LuLaRoe Pyramid Scheme Lawsuit
Another day, another lawsuit against LuLaRoe. The leggings MLM seems to be on the verge of collapse. A lawsuit filed in 2018 by Providence, a company that supplied LLR with goods first demanded $49 million. More recently, Providence says it is owed $63 million and it wants the court to seize $34 million in assets since owners Mark and DeAnne Stidham are a flight risk. And then the state of Washington sued LLR, alleging it is a pyramid scheme:
“LuLaRoe tricked consumers into buying into its pyramid scheme with deceptive claims of high profits and refunds for unsold merchandise,” Ferguson said in a news release. “Instead, many Washingtonians lost money and were left with piles of unsold merchandise and broken promises from LuLaRoe. It’s time to hold LuLaRoe accountable for its deception.”
The newest lawsuit has been filed by plaintiffs Tabitha Sperring, Paislie Marchant, and Sally Poston. The lawsuit sums up the scam (coincidentally or not in language that sounds an awful lot like things I’ve written):
Although putting in the effort, Plaintiffs, like other LuLaRoe consultants, failed because they were doomed from the start by the LuLaRoe plan that systematically rewarded recruiting consultants over retail sales of the product. This was a plan where LuLaRoe paid a significant portion of every dollar that Plaintiffs and other consultants paid for LuLaRoe products to others in the form of bonuses, regardless of the consultant’s actual retail sales. This was a plan where millions were paid to those few at the top (primarily Mark Stidham and Deanne Brady), at the expense of the many at the bottom. LuLaRoe was started by Mark Stidham and Deanne Brady (who essentially sit at the very top of the pyramid) in order to enrich themselves through a calculated endless chain scheme. Upon information and belief, Stidham and Brady have earned hundreds of millions of dollars in profit for themselves on the backs of women who were seeking a legitimate business opportunity where they could earn income while spending more time with their families.
Here is where it gets more interesting:
Income earned through the Leadership Bonus Plan significantly dwarfed retail profits for top consultants. At a Leadership Conference themed, “Be the Light” hosted at the Riverside Convention Center in California in January 2017, Defendant Brady asked Consultants to publicly state their last month’s total retail sales and bonus checks. Consultants, at Defendant Brady’s direction, announced the amounts of their monthly bonus checks, which ranged from $85,000 to $307,000. Compared to their monthly retail sales, which ranged from $12,000 to $25,000, it was clear that the primary opportunity for compensation was not through sale of LuLaRoe apparel, but bonuses earned through recruiting.
The lawsuit goes on to explain the typical MLM scam… get the downline to buy bunches of inventory so the upline gets commissions, regardless of whether the downline will actually be able to sell that inventory. Inventory purchases are encouraged as a participation activity, rather than something that represents retail sales. LuLaRoe promotes a “buy more, sell more” concept, which is done to encourage inventory loading.
And then there are the false income claims. Print materials distributed by LLR say:
- MAKE A FULL-TIME INCOME DOING PART TIME WORK. BECOME A LULAROE
INDEPENDENT BUSINESS OWNER - WANT TO EARN FULL-TIME INCOME FOR PART-TIME WORK? ASK ME HOW?
Where have we heard these types of claims before?
You’ve heard of Mary Kay math? Well there’s LuLaRoe math too. Mark Stidham made claims at a recruiting event that you can do a party in 5 hours (including set-up, take down, and work ahead of time). 4 parties a week is 20 hours. You’ll sell about 100 pieces a week if you do the 4 parties every week. Take a couple of weeks off each year, and you’ve sold 5,000 pieces in a year. With an average profit of $12 to $15 per item, you’ve just made $60,000 to $75,000 a year working 20 hours a week.
No one tells you how you’re supposed to get that many parties to happen, though.
The lawsuit goes on and on. Read it and substitute Mary Kay for the company name and cosmetics for pieces of clothing. The scam is nearly identical.
Visit the
So why has the state of Washington sued all MLM’s then, is my question?
The State if Washington is doing this partly because of the changes in LLR return policy. I think the AG was overwhelmed by the amount of complaints they received about it & that’s why. The fact that they are a pyramid scheme is just one piece of the AG’s case against them.
Not sure I feel sorry for the people who signed up for this scam, I mean its all over the internet that these are all scams and that people dont make money in MLMS
One thing that kills me about MLm’s Is they wanna have their cake and eat it too when it comes to hiring reps and [insert whatever name here] as independent contractors. In the real world, you can be hired by using your sIngle business LLC number but these MLM’s want you to use your social security number despite the HUGE inventory options. They tell you to open an LLC but god forbid you use your LLC # number to sign up with.
Not inventory options I meant, “inventory risks”
Not to mention Mark’s been quoted as saying he’s going to skip town with his wife Deanne and head to the Bahamas and “eff everything” (I’m paraphrasing). He’s really creepy during those recorded videos to their retailers – condescending, blaming them for poor sales (when the merchandise is garbage and nobody wants it anymore), and I’ve seen retailers call him “Dad” or “Father”! Absolutely cultish and creepy.
Deanne has encouraged her top sellers to get weight loss surgery in Mexico, with kickbacks going to a relative of hers. She wants all her top sellers to be “size medium or small”. Deanne goes live daily on Instagram and spouts incomprehensible word salad at hungry retailers. It just blows my mind.
It’s a real rabbit hole if you choose to dig around.
Surprise…this started in Utah, MLM scam central.
You people are insane. The business model is simple by the clothing at wholesale and he engaging enough to appeal to customers. You don’t have to build a team to make money. The fact that woman think they can buy the inventory at an initial investment of as little as $4300 just sell it dumb. You have to have a personality. Social media sales required you to do more than walk drops or live sales where you are as interesting as cardboard. You do need a personality and an ability to have customers invest in you personally. My wife does sell Lularoe. She has taken a $6000 inventory to $40000. She was worked big hours the first year but now works 80 hr per month to bring in $6-7k profit. She doesn’t have a team that she makes money from, I wish she would but she is satisfied with where income and effort. If this was a true MLM or scam she would need others under her to make money. Plus check the results of the claimed law suit that was thrown out due to misinformation and lack of facts.
What’s insane is having $40,000 of inventory.
Very true that is a lot but selling 25% of it monthly is good business. JC Penny and Macys wishes they could have a 25% inventory turnover.
Oops caught in lies! If $10k is being sold per month, the profit on that is not $6k or $7k as you stated above. Keep your story straight!
Victim blaming is an emotional control technique used by cults to shunt any responsibility for the fraud and used to shame victims. You’re in the cult too now.
Reading comprehension. Improve yours.
Did you miss the links to the latest lawsuit? You know, the one filed by the Attorney General for the State of Washington. I’m pretty sure he knows what he’s doing.
Good luck when the pyramid collapses.
Again, grammar lessons are needed by these people still in MK or other companies. Embrassing!
It is true that I am uneducated and especially weak at grammar. But my statement is true if this was a MLM scam you wouldn’t be able to earn good money without a team. Also the so called leader compensation is not based on inventory purchases it is based on team sales. So once again the lawsuit is not factually based.
It WAS based on orders until a couple of attorney generals made legal noises. Then they abruptly changed it.
The shrieking from the uplines, whose income was cut by 50-75% or more, was intense.
Not a scam. It’s simply people that don’t know what they are getting into, don’t know how to do it, bad at it or aren’t getting rich quick. LuLaRoe can’t control what the consultants promise. My wife has made enough to help us out at home after a new baby girl. It’s sad that whiny people like this exist. You want numbers? They are reasonable. $22k profit. That’s what you should consider making. Plus about 30 hours a week at home, on your own schedule. Some people just don’t like working hard and are looking for the next get rich quick scheme. They need to grow up.
Go tell the Washington attorney general that it’s not a scam.
https://www.seattletimes.com/seattle-news/washington-attorney-general-sues-lularoe-clothing-accusing-company-of-pyramid-scheme/
I doubt your wife profited $22,000 in a year. But if she did, she made less than $15 an hour using your 30 hours a week formula. And she pays self-employment taxes. She would have been better off getting a job and not having thousands of dollars sunk into inventory.