First Nuuly delivery smelled and had heavy pilling - how do you handle unwearable items?

I'm fairly new to Nuuly and just opened my latest box. One piece is basically unwearable: a sherpa-style fleece pullover that was listed in "excellent" condition but has heavy pilling all over the sleeves and front and smells like old perfume mixed with a sweaty gym bag. I know rentals aren't going to be perfect, but this is the first time I've gotten something I don't even want to try on.

A few questions for the veterans:

1. When you get an item like this, do you immediately report it in the app and send it back, or do you contact customer service first?

2. If you report it as damaged/unsanitary, do they usually give an item credit, or is it more hit-or-miss?

3. Do you ever wash something like that anyway so you can wear it for the month, or is that risky since it arrived in that condition? I don't want to be blamed for the pilling or smell.

4. Any tips for avoiding this on future picks? I tend to grab cozy stuff for low-key weekends (friends' houses, game nights, casual hangouts), so I'm guessing fleece is a higher-risk category.

Not trying to be dramatic - just bummed because it was the piece I was most excited about. Would love to hear how you all handle items that show up in rough shape.