OK, so here’s some news that sure’s to break Clark Howard’s penny-pinching heart!
His beloved Costco has been ordered by a federal jury to pay $5.5 million to Tiffany & Co. for the misuse of its name in selling diamond engagement rings, according to a Reuters report.
And worse yet, that dollar amount is certain to rise when punitive damages are handed down in the near future.
Costco takes a ding over the diamond ring
Clark has long talked about how Costco Wholesale is a great place to buy an engagement ring.
He enthusiastically reported the results of a Good Morning America report where they had an expert compare similar diamonds found at Tiffany and Costco.
The Tiffany diamond, which was being sold for $16,500, was appraised at only $10,500—meaning it was being sold for 58% more than its real worth on the open market.
The Costco diamond of similar size was being sold for $6,600, yet it was worth 17% more than that price at appraisal.
But back to the case at hand. Where exactly did Costco go wrong and why it is facing such a hefty fine?
According to U.S. District Judge Laura Taylor Swain who ruled on the case last year, the warehouse club erred by using the Tiffany name in display case signs. That was deemed a willful infringement of Tiffany’s trademark.
‘The reality is Costco’s markups on anything it sells are teeny tiny—usually on the order of 14%. With Tiffany, you pay for image, luxury square footage of those stores and that little blue box!’ Clark says.
‘When this issue first came up a couple years ago, Costco admitted to BusinessWeek that the advertising was stupid…and a dumb move. I thought it was very transparent of Costco to admit that they’d made a misstep.’
Predictably, the Internet’s reaction has been all over the place on the news of the Costco fine. Below are a few zingers from the comments section of the Insurance Journal.
Some posters expressed surprise and dismay:
Others found levity and humor in the news: