A CNBC investigation found instances of RealReal selling counterfeit merchandise on its platform. The CEO said in the e-mail to clients that the company dedicates itself to work "seven days a week to ensure the highest standards in our authentication process."
No rival company is "doing more to remove fakes," but no system can be perfect 100% of the time, Wainwright said.
Why It's Important
RealReal's woes are a "classic case of growth at all cost," CNBC's Melissa Lee said Thursday. RealReal's authentication personnel have quotas to satisfy, and the company reached a point where the volume of incoming products was too much to handle, she said.
Copywriters responsible for writing content on RealReal's website were also tasked with authenticating products and they weren't properly trained, Lee said.
The CNBC report marks a reversal from Wainwright's 2016 comments to the news outlet that "there are no fakes on our site," according to The Business of Fashion.
RealReal faces other woes not highlighted by the CNBC report.
For example, luxury maker Chanel is engaged in an ongoing lawsuit against RealReal and has argued the platform is not authorized to authenticate its products, according to The Business of Fashion.
The stock fell 2.01% in Thursday's regular session and was down another 0.4% at $17.50 at the time of publication in the after hours session.
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