Lawmakers say Costco’s decision to continue selling banned China surveillance tech is ‘puzzling’

US retail giants removed Lorex from their shelves citing human rights abuses, but Costco continued selling

Two U.S. lawmakers have asked retail giant Costco why it continues to sell surveillance equipment made by Lorex, despite warnings of cybersecurity risks and links to human rights abuses.

The bipartisan letter dated October 31, sent by Rep. Christopher Smith (R-NJ, 4th) and Sen. Jeff Merkley (D-OR), said Costco’s continued sale of Lorex products is “all the more puzzling,” given several of its retail rivals have long discontinued selling the technology citing human rights and ethical sourcing concerns.

The lawmakers added that the sale of Lorex equipment conflicts with Costco’s public commitments prohibiting international human rights abuses in its supply chain, according to the letter sent to Costco’s chief executive Walter Craig Jelinek.

The letter landed some two years after an investigation by TechCrunch and video surveillance news site IPVM found that several retail giants were selling Lorex surveillance equipment. Home Depot, Greatest Buy, and Lowe’s removed Lorex products from their shelves following our inquiries, but Costco did not.

Lorex was until recently a subsidiary owned by China-based company Dahua. In 2019, Dahua was added to the U.S. government’s economic sanctions list, alongside Hikvision, after both businesses were accused of profiteering from selling technology linked to China’s ongoing efforts to suppress ethnic minorities in Xinjiang, where millions of Uighur Muslims live. The U.S. accused China relies on technology makers, like Dahua and Hikvision, to surveil the population, calling the human rights abuses in Xinjiang “genocide.”

“The sale of Lorex security equipment allows Dahua to profit from the U.S. market even though its equipment is banned from U.S. government use because of security and human rights concerns,” said Smith and Merkley in the letter.

The lawmakers say that Lorex products also present a “known security risk,” citing recent security flaws found in its products, and the company’s apparent legal requirement to comply with China’s intelligence law upon request.

Although Dahua sold Lorex earlier this year to Taiwanese company Skywatch, the lawmakers say the sale “does not allay our concerns or immediately change the security risks posed to U.S. businesses and consumers moving forward, as Dahua still supplies all the component parts for the Lorex cameras and other surveillance equipment.”

The lawmakers sent Costco close to a dozen questions, including asking the company to explain how its sale of Lorex equipment complies with U.S. sanctions or its own human rights commitments. The lawmakers also asked for details about Costco’s sale of seafood from Chinese businesses that allegedly used forced labor to catch and process seafood for U.S. buyers.

Costco did not return a request for comment. Lorex parent company Skywatch also did not comment at the time of publication.

The letter sent to Costco can be found here.