Tons of clothing companies have come and gone over the years for all kinds of reasons. The pandemic was a big factor in many of them closing their doors. But for some companies, there was a lot going on behind the scenes that made things difficult, and that's what happened with the clothing company LuLaRoe.
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At one point in time, LuLaRoe was everywhere. People loved its leggings, which sported all kinds of over-the-top prints. But over the years, multiple people who've worked there have spoken out about negative experiences they've had. Plus, the company has been in a lot of legal trouble. What happened to LuLaRoe? Here's what we know.
LuLaRoe is a multilevel marketing or MLM company. According to Investopedia, this is a business model where companies use their members or distributors to sell their products. Although this is a legitimate and legal way to run a company, it can be confused with or used to cover up pyramid schemes.
In the VICE documentary Why Women Are Quitting Their Side Hustle: Leaving LuLaRoe, former LuLaRoe employees talk about their experiences with the company. Courtney Harwood speaks about how much money she made in the MLM. When she first saw success, she was easily making five figures monthly. "I was on my way to being a millionaire," she says in the doc.
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Courtney says LuLaRoe pushed recruiting much more than selling the clothing and that's a major sign of a pyramid scheme, according to the FTC. The documentary shows that this was the beginning of the end for the company.
At the end of it all, Courtney made a lot of money, but it wouldn't last. In the documentary, we see her packing to sell the house she bought with money she made at LuLaRoe. Because things started to go downhill behind the scenes, different policy changes were made so that the company could save money, and the distributors suffered for it.
LaShae Benson was hired to onboard new distributors. In the documentary, she said, "We were growing so fast. I don't think that the system was big enough."
Yes, LuLaRoe is still around, it's just not as big as it once was. The VICE documentary says that around the summer of 2016, the company was bringing in so many new distributors that the system couldn't keep up and send out the clothing fast enough. Because of this, warehouses began to fill up too quickly and there was no place to store the product.
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Instead of slowing down, LuLaRoe began to store clothing outside where the elements could damage the goods. Then, when distributors would get their orders, they would be moldy, wet, or otherwise damaged. They couldn't sell clothes like this, so when they reached out to the higher-ups in the company, they wouldn't get the help they needed. They were just stuck with moldy clothes.
Currently, LuLaRoe has 249,000 followers on Instagram and more than 670k likes on Facebook. Through their website, you can still get in touch with a retailer to buy clothes and even join the company yourself. But the Amazon docuseries LulaRich also talks about the darker side of the company. The company has faced dozens of lawsuits, and women involved with LuLaRoe have even spoken out about being pressured into getting weight loss surgery.
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In LuLaRich, LuLaRoe's CEOs, DeAnne and Mark Stidham, were interviewed and talked about their side of the story. According to an interview with Variety, the directors of the docuseries, Jenner Furst and Julia Willoughby Nason, said that the company became a "runaway train" that grew out of control in a way that DeAnne and Mark couldn't keep in check.
You can watch Why Women Are Quitting Their Side Hustle: Leaving LuLaRoe on YouTube, and LuLaRich premieres on Amazon Prime Video on Sept. 10, 2021.
Plaintiffs in the suit allege the company engaged in "misconduct, including unfair business practices, misleading advertising, and breach of contract." According to the $1 billion lawsuit, which LuLaRoe argues is baseless and inaccurate, the company allegedly advised its distributors "to borrow money [...]
LuLaRoe settled with the state in February 2021 for 4.75 million dollars. Today, the company remains in business, although according to the docuseries, many “LuLa-famous” independent retailers have closed up shop.
Even though Christine has left the LuLaRoe family, Mykelti and Meri Brown still are large parts of the organization. Meri has been with the clothing company since 2016 and has done exceptionally well for herself.
Since consultants received a portion of these 'in-house' sales via bonuses, most made FAR more money from selling to new recruits than through direct merchandise sales. Then the lawsuits started, claiming this bonus structure proved LuLaRoe was operating as a pyramid scheme.
The short answer: Yes, LulaRoe is still around in 2021. If you take a quick glance at their social media accounts and website, it appears that everything is carrying on as normal.
Mark and DeAnne Stidham founded LuLaRoe in 2013 with a dream to teach and share their entrepreneurial business success with families around the country. They wanted others to enjoy the freedom and flexibility they have found through business ownership.
In a recent Instagram post, LulaRoe said they have 17,000 active retailers, a far cry from the 80,000 they had back in 2017. Of those retailers, the income disclosure statement shows that about half made less than $5,000 in product sales and bonuses (now called the "Leadership Compensation Plan").
The leggings, which cost $25 (plus tax and shipping), come in two versions of "one size fits all": One-Size (aka OS), which supposedly fits sizes 2-10, and Tall & Curvy (or T&C), which is for sizes 12-22.
The average Lularoe hourly pay ranges from approximately $15 per hour (estimate) for a Sales Associate to $60 per hour (estimate) for an Independent Consultant.
Sister Wives star Christine Brown isn't affiliated with LuLaRoe anymore, and since the searing documentary LuLaRich aired, she may be trying to distance herself from the company.
Her fight with Kody on Sister Wives was a turning point for her, leading her to prioritize her independence and focus on her own health and happiness. Janelle credits her 100-pound weight loss to her determination, diet and exercise, as well as using Plexus products and working with a personal trainer.
Meri was studying psychology and worked with at-risk youth. Meri reportedly lost the job once Sister Wives debuted on September 26, 2010. Meri's employer was apparently aware of her polygamist marriage.
Inventory, which is purchased at wholesale, can then be sold for a profit by marking items up anywhere between 35–50% (though LulaRoe is very strict about using a minimum advertised price for online sales).
A new Harper's article claims that the direct-sales beauty empire is merely a "pink pyramid scheme." A reporter went inside the pink heart of Mary Kay, dropping more than $1,800 on cosmetics to become a decorated beauty consultant with the company to see what makes it tick.
Madoff Investment Securities. It was the largest pyramid scheme in history, disguised as an investment fund. Its creator, Bernard Madoff, was one of the founders of the NASDAQ stock exchange and a well-known philanthropist. In 1960, he founded Madoff Investment Securities.
Now, the company, plagued by lawsuits, has been accused of running an illegal pyramid scheme, among other allegations. It has also been accused of cult-like behavior by its former retailers and selling faulty products.
On the other side, LuLaRoe is an entirely different company, recognized for its legging collection and direct sales model. Unlike Lululemon's focus on technical athletic wear, LuLaRoe leans towards comfort and versatility in everyday wear.
LuLaRoe does, in fact, still exist, which is made clear at the end of the docuseries. (Its website and Instagram alive and well.) However, it has since cut startup costs by 90 percent and reorganized its compensation structure.
Introduction: My name is Patricia Veum II, I am a vast, combative, smiling, famous, inexpensive, zealous, sparkling person who loves writing and wants to share my knowledge and understanding with you.
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