Sales for women's clothing company LuLaRoe reportedly soared to $1 billion in 2016, but apparently, many of its “fashion consultants” aren’t reaping the fruits of their labor. Four plaintiffs filed a class-action suit against the brand last year, alleging that it’s a pyramid scheme — and we’re still wondering how one of its most famous employees, Sister Wives star Meri Brown, is faring.
Businesswoman DeAnne Stidham founded LuLaRoe in 2012, naming the then-fledgling company after her three eldest grandchildren: Lucy, Lola, and Munroe. It’s a multi-level marketer in the same vein as Herbalife and Mary Kay, meaning that independent distributors sell the products while recruiting more people.
The suit, which was filed in October, accuses LuLaRoe of deceiving its salespeople — whom the company calls “fashion consultants” — about the refund policy. According to the plaintiffs, LuLaRue once told employees they could return unsold inventory for a full refund if they decided to leave the company. But in September, the brand lowered the refund from 100% to 90% and added additional restrictions.
Fashion consultants have to purchase at least $5,000 of inventory to get started, and many who joined did so because of that 100% buyback guarantee, Yahoo reports. The plaintiffs also call the company a pyramid scheme because consultants rise in the LuLaRoe ranks if they sell a sufficient amount of inventory or recruit a certain number of new employees. (“These allegations are completely without merit,” the company previously told In Touch.)
Here’s how the Federal Trade Commission defines pyramid schemes: “If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s probably not. It could be a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.”
As In Touch previously reported, Meri hasn’t commented on the controversy. In the past, however, she’s called her work with LuLaRoe “a blessing and a game-changer.” We certainly hope she’s not losing money!