LuLaRoe hit with $1 billion lawsuit

↓ Advertisement ↓

A class action lawsuit seeking $1 billion has been filed in California against the LuLaRoe company, sought by former consultants alleging they were coaxed into a pyramid scheme. 

The 27-page lawsuit has been filed by three Sacramento area plaintiffs Aki Berry, Tiffany Scheffer, and Cheryl Hayton on behalf of LLR consultants between 2013 until the present.

The suit alleges recruits were offered part-time and full-time pay for extra cash and pulled in through misinformation into a business model that was not profitable, amongst other claims.

“You feel kind of at first like, what could I have done to make this successful," Hayton said. "You know we did everything we could I mean we worked our butts off.”

LuLaRoe is known for its vibrant printed leggings and other assorted women’s clothing. The company relies mostly on women, to buy their merchandise and sell it out of their own homes.

↓ Advertisement ↓

%INLINE%

In a statement from LuLaRoe, the company said it has grown exponentially over the last several 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," according to a statement. "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 was founded in 2012 by DeAnne Stidham. Prior to launching the clothing line, Stidham was a single mother, struggling to balance life with seven children and a job, according to the LuLaRoe website

After being inspired by dress wholesalers and finding success in network-based marketing, Stidham launched LuLaRoe with the help of her husband. The company states, it prides itself it personal success and independence, allowing their retailers to set their own schedule and set their own space.

LuLaRoe is named after Stidham's three granddaughters-- Lucy, Lola and Monroe, according to the website. 

The company sells a family theme. Stidham credits her mother for teaching her how to make quality clothes and stresses the importance of balancing family values and work, perhaps to attract mothers who want to work from home. LuLaRoe says they encourage leadership from retailers, encouraging them to "Sponsor, Train, Coach, and Mentor others in their business".

Overall, the company seems to sell women, specifically, the dream of managing a business from home.

In September, the company ended a temporary 100 percent buyback policy for exiting retailers. Some consultants were upset with the policy change.

The company responded, saying the decision to end the waiver program was made after retailers were abusing the policy by returning product in poor conditions.