Is Rent the Runway A Ripoff?

Rent the Runway, the online startup that has made the luxury of wearing high-end (and high-ticket price) designer dresses available to the masses, is coming under scrutiny for misleading users of its service. What started as a good thing — the online service offering dresses under its own label — has stirred up a controversy about transparency and pricing.

As Consumerist recently reported, Rent the Runway has gotten into the house brand business by creating a line of clothing and accessories offered exclusively on its site to rent out alongside the designer labels offered. However, what started as a positive thing for renters — more dresses to choose from — has raised questions about ethical practices on the site.

The allure, and value proposition, of the online service is that users can rent a piece of clothing, which might cost $500 at a retail store, for a fraction of the price. As such, items have a listed “retail price,” alongside the cost of renting, to drive home that concept to users. In the end, the renter saves money by not having to purchase the item, and Rent the Runway is able to create revenue from the garment on an ongoing basis as it is shipped back and re-rented time and again.

However, the introduction of Rent the Runway’s house brand has called that model into question.

One user of the service pointed out to Buzzfeed (via the Consumerist story) that a dress being offered on the site for rent was retailing at less than the rental price and far less than the retail price being listed next to the dress. The customer said the dress she had rented was listed as retailing for $595 on the Rent the Runway site; however, the same garment was displayed on a department store’s website for only $118. When she complained to the company, it offered her a refund. And when a Buzzfeed reporter contacted Rent the Runway with questions about the discrepancy, the “retail” price on the item in question mysteriously fell to a listed retail value of $345 on the site.

In the most extreme example that Consumerist offers, a dress that Rent the Runway has listed for a $50 rental has a listed retail value of $370, while the same dress in a different color was available for only $27.50 at Nordstrom Rack before it sold out.

Perhaps more disturbing than the price discrepancy is the question of why are these items, which Rent the Runway is promoting as part of its “exclusive” line, available from other retailers at all?