LuLaRoe Leggings Lawsuit: Consultants Earn Average Of $85/Year Buy $5K Inventory

When LuLaRoe leggings began to pop up on the social media scene, the LuLaRoe butter leggings and their unique designs caused a fervor, as reported by the Inquisitr. When LuLaRoe consultants came forward and spoke about making a $3,000 profit for each “pop-up” LuLaRoe party, the rage over becoming a LuLaRoe consultant caused even more of a sensation, especially with work-at-home moms. However, before long, LuLaRoe would face backlash from both LuLaRoe consultants and LuLaRoe consumers, and now a new class-action lawsuit filed against LuLaRoe, LLC and LLR, Inc., by Julie Dean and Suzanne Jones on behalf of themselves and all other LuLaRoe consultants and similarly situated LuLaRoe consumers, is making the news.

LuLaRoe was initially touted as creating a high-quality product, with the LuLaRoe butter leggings being so soft to the touch that they lived up to their “butter leggings” nickname, as reported by the Inquisitr. The fact that LuLaRoe only created a limited number of patterns helped to create a sense of demand for the patterns before they sold out. The method of selling the LuLaRoe clothing via Facebook groups and in pop-up parties was a creative concept that initially brought LuLaRoe buzz, but is now bringing them backlash.

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[Image by Paula Mooney]

The leggings from LuLaRoe have garnered complaints about the quality of the product, with plenty of photos online of holes or rips in the LuLaRoe leggings, which some consumers claim happened after only a matter of hours. The lawsuit against LuLaRoe that was filed on March 23 alleges that LuLaRoe consultants must pay a hefty sum to become a LuLaRoe consultant, with an initial investment of approximately $5,000 to $9,000 — and stated that the LuLaRoe consultants were urged to keep about $20,000 in LuLaRoe inventory on hand at all times. However, that high investment may have paid off for the $1 billion gross revenue-earning LuLaRoe company in 2016, but not the LuLaRoe consultants, who only average $85 per year in commissions.

“LuLaRoe was founded in 2012 by DeAnne Brady and Mark Stidham, and the business has become very successful, very quickly. Reports indicate that sales have soared 600 percent to approximately $1 billion as of 2016. [Defendants] estimate the average commission that reps earn is a paltry $85 per year, according to Tracy Coenen, a forensic accountant and critic of the MLM industry, citing a 2015 income disclosure statement from LuLaRoe.”

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[Image by Paula Mooney]

The LuLaRoe lawsuit went on to contend that LuLaRoe customers had a difficult if not impossible time getting refunds for defective LuLaRoe products, or found it hard to exchange them, if they could at all.

“As of today, Defendants have over approximately 80,000 Fashion Consultants. Reports indicate that the company ‘on boards’ approximately 150 to 200 new Retail Sellers everyday, with the goal of getting 300 new Fashion Consultants per day. The initial investment…is expensive; it costs between $5,000 and $9,000 to buy an ‘onboard package’ which includes approximately 380 pieces of clothing and marketing materials (the ‘Onboard Package’). One report alleges, however, that Defendants encourage Fashion Consultants to keep about $20,000 in inventory at any given time, and further encourages them to reinvest in their business.”

The lawsuit describes the runaround some LuLaRoe customers got when trying to return or exchange products.

“[A]ny request pertaining to returns, damages, or shipping should go to the original Retailer you purchased from. THANK YOU.”

The problem has grown so large that there exists a Facebook group named LuLaRoe Defective/Ripped/Torn Leggings And Clothes that has more than 19,220 members.

According to the Better Business Bureau, LuLaRoe has earned an “F” rating. The above is not the only lawsuit that LuLaRoe is dealing with, however. As reported by Business Insider, a different lawsuit was brought against LuLaRoe about sales tax rates charged.

[Featured Image by Paula Mooney]