Microsoft Sued Over Alleged Withholding of Tariff Refunds from Consumers

A California man who bought an Xbox game console that was marked up amid President Donald Trump’s tariffs regime is suing Microsoft, claiming the company pocketed government refunds and never distributed them back to consumers.

In October, Microsoft raised the price of its Xbox game console by $20 to $70 depending on the model. The increase was not attributed to tariffs or any other specific factor. Microsoft said the increase was a reflection of "changes in the macroeconomic environment."

Trevor Hastings purchased an Xbox after the price increase. He is named in a proposed class-action lawsuit that is now in federal court that claims that Microsoft — after receiving refunds from the government following the U.S. Supreme Court's ruling that Trump's tariffs were illegal — will benefit twice from the tariffs while customers are left to bear the cost.

"If unchecked, Microsoft will reap those tariff payments twice – once in the form of pass-through costs imposed on consumers like Plaintiff, and then again from the federal government through its tariff refund program, including interest," Hastings' lawyer wrote in the lawsuit, according to Aftermath.

Amazon, Sony Interactive Entertainment, Nintendo, Lululemon, and Costco have also been sued in similar tariff refund-related lawsuits.

In February, the U.S. Supreme Court ruled that Trump's 2025 tariffs were illegal. Since then, the U.S. Department of Treasury has refunded approximately $81 billion to companies that were affected by the tariffs.

Microsoft raised the cost of its consoles again in June, citing the rising cost of components used in video game hardware.

The current price for 1 TB Xbox Series X, which launched at $500, is now $800.

Nintendo — one of the big three video game console producers alongside Sony and Microsoft — said in court documents filed Monday that its customers are "not entitled to a [tariff] rebate."

"If a consumer did not want to pay the advertised price, they were free to abstain from purchasing the product or seek out competing products," Nintendo's lawyers said in the filing, according to Aftermath. "protect[ing] consumers, not deceiv[ing] them."

A different lawsuit, targeting Costco, aims to compel the company to pass its refunds along to consumers.

That suit was brought by Matthew Stockov, an Illinois Costco shopper who says he purchased electronics, food, and household goods at "prices inflated by Costco’s pass-through of IEEPA tariff costs.”

“Costco has made no commitment to return any portion of anticipated tariff refunds to the consumers who bore those costs,” Stockov said, adding that customers are “entitled to restitution” for the additional costs they paid.

Some companies that received refunds from the government have said they plan to reimburse customers. FedEx said in June that it plans to refund $800 million to its customers beginning in August. UPS said it planned to do the same, up to $5 billion, according to a Fortune report.

The lawsuit against Microsoft is seeking monetary relief that includes compensatory and punitive damages as well as litigation costs.

The Independent has requested comment from Microsoft.