Advertised on the site of New York-based fashion label 6397, the dress is a kind of formless long t-shirt with baggy sleeves.
It was brought to light when a Reddit user posted a picture of the dress under the title "Yeah, because I’m totally going to spend $400 to look like a goddamn peasant".
Users were quick to criticise the dress, with the top rated comment reading: "She looks like a mental patient from a movie."
Many of the users commenting took umbridge with the idea of poverty being exploited in the name of fashion.
Some drew parallels to the Urban Outfitters chain of stores, which sell drab looking clothes for high prices, and who in their mission statement described the target audience as "upscale homeless".
Others made reference to the fashion community’s fascination with poverty and homeless people, pointing out the popularity of fashion designers like Vivienne Westwood, who held a 2011 collection called "Homeless Chic".
Vivienne Westwood’s “Homeless Chic” fashion show. Increasingly the fashion world has been accused of exploiting poverty for designs.
Another comment read: "For that much money I could just hire someone to beat up a real peasant and take his/her clothes. And then it would be an authentic oppressed peasant shirt."
One pointed out the similarity between the term "peasant dress" and the trend of pre-ripped jeans.
They said: "Not to sound too much like the parent who says, "who pays for jeans with holes in them?"…but…who pays $400 for a stretched out shirt?"
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One comment simply said: "It’s a goddamn hospital gown."
But the term "peasant dress" is not new – the term is commonly used to describe a loose fitting dress, most of the time with buttons down the front of the dress, often with an elasticated wasteband.
Many "peasant dresses" at other well-known UK retailers like ASOS come in at around £120, while one particular "peasant dress" from the Saint Laurent fashion brand costs a considerably larger £2,300.