LuLaRoe hasn’t garnered the best reputation recently. Their leggings are notorious for ripping, and now the company is facing accusations of being nothing more than a pyramid scheme.
The complaint, which is seeking $1 billion in restitution, was named by three plaintiffs who are also representing thousands of LuLaRoe “consultants” who, according to the lawsuit, “Plaintiffs and so many other consultants were never able to realize any actual profit and, as a result, they failed. They failed even though they were committed and put in the time and effort. They failed because they were doomed from the start.”
Basically, LuLaRoe consultants are accusing the company of falsely guaranteeing promises of financial freedom, based on the notion that consultants would purchase company inventory to sell to the public. They claim that the only real advancement comes with purchasing a substantial amount of inventory, even to the point of financial burden, and recruiting willing, yet unknowing people to join the ranks as a consultant.
LuLaRoe released a statement regarding the lawsuit that read:
LuLaRoe has grown exponentially over the last four years. Our success has made us the target of orchestrated competitive attacks and predatory litigation. We take all litigation — regardless of its lack of merit — seriously. We have not been served with the recent complaints, but from what we have seen in media reports, the allegations are baseless, factually inaccurate and misinformed. We will vigorously defend against them and are confident we will prevail.
LuLaRoe’s focus is to support the more than 80,000 Independent Fashion Retailers who make retail sales to consumers. Our Leadership Bonus Plan only includes incentives that reward retail sales to consumers. As a result of our business model, Independent Fashion Retailers have sold more than $2 billion of LuLaRoe apparel directly to consumers from January to October 2017, far more than double the same period in 2016. These sales have put hundreds of millions of dollars in the pockets of Independent Fashion Retailers across America who are building their own small businesses.
Along with the charges of being a pyramid scheme, the lawsuit also accuses LuLaRoe of charging erroneous taxes to its consultants, and selling defective inventory, specifically leggings already afflicted with tears and holes before even being worn.