Costco issues refunds for Synergy World restaurant gift cards after issuer's collapse

Costco acts to refund customers after Synergy World collapse

Recall targets Synergy World restaurant gift cards sold at Costco

Costco Wholesale is issuing a recall and offering refunds for remaining balances on Synergy World restaurant gift cards that it sold at warehouse locations nationwide after Synergy World abruptly halts redemptions and files for Chapter 7 bankruptcy. The company notifies members that customers who purchased Synergy cards between Oct. 27, 2025, and Jan. 26, 2026, are eligible for refunds because the cards were issued and managed by Synergy, not by Costco or the participating restaurants. Costco’s member letter tells affected purchasers how to request refunds, while stressing the role of the third‑party issuer in the disruption.

The move follows an abrupt stoppage of redemptions that Synergy initially said would be honored through early February but then suspended, citing a surge in demand that it says it cannot satisfy. That suspension effectively renders outstanding balances unusable pending bankruptcy proceedings, leaving gift card holders unable to redeem value that had been accepted at hundreds of participating restaurants. Costco emphasizes that it is responding to consumer harm created by the issuer’s collapse rather than by any failure in its own retail operations.

Costco and consumer advocates say the full extent of the exposure remains unclear until Synergy World’s bankruptcy filings are made public. The number of cards sold through Costco and the total dollar value tied up on unredeemed cards are unknown, and legal and administrative outcomes will depend on the Chapter 7 process. For now, Costco’s recall and refund program aims to restore member balances and limit reputational fallout from third‑party branded products sold in its warehouses.

Consumer advice and protection measures

Consumer finance experts urge buyers to treat gift cards as near‑term spending instruments. Matt Schulz of LendingTree advises using gift cards promptly, keeping receipts to ease refund processing, registering cards where possible to protect against loss, and purchasing gift cards with a credit card to gain fraud protections.

Broader industry implications

The incident highlights risks for retailers that sell third‑party gift products and for consumers reliant on outside issuers. Retailers such as Costco are now confronting operational and customer service burdens when vendors collapse, and the sector may see renewed scrutiny of gift card issuer disclosures and protections.