Is LuLaRoe A MLM Scam?

Is LuLaRoe A MLM Scam?

In certain cases, people like to wear things that are edgy, distinct, and comfortable.

This is exactly what businesses like LuLaRoe claims to be selling.

Perhaps you have tried the company’s leggings and wondered if you could sell them for extra cash!

Is selling LuLaRoe’s items profitable?

On the one hand, the company has a huge number of legal issues and conflicts they are fighting to sort, plus many associates have not made that much selling their items.

Then again, many people love their items and make money selling them. So in the end, it’s your choice.

Let’s look closely at the company, what they’re selling, their journey, and at other businesses you may like to consider before joining!



Is LuLaRoe A MLM Scam – Company Overview

Is LuLaRoe A MLM Scam?
  • Headquarters: Corona, California
  • Founders: (In the picture above) Deanne (Brady) Stidham and Mark Stidham (CEO)
  • Website: http://www.lularoe.com
  • Founded: 2012
  • Industry: Multi-Level Marketing and Women’s Clothing
  • Number of Consultants: 80,000+
  • LuLaRoe Product Line: Leggings, Shirts, Skirts, and Dresses

The company is a MLM business started by Mark Stidham and DeAnne Brady, now DeAnne Stidham, in 2012.

Its name is derived by joining parts of Mark and DeAnne’s granddaughters’ names: Lola, Lucy, and Monroe.

The company’s mission is helping people better their lives and families using fashion.

They assert fashion is helping people by “instilling confidence” and with quality merchandise while thinking of the customer.

Like any other MLM business, they have “social sellers” who have freedom to operate on their own and to be an owner.

LuLaRoe Is Not Without Controversy

Is LuLaRoe A MLM Scam?

The company asserts to be philanthropic and have given more than $7 million towards “numerous organizations.”

However, none of these organizations is the National Down Syndrome Society.

The National Down Syndrome Society stopped accepting funds from them when an associate was seen on video making fun of a disabled individual.

The associate apologized and the company said the person’s action does not represent LuLaRoe’s overall beliefs, but they refused to end the associate’s contract.

As a result, NDSS has decided to have not partnerships with the company.

Washington state has not been kind to LuLaRoe.

is actually a pyramid scheme that duped consultants and tricked consumers,

According to a new lawsuit filed in Washington state, Attorney General Bob Ferguson is arguing that LuLaRoe is actually a pyramid scheme that misled consultants and played shenanigans with consumers.

Attorney General Ferguson said LuLaRoe violated the state’s Consumer Protection Act and the Antipyramid Promotion Scheme Act.

The attorney general argues that LuLaRoe’s bonus structure and misrepresentations regarding sustainability, profitability, and inventory refunds violated Washington state laws that were established to protect consumers.

Ferguson’s suit seeks the maximum penalty associated with each violation – $2,000 – as well as costs, fees, and restitution for Washington consumers.



Other Problems Facing LuLaRoe

Is LuLaRoe A MLM Scam?

Start up costs for participating in this network marketing company were a real issue.

The start-up cost of becoming a LuLaRoe clothing retailer were usually between $2,000 to $9,000 dollars.

Also, according to LuLaRoe’s past bonus structure, associates’ monthly income was dependent on the amount of inventory they and their recruits purchased and not on how much they actually sold in retail.

Amid growing outcry, LuLaRoe changed the structure in 2017.

LuLaRoe claimed that some consultants were earning between $10,000 to $500,000 a month.

However, most Washington associates of the company actually made less than $10,000 in profits and nearly one-third reported making no money at all, according to Ferguson.

LuLaRoe Product Quality Is Questioned

As we can see, the company had its own newsworthy controversies. Now let’s look at what they’re selling and how to join.

Is LuLaRoe A MLM Scam?

The company mainly sells women’s clothing, like:

  • Denim
  • Bottoms
  • Dresses
  • Leggings
  • Layers
  • Tops
  • Skirts

Of these, their funky ultra-soft leggings are the most famous.

They focus on women primarily, but they also provide a few men’s items too.

Regarding their product’s quality, many say that their leggings are soft, but the method used to soften them actually makes the leggings weaker and of poor quality.

This is a big problem that customers have described, and that the leggings develop holes quickly, like after just one wash.

Many people like that the clothes are “moderate.”

In all fairness, the clothes are conservative than current trends, though I wouldn’t call a skin-tight legging as “modest.”



Steps Needed To Becoming an Associate

Is LuLaRoe A MLM Scam?

It’s an easy 3-step process that will help you. Here are the entails:

  • Sign up
  • Purchase items
  • Complete on boarding
  • Sell

You first sign up to become a consultant with the company.

As is with other MLM businesses, you need a Sponsor to sign up.

The sponsor is somebody who already sells their items and helps you with the processes.

You can ask the company to select your sponsor, or you know someone already and would like to be working with them, you’ll have to enter that Sponsor ID and you can start working.

The next process step is purchasing inventory.

There are many contradictory claims on different sites to the costs, but on their own site, the starter pack is $499.

This gets you some initial items – 65 pieces for you to start. This enables you to display and sell them.

You’ll be able to wait 8 weeks before beginning on boarding.

While you wait, you should focus on having your business up and running and making some plans ready.

You’ll Have To Schedule Home Parties In Order To Make Sales

Is LuLaRoe A MLM Scam?

When you on-board, your Sponsor is going to go through the nuts and bolts of how to be successful and how to earn selling the company’s items.

To sell the company’s items, you’ll be doing the same as you do with other MLM businesses.

You could have virtual parties or home parties. Then you’ll be able to display the merchandise and try to convince people into buying.

Home parties do have satisfactory results than virtual parties as potential customers will be there and take a look at these products, thus giving you a better chance of converting them into purchases.

You Get What You Pay For

Many consumers have complained that LuLaRoe’s leggings are too expensive.

LuLaRoe leggings costing on the average $30 to $40 each which are far from the cheapest options available.

Interestingly, If you make the point about cost to a LuLaRoe rep, they’ll quickly respond that “you get what you pay for”.

That brings us to the issue of quality. If you do a quick search on Instagram, Facebook, or Google you’ll find a tremendous number of complaints of LuLaRoe customers who have holes in their leggings after just a few uses.

The point is if LuLaRoe is going to justify charging a higher price, then the quality of their merchandise needs to be of a higher quality that lasts much longer than a few days or weeks.

According to an article in businessinsider.com, LuLaRoe doesn’t even hide the fact that their leggings are getting holes too quickly. Here is a statement from their head of production:

“The leggings may get holes, because we weaken the fibers to make them buttery soft,” Patrick Winget, the head of production for LuLaRoe, is quoted as saying in the January 17 email. “We have done all we can to fix them.”



Is LuLaRoe Similar To A Pyramid Scheme?

The biggest question regarding any MLM business today is are they or are they not a pyramid strategy.

Well, in LuLaRoe’s case, the business seems to be right on the border of being a pyramid scheme.

If you read the FTC’s explanation of what constitutes a Pyramid scheme, you could make the case that the facts presented by the FTC could fit LuLaRoe and hundreds of other network marketing companies.

According to the Federal Trade Commission, many pyramid schemes do include selling products or services.

Here’s some guidance from the FTC on when a scheme selling products might be a pyramid scheme: Recruits are forced to buy more products than they could sell often at inflated prices.

This is a way to make a pyramid scheme harder to catch!

Why Women Are Quitting LuLaRoe

I rarely post YouTube videos on my blog posts, but here is an excellent video describing the truth behind LuLaRoe.

Many have complained that LuLaRoe associates are “inventory stacking”, that is buying thousands of dollars of merchandise with the hopes of eventually selling it off or even trading with other LuLaRoe associates.

Many spouses have complained that they are in credit card debt because of purchasing thousands of dollars of inventory from the company.

You do have distributors selling retail products and people can purchase LuLaRoe merchandise without joining the business.

The State of Washington, January 2019, filed a suit against the company for deceiving people into “purchasing into its fraudulent scheme using misleading assertions of great profits and unsold item refunds.”

December 2018, California’s Superior Court’s filed suit asserts the company has “cheated creditors and suppliers.”

This isn’t to say the company is fraudulent or a scam, but with what I have seen, you have red flags making me personally feel skeptical.

As is with MLM businesses, it pays to do due diligence when getting involved, because you need to feel confident that you are associating with a legit business.

LuLaRoe is similar to other network marketing business I’ve reviewed on this blog such as:

Startling Facts About Multi-Level Marketing

  • According to the FTC, 99% of all MLM participants lose money. 
  • The chances of profiting by starting your own small business are 38% more than by joining an MLM. 
  • The profitability rate of running an online business is 10% – 20% higher than the profitability rate of joining an MLM.
  • According to AARP Foundation, 47% of MLM participants lose money and 27% make no money whatsoever.
  • Of 26% who earned a profit, only 53% earned less than $5000 a year.
  • 39% of MLM participants quit because of pitching products and services to friends and family jeopardized their relationships.
  • 50% of MLM reps quit within 1 year and 95% quit within 10 years​.
  • 75% of those who have joined and left an MLM state that they would never join another MLM in their life​.
  • A 2018 poll of 1049 MLM reps found that most of them make less than 70 cents an hour and 20% of them never made a sale​.
  • 60% of them had earned less than $500 in sales over the past five years​.
  • 32% of them acquired credit card debt to finance their MLM involvement​.


I Do Not Recommend LuLaRoe

Is LuLaRoe A MLM Scam?

There are too many red flags with LuLaRoe for me to recommend this as a “business opportunity” worth looking into.

I would not call LuLaRoe a SCAM, but I certainly can’t recommend this as a business opportunity.

However, what you decide to do is an individual choice at the end of the day.

Nevertheless, seeing some negative aspects of the company that hasn’t changed, and the majority of associates overwhelming saying they don’t make much income, I would not recommend LuLaRoe.

These are the facts you ought to be aware of this before being involved.

This company is not the best to start a home business.

There are other methods of making money that is less controversial and less stressful.

Also, I believe you have found this review helpful.

As noted earlier, 99% of people who get involved with multi-level marketing fail to make money.

Also, because of the fraudulent “gurus,” marketing their exaggerated “schemes” that just don’t work out, many people fail at making money online.

However, there’s some good news…

There is a much better way to make money from home.

Creating your own affiliate marketing business with the help of Wealthy Affiliate.

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  • Traveling
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Talk Soon,

Howard

PS:

What You Need To Do Now

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