On Friday, 25-JAN-2019, the Washington attorney general filed a lawsuit against LulaRoe, the clothing marketer, for operating as a pyramid scheme that defrauded the "fashion consultants" it employs.
Without going into too much detail, LuLaRoe is best known for selling leggings (and other stuff) on a lottery system. Each consultant is expected to buy $2000 to $9000 worth of stuff upon signing up. Yet they will not know what they will receive. Since 2014, over 3500 Washington residents signed up, but less than 2000 remain active today. Between 2014 and 2017, LuLaRoe consultants receive bonuses based on how much inventory they and their recruits have PURCHASED (not sold) from the company. It is obvious that the more the consultants recruited (and each recruit bought THOUSANDS of dollars of stuff), the more bonuses were paid out. The compensation plan was changed in 2017 to be only based on sales of the consultant alone.
There are PLENTY of other problems with the company's practices. The leggings have to be unpacked to be show to potential customers (including for eBay), yet LuLaRoe have refused to provide refund if the package was opened. There were frequent charges of "low quality". Multiple designers have charged LulaRoe of stealing their designs and patterns without their permission. After multiple complaints, LLR seems to have moved to taking vector art and remixing them, but again, many seems to have been used without the proper license.
MLMSkeptic had penned a commentary "Is LuLaRoe eating its own tail?" in 2017, when LuLaRoe attempted to serve a "discovery" on a blog critic who goes by MommyGyver, claiming she had disclosed company secrets.
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