LuLaRoe hit with class action claiming pyramid scheme
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LuLaRoe leggings come in virtually every print imaginable: clouds, pizza, Santa Claus, and yes, pyramids — the irony!
The Corona, California-based apparel company is now facing a class-action lawsuit stemming from the multilevel marketing company’s business model that relies on thousands of consultants who purchase apparel at a discount and then sell to their friends and family a la Tupperware, according to media reports.
Sellers are required to purchase an "onboarding package" of $4,925 to $9,000 worth of inventory and the company also encourages consultants to keep "investing” by purchasing more inventory and recommends they maintain an inventory of $20,000 worth of merchandise to stay in business, according to media reports.
Stuck with too many wacky prints nobody wants? That’s the problem. The lawsuit labels the company as a “pyramid scheme” and slams its buy-back guarantee, which offered consultants the option to return inventory for a full refund — a policy that was canned in September, leaving consultants with thousands of dollars of unwanted merchandise on their hands. There are four plaintiffs so far but the lawyer representing them estimates there could be thousands more, per media reports.
"Consultants were encouraged to max-out their credit cards with inventory purchases, all of which would be refunded at 100%, plus free shipping, should the consultants decide to stop selling for LuLaRoe," reads the complaint, which was filed on Oct. 13.
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