LuLaRoe first began getting loads of buzz in early 2016, with tales of leggings so soft that LuLaRoe dubbed them “butter leggings.” The LuLaRoe Facebook groups began cropping up, along with claims that some women were making $3,000 in profit per pop-up party that they conducted. However, by 2017, the bloom had fallen off the rose as talk of LuLaRoe lawsuits claimed that consultants only averaged $85 per year in earnings but were encouraged to spend at least $5,000 on their initial LuLaRoe inventory.
According to BuzzFeed , a couple of new class-action lawsuits claim that LuLaRoe is all a pyramid scheme. Instead of a company that values the notion of modest clothing and helping stay-at-home moms earn a good salary, LuLaRoe is being accused of encouraging women to max out all of their credit cards in order to stock their homes full of LuLaRoe merchandise that the consultants claim isn’t selling.
Both lawsuits were filed in October in the U.S. District Court for the Central District of California. The court documents claim that LuLaRoe makes the bulk of its revenue via sales to consultants and not to customers. Those LuLaRoe consultants are urged to keep $20,000 in inventory and encouraged to “buy more” so they can “sell more.” But the inventory tends to pile up in the garages of LuLaRoe consultants, claims the lawsuit. The income that LuLaRoe consultants made via sales to customers was recommended to be used to invest back into buying more LuLaRoe inventory.
LuLaRoe also encouraged consultants to buy more inventory by offering perks such as designer bags, free cruises and bonuses to those who purchased the most LuLaRoe inventory.
“Consultants were told that they should have at least 10 items in every size in all styles. This was purportedly the ‘magic number’ of inventory.”
Claims that LuLaRoe refused to refund their consultants for the inventory that didn’t sell are also being alleged in the lawsuit. But consultants claimed that they were stuck with LuLaRoe unsold inventory due to the market being oversaturated with LuLaRoe items. Some women faced financial ruin, according to the suit, due to taking out loans to fund their LuLaRoe dreams.
The lawsuit claims that one LuLaRoe advisor even encouraged women to sell their breast milk in order to make the money to buy more LuLaRoe inventory.
[Featured Image by Paula Neal Mooney]
