The RealReal, Inc. finds itself as the defendant in a proposed class action lawsuit in which a Michigan resident alleges the luxury consignment retailer systematically inflates the total weights of uncertificated gemstones knowing full well that most consumers have no way of telling that the stones’ weights are exaggerated. The 32-page complaint, filed in California, alleges that despite the defendant’s guarantee that everything sold on its website and at its luxury consignment offices is “100% the real thing,” the weights of The RealReal’s gemstones vary far more than what’s allowed under Federal Trade Commission (FTC) regulations.
“Consumers are not advised that gemstone weights are approximate nor are they advised of a range of weights for the gemstones,” the lawsuit summarizes.
What is The RealReal?
TheRealReal is a luxury consignment retailer that, through its website and what the case calls “Luxury Consignment Offices,” allows consumers to sell and purchase luxury goods on consignment, i.e., second hand, through a network of users around the world. If you’ve heard of The RealReal this year, it may be because the startup, after a funding round that brought in $173 million, announced it is mulling over the potential opening of a slew of brick-and-mortar stores, possibly starting with a New York location. From the lawsuit:
“RealReal’s consignment process allows individuals to have luxury items they wish to sell shipped, dropped off, or picked up by RealReal. After Real Real receives the item, RealReal’s team of ‘experts’ authenticate, price, and sell the items the consigner wishes to sell.”
Got it. Now, what does the plaintiff allege in the suit?
The complaint notes the plaintiff bought a non-returnable ring from TheRealReal.com in August 2017 for $982.62, a price based in part on the defendant’s stance that the ring contained 2.10 carats of diamonds. The below picture represents what the plaintiff says she believed she was purchasing from the defendant:
Shortly after receiving the ring, the plaintiff had the item inspected to measure the total weight of the diamond, the lawsuit continues. The gemologist who performed the inspection, the plaintiff asserts, found the ring contained only 1.2 carats of diamonds, an apparent sharp discrepancy from the 2.1 carats the woman believed she purchased.
From here, the complaint gets into FTC regulations that stipulate that “the allowable range of weights based upon the description was 2.0955 to 2.1055 carats.” Per the lawsuit’s primary allegation, the actual difference between what the plaintiff believed she was purchasing and what she received from The RealReal was far greater than allowable by law, notwithstanding the apparent lack of any indication that the carat weight of the ring was approximated, the complaint claims.
“[The defendant] held themselves out as experts in the field of gemology and it was [The RealReal] who examined the subject ring and determined its characteristics and selling price,” the complaint argues. “[The defendant] intentionally overstated the weight of the diamonds.”
How is pricing determined for items sold by The RealReal?
Per the complaint, what The RealReal charges is based on the weight of the gemstones found in its jewelry. Importantly, the case points out, smaller gemstones have a price-per-carat that is “generally stable over long periods of time.” The plaintiff claims the benefit of the defendant allegedly overstating the weight of the gemstones in its jewelry is that the consignment shop can charge higher prices than necessary.
What does the lawsuit look to recover for potential class members?
The plaintiff says proposed class members should be entitled to recover the difference between “what they paid for [The] RealReal’s jewelry and what the jewelry would have been priced at with the correct gemstone weight.” In the plaintiff’s situation, the case claims the weight of the woman’s ring was overstated by 75 percent.
Which consumers does this lawsuit hope to cover?
The proposed class named by the lawsuit includes all consumers throughout the United States who, between December 1, 2013 and the present, purchased from The RealReal one or more pieces of jewelry where the weight of gemstones listed on the product label exceed the true weight of the gemstones by more than 1/100 of a carat.