The RealReal's Internal Documents Reveal Indifference to Vetting Fakes (UPDATE)

UPDATE (November 23, 2019): After much controversy surrounding The RealReal’s process of vetting counterfeit items, the company stood by its strict standards and published an open letter by CEO Julie Wainwright upholding the claim. However, CNBC has now obtained internal documents that reveal the company has known about the influx of fake goods for a while, yet has done little to combat them. TRR’s weekly reports known as “Copywriting Faux and Tell” recap fakes that were published and returned on the site, and are circulated to the company’s copywriters.

The 227 pages from the first and third quarters reveal hundreds of obvious mistakes that slipped through the vetting process, such as Jimmy Choo shoes that were mislabeled as “Jimmy Ghoo” and a pair of Louis Vuitton shoes that were never even made by the brand. Investigators believe the company’s quota for copywriters has led to a large number of errors, although TRR has never confirmed having such a system. See more examples of the report on CNBC.

UPDATE (November 13, 2019): The RealReal has responded to the recent authentication firestorm with a new authentication page on its website and an open letter from CEO Julie Wainwright. Asserting that “The RealReal has the most rigorous authentication process in the marketplace,” the page includes courtesy photos and short bios of The RealReal’s myriad experts, sorted by location and expertise, demonstrating the site’s particularly vast array of handbag, watch and jewelry specialists.

Meanwhile, Wainwright’s letter breaks down The RealReal’s authentication workflow and reaffirms its dedication to parsing out fake goods. In fact, the letter begins underscores The RealReal’s high customer satisfaction, noting that “we have a best-in-class customer satisfaction rating of 703, measured by our Net Promoter Score [provided by NICE Satmetrix U.S. Consumer 2018 and 2019], which is higher than Nordstrom’s and Apple’s scores.”

Among the other concerns discussed, the copywriter authentication controversy is given a direct, lengthy response — recall that a former copywriter asserted that “all [The RealReal] cares about is the product getting on the site,” by instead of having each item assessed by highly-trained specialists. Wainwright recontextualizes the situation, outlining the entire intake process for new goods.

Items that are considered “high risk” (anything from an Hermès Birkin bag to the hottest streetwear) are sent to authenticators with significant authentication experience, who are highly specialized in specific categories. Items that are considered “low risk,” such as contemporary brands with clear authenticity markers, are sent to be authenticated by our copywriters, who receive deep training in authentication, but whose title has become outdated.

Wainwright highlights the training given to copywriters (“a minimum of 30 hours of training, including onboarding, job shadowing, daily training sessions and quizzes”), explaining that “we do not sacrifice quality for quantity” in reference to The RealReal’s dedicated “Quality Control team” and customer satisfaction guarantee. Interestingly, Wainwright soon expects “that much of our copywriting and pricing will be automated using machine learning. We’ll then modify the evolving structure of our authentication team’s titles to better reflect their scope and responsibilities.”

Read Wainwright’s letter on The RealReal’s investor site.

ORIGINAL STORY (November 8, 2019): The RealReal has come under fire for reportedly misleading customers seeking secondhand luxury goods. As one of America’s largest pre-owned consignment stores — it filed to go public in May 2019 — clients depend on The RealReal to verify the authenticity of the often-pricey garments and accessories it handles, but Quartz highlights recent controversies surrounding the company’s verification practices.

Detailed in a report by CNBC, a lack of appropriate training is key to the issues plaguing The RealReal. For instance, much of the verification is reportedly handled by untrained copywriters subjected to restrictive production quotas. Interviews with former employees and review of internal documents led to a conclusion that “the company’s claim of expert authentication was not accurate.”

These unreliable proclivities have been documented in the past. “They give you a quick 5-minute presentation on what things should look like and then have you go,” one copywriter told The Capitol Forum earlier this year. “I should not have been authenticating an Hermes scarf, for example, but all they care about is the product getting on the site. … It’s really hard for someone to properly authenticate something when they’re not probably the best qualified to be even doing that in the first place.”

Meanwhile, The RealReal maintains that it prioritizes verification processes, writing in its SEC filing that “our success depends on our ability to accurately and cost-effectively determine whether an item offered for consignment is an authentic product.” However, it acknowledges that “while we have invested heavily in our authentication processes and we reject any goods we believe to be counterfeit, we cannot be certain that we will identify every counterfeit item that is consigned to us.”

Even though it admits the difficulties of battling fake goods, The RealReal steadfastly refutes CNBC‘s findings. The report “does not accurately represent the depth of our team’s expertise and the thoroughness of our authentication process,” the company told Refinery29. “We stand behind both our process and authenticity guarantee, and will continue to provide a safe and reliable platform for buying and consigning luxury items.”

In a recent call with investors this week, CEO Julie Wainwright emphasized that The RealReal maintains a stringent chain of verification for each item. The process goes as such: Receivers at The RealReal’s processing center review the new intake and sort items into different categories (“low-risk,” “high-risk” and so on) based on factors like brand, style, value and source. Then, some goods are sent to corresponding authenticators while “other items are authenticated by our copywriters,” she said. Wainwright emphasized that those copywriters do receive verification training and the company also employs an audit team to perform additional checks.

Most recently, a new report revealed that fake Supreme items are the world’s most searched-for counterfeit.