Maker of the Chi Straightening Iron Suing Costco

November 3rd, 2009 · 19 Comments

Farouk Systems, the maker of the Chi filed a lawsuit this week against Costco alleging that it improperly sells the hairstyling tools, including counterfeit ones.  Farouk claims that they only sell to authorized distributors, which in turn sell the tools and Farouk’s BioSilk-brand hair-care products to salons. It prohibits its distributors from selling to large retailers or wholesale clubs to avoid “tarnishing its reputation,” according to the lawsuit.  According to them, Costco is selling the flat irons for as little as $59.99, whereas they cost at least $100 in salons.  When I look online at Costco, all of the models or products are at least $69.99.

I think it’s so funny when these people say that selling something at Costco will tarnish their image or reputation.  Some very big and prestigious names sell items at Costco, so, I don’t see how these people can lose reputation points for selling their straightening iron there.  If it’s good enough for Cartier and Baccarat, it’s most likely good enough for Farouk Systems and their Chi.

The other thing that is claimed in the lawsuit, is that Costco is selling counterfeit Chis.  According to Farouk, there have been counterfeit Chis sold in Texas and California.  However, I’m not sure that I’d totally believe that, mostly because this is a bit of a legal ploy.  If you’re not familiar with how these suits work, the manufacturers say that Costco is supplying counterfeit goods so that they can find out who provided the products to Costco.  And that means that they can then go after the ‘weak link’ in their distribution chain and punish them.  If they don’t claim counterfeit items are being sold at Costco, then Costco can protect the source that they got the items from as a trade secret.  This is similar to some of the other suits that various manufacturers have brought against Costco, including the Citizens of Humanity jeans thing.

For more information on the lawsuit:

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Tags: costco.com · Health & Beauty · In the News Share

19 Responses so far ↓

  1. 1 Brittany // 2013.02.02 at 10:28 pm

    2 years ago I bought a chi at target for about $110 and it worked wonderfully. 3 days after that I found it for $60 at Costco so I returned the one to target and went back to Costco for the better price. For 2 years I’ve dealt with the chi from Costco snagging my hair. It would take so long to get it sleek, which i never truly accomplished, and it would be frizzy within just a few hours. Fast forward to 2 days ago, the one of the ceramic plates FELL OUT of my flat iron!! After some research I found that target, Walmart, and Costco had been selling counterfeit Chis and I thought ‘of COURSE!!’. I assumed throughout the years Farouk had cheapened their product. So today I bought the pink fade cancer edition chi from cosmoprof and it is like night and day. A full head of long, sleek, frizz free hair in about 5 minutes with no product(I normally add organix Moroccan oil or Rusk deep shine oil which I highly recommend!!). I can’t believe I tolerated that other chi for so long.
    I had to tell my little story here because I saw a few comments defending Costco. I love Costco, and I love my Chi. I’m sure they didn’t intentionally sell counterfeits but I am telling you, the one I bought from Costco is total garbage compared to the one I bought today. They’re $100 at cosmoprof and ulta- just spend the extra $40 and save yourself the time and frustration and buy from a legit seller : )

    • 2 Kimberly // 2013.02.06 at 6:05 pm

      @Brittany – Did you take your Chi back to Costco? I definitely would have returned it for snagging on my hair, I think.

      • 3 Brittany // 2013.02.07 at 3:24 am

        @kimberly- it never really occurred to me that the problem was that it was not legit product. I was kind of like, whatever, and went with it. My sister had even commented that it snagged her hair and that her cheap flat iron didn’t even do that. It’s been about 2 or so years now so it is definitely too late now but I’m telling you I am SO relieved that my new Chi kicks so much butt!!! My faith has been restored lol

  2. 4 ANTONY WEST // 2009.11.12 at 2:50 pm

    KNOWING THIS GREY MARKET BUSINESS INSIDE OUT, I WILL NOT BE SURPRISED IF FAROUK COMPANY THESELVES HAS SOLD THE GOODS TO COSTCO INDIRECTLY. THE FUNNIEST THING OF THIS WHOLE ISSUE THAT FAROUK IS SEEKING 75.000 DOLLARS ????????? ARE YOU KIDDING ME????? IF I BUMPED INTO THE CASH REGISTER AT COSTCO AND DIRTY MY JACKET I WILL PROBABLY SUE FOR MOR MONEY. THIS TELLS ME THAT FAROUK GOT ANGRY THAT COSTCO IS BUYING IT THROUGH DIVERTERS AND GAVE THEM A SLAP ON THE WRIST AND TELLING HTEM, LET US PUT THE CARDS ON THE TABLE, DO NOT BUY FROM DIVERTERS, COME TO ME DIRECTLY AND I WILL ENTERTAIN. THIS LAWSUIT IS THE JOKE OF THE CENTURY.

  3. 5 Kimberly // 2009.11.12 at 12:38 pm

    I agree, KD, that’s how I feel too. I trust Costco to not be selling something just because it’s cheap, but because it is a good quality product. I think that’s how they can afford to have their awesome return policy, too.

  4. 6 KD // 2009.11.12 at 11:28 am

    I agree that it is “funny when these people say that selling something at Costco will tarnish their image or reputation.”

    For me ~ and my mother, from whom I learned all things Costco ~ it’s only worthy of being purchased IF it’s sold at Costco. If it’s sold at Costco, I know they stand behind the product. I know it means something that Costco carries a product. I don’t put much effort into researching the item if Costco carries the item. Other retailers, on the other hand…. you never know what you’re going to get so I do more research.

  5. 7 Will Answer // 2009.11.08 at 5:08 pm

    Farouk suing Costco is a joke. I wouldn’t be surprised if Farouk dumped a bunch of goods KNOWING that they would be diverted into Costco. They are suing just so they can tell the salons that they are ‘going after’ Costco. Why didn’t they investigate when someone placed an unusually huge (Costco) order? The answer is because they like the extra sales. Farouk should be HONORED that Costco is selling their goods. These companies like Farouk turn a blind eye to diverted goods until the salons complain then they have to make like they are going to do something about it. It’s all a game.

  6. 8 Heather - Dollar Store Crafts // 2009.11.07 at 12:31 pm

    Sometimes Costco buys “grey market” stuff – things that sell in other countries for lower prices. They buy them from another country and are able to sell them for a lower price than is typical in the USA. Sometimes you will see grey market computer stuff or bottled Coca-cola, etc. It makes the manufacturers mad because they want to sell stuff for the price they set at retail in the US.

  7. 9 Pat P. // 2009.11.05 at 3:44 pm

    In that case, I wonder if they’re suing Amazon and eBay too? I bought mine at Costco for $60, and it seems to be authentic according to
    http://reviews.ebay.com/Determining-if-your-Chi-Flat-Iron-is-FAKE_W0QQugidZ10000000011204116
    But take it for what it’s worth…all I worry about is how well it works and if it’s safe (electrically). It works sooo much better than a $20 one I had. Now I understand all the craze for CHI. Get one while you can. By the way, you can do a few different styles such as flip, curl, wave…not just straighten hair.

  8. 10 RickieM // 2009.11.05 at 2:02 pm

    That’s so funny.. you look on the web and see ads all over the place discounting this product I never heard of, including this very web site via google ads! I see the ads plus I see a bunch placed by ambulance chasers for lawsuits. Ya gotta smile about that!

  9. 11 Kimberly // 2009.11.05 at 12:42 pm

    I hadn’t really noticed all the ads for cheap Chis on this post until Gehrig pointed it out . That’s pretty funny though. Maybe Farouk should use this as a way of tracking down all of the people that they need to sue for selling their irons so cheaply.

    I’m also not a lawyer and only watch them on tv. However, I’m guessing that the Farouk folks would say that Costco wasn’t an authorized dealer and that purchasing one there voided their warranty. And then the person with burned hair would have to sue Costco directly. And the jury would probably give them $150 million for having singed their hair…it’s hard to tell with civil suits like that.

  10. 12 Maria S // 2009.11.05 at 12:41 am

    OMG – I’m really worried. Maybe I should sell my Costco stock!!!

  11. 13 Gerry // 2009.11.04 at 11:36 am

    Don’t blame me. I’m bald!!!

  12. 14 Kissen // 2009.11.03 at 11:06 pm

    I saw them for %59.99 at the Springfield, VA, Costco on Nov 2, 2009.

  13. 15 costco fan boy // 2009.11.03 at 3:23 pm

    Another point that does not make sense is what happens in the case of a product liability lawsuit ?

    I am not a lawyer ( all i know about law is Sam Waterston plays one on TV ) , so what would happen in the follow scenario.

    1. Consumer buys an iron & manages to burn their hair.
    2. Consumer sues Farouk who then can force Costco to reveal from whom they bought the iron

    Maybe Farouk should try that angle :)

  14. 16 costco fan boy // 2009.11.03 at 3:18 pm

    What i do not understand is how is Costco getting these supplies ?
    I am not saying Costco is buying fake stuff , but a buy of Costco’s magnitude can surely be detected.
    Maybe it is one of the retail outlets ( Ulta for instance carries Chi ) who is doing the flipping.

    The reason why the manufacturer is going after Costco is to protect their revenue.
    When these things came out they used to cost 159.99 at Ulta ( yeah i paid that much :( )

    So it is quite a bit of revenue loss when your product goes down in MSRP from 159.99 to 59.99

  15. 17 Gehrig // 2009.11.03 at 1:29 pm

    I find it interesting that the banner adds displayed by Google on the right side of this page has ads advertising “60% off select CHI Irons”, “CHI Silk Infusion Sale All CHI products on Sale Up to 75% Off + Free Shipping” etc. Apparently CHI products are discounted all over the internet. Just Google “Chi Hari Products” and you will get LOTS of ads for Discounted products, including Buy.com selling a 1 inch True Ceramic Hair Straightener for 68.95″.

  16. 18 Kimberly // 2009.11.03 at 9:32 am

    I haven’t noticed them in the store in Austin, but it’s probably one of those things that I just look right over since I’m not in the market for one.

  17. 19 Jill // 2009.11.03 at 9:19 am

    they are selling here in utah for $59.99.

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