The RealReal CEO Julie Wainwright conceded on Wednesday that the luxury consignment marketplace’s claim of not having any fakes on its website may not be correct.
“We strive for perfection, but may not be perfect every single time,” Wainwright wrote in an email to customers and consignors.
Wainwright’s message was sent one day after CNBC reported that copywriters, who were hired to write descriptions of items, were verifying the authenticity of items without sufficient training. Former employees also said they were operating under strict quotas, in a culture that focused on volume. They said this could lead to fakes or mistakes on the site.
The stock of the company, which went public in June, has dropped more than 20% to trade around $17.50 since the report. It has lost about $380 million in market value, bringing its current capitalization to $1.5 billion.
The RealReal has long tried to differentiate itself from competitors by saying it has a process by which it authenticates ever item on its site to make sure there are no counterfeits.
In the email, Wainwright described the coverage as “attempting to discredit the business we have so proudly built.”
“Counterfeiting is a global issue and those engaged in its practice are egregious and relentless,” Wainwright’s email said. “Therefore, the entire team at The RealReal works diligently seven days a week to ensure the highest standards in our authentication practices.”
She added: “There is no other resale company doing more to remove fakes, and put counterfeiters out of business than The RealReal.”
CNBC reviewed nearly 1,400 reviews of the company online and found fakes, damage and customer service were the top complaints.
The day after the report, two unhappy customers who were interviewed received an email from the company, cancelling their memberships.
“It has come to our attention that The RealReal has been unable to satisfy your needs as a client. Please be advised that your membership with The RealReal has been canceled and you will no longer be able to shop or consign on our site,” the email sent to Cherish Garcia said.
Garcia, who lives in the Philippines, said The RealReal sold her a fake Prada dress in 2017 and has not used the site since.
Wendy Meltzer, who also complained about receiving a designer scarf with the wrong tag attached, which inflated its value, received a similar email on Tuesday from the company cancelling her membership. Meltzer has been a customer and consignor.
“The items you have on consignment with us are being returned along with a check for outstanding commissions,” the email said.
Below is a copy of the full email:
To Our Customers & Consignors:
Hello. I am writing to you today as valued customers and consignors of The RealReal who have helped us become the leader in authenticated luxury consignment over the past eight years. You may have seen recent media stories attempting to discredit the business we have so proudly built. Please allow me to share some insight with you.
Counterfeiting is a global issue and those engaged in its practice are egregious and relentless. Therefore, the entire team at The RealReal works diligently seven days a week to ensure the highest standards in our authentication practices. We employ certified experts such as gemologists and horologists, luxury experts who have worked at companies like Sotheby’s and Christie’s, and brand experts who have worked directly for luxury brands. We are constantly and consistently training our teams, and evolving our technologies to ensure your items are the real thing. There is no other resale company doing more to remove fakes, and put counterfeiters out of business, than The RealReal.
This is a complex problem, and fighting global counterfeiters is hard work. We strive for perfection, but may not be perfect every single time. As has always been our policy, if there is ever a concern about an item, it can be sent back and we will make sure the issue is resolved to your satisfaction.
Our pledge is to provide you with the best, safest and most secure place to purchase authenticated luxury consignment. Thank you for your trust in us.
Founder & CEO