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LuLaRoe, a multi-billion dollar company that skyrocketed to success by attracting an army of women to sell their colorful patterned clothes is now facing numerous lawsuits calling the company a “pyramid scheme.”

Thousands of women who have bought into the LuLaRoe legging empire in hopes of getting rich quick has since left. We talk to three women about their experiences as LuLaRoe consultants and why they decided to leave the controversial MLM behind.

This video was originally published on Vice and is being repurposed by Refinery29.

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Transcript
00:01LuLaRoe made me feel so good about me and have boosted my self-confidence.
00:07I feel like I found my place again with, you know, with LuLaRoe and everything, these women.
00:13Someone would go, there's a sale tonight, and everything was like sold, sold, sold, sold next, sold next, sold next.
00:19Twenty-five people want this pair of leggings. She only had three pairs. This is crazy. This is selling out
00:23like crazy.
00:24Here I am, 35, 36 years old, and I was on my way to become a millionaire.
00:30Instantly, I had this huge network of women who just wanted nothing but the best for me.
00:37I love you guys. You're amazing. Hearts everywhere.
00:42Everything they did was just big. Every party I've ever been to, very elaborate.
00:47You felt like the best person ever. You felt like a celebrity.
00:56The quicker you rise, the harder you fall. And I fell.
01:01You tell the people you love they're in a pyramid scheme, and they go, no, I'm not. You're just a
01:05hater.
01:05I own my own business. I'm very successful.
01:07My orders would smell disgusting.
01:11It was just insane the amount of hoops I had to jump through to get them to ever admit that
01:17their product was faulty.
01:19I would sometimes open bags, and they'd be wet.
01:25You have to look a certain way. You have to be a certain way.
01:29People talk in the company, and you would be like, well, where is so-and-so?
01:33And they'd be like, oh, you didn't hear? Oh, they went and got the surgery.
01:36Surgery, bypass, pills, weight loss. They did everything in Mexico. Everything.
01:41And then they would come back and, girl, be snatched. Be snatched.
01:45The more I shared my story, the more friends unfriended me.
01:50They invested all their hard-earned money for you guys, and you guys screwed them.
01:55All I wanted to do was sell some clothes.
02:03Lularoe is a clothing company that empowers moms and everyday women to sell their colorful clothing on social media or
02:09at pop-up parties.
02:10Back in 2013, Lularoe had just started out and became known for their leggings, often brightly patterned and described as
02:18buttery soft.
02:18Now, Lularoe sells all types of clothes in different patterns and prints.
02:24What's different about Lularoe is that you could only buy their clothes from at-home sellers, who are referred to
02:29as consultants in the company.
02:32Headquartered in Corona, California, Lularoe was started by married couple Mark and Deanne Stidham.
02:38The company started taking off, and by employing their at-home sellers, they made $2.3 billion in sales.
02:46Lularoe became more than just a clothing company.
02:49It became a lifestyle.
02:51Being part of the Lularoe family meant big incentives.
02:54Cruises, conventions, private concerts with celebrities like Katy Perry and Kelly Clarkson.
03:00This is a story following three women who paid the $5,000 minimum to start down the path of a
03:07Lularoe fashion consultant.
03:17Every order will come with a free pair of leggings.
03:20Hey!
03:21And if they ain't cute, then they're pajama leggings.
03:24And if they're really not cute…
03:26Then they're dog scarves.
03:28Right?
03:28Meet Roberta Blevins.
03:30She's a mom living in San Diego, California.
03:33She first heard about Lularoe through a friend she met online.
03:36Roberta was curious about it, so she started looking to the company herself.
03:40I started calling in to these opportunity calls that they would have.
03:44And all of these women were talking about all the success they were having and all of the friends and
03:49this sisterhood that was so empowering.
03:53I was getting very, like, motivated.
03:55Like, I can do this.
03:56I can sell leggings on the internet.
03:58This is easy.
03:59In 2015, the owner, Deanne, would be on these opportunity calls.
04:04They would be live and she would be talking.
04:05And I thought that was amazing that the owner of this company would take time out of her day, her
04:10busy day, to sit on a phone call with women and empower them.
04:16And you choose to be lifted by one another and everything is up in a place where you can make
04:21your life better.
04:24LuLaRoe marketed themselves as a family-oriented company and would be an opportunity for part-time work for full-time
04:30pay.
04:31The idea of making your own schedule and making new friends through social media attracted many moms like Roberta.
04:37Despite her husband's doubts, she found a team and paid close to $7,000 for her first package.
04:44I didn't have friends because my daughter was so young and I was stuck at home.
04:48And then instantly I had this huge network of women who just wanted nothing but the best for me.
04:55They became like sisters.
04:57Every single time anything good happened, I had an entire brigade of women behind me that were like,
05:03Go you!
05:04And I was like, Yes!
05:06And it felt amazing.
05:08And then we've got white and purple.
05:10That's Amelia number 10.
05:14Feeling the love, Roberta quickly became a part of the LuLaRoe world.
05:19She was live streaming on Facebook two to four hours a day and customers would watch and shop.
05:24She was doing all the things they told her to do to be successful, including buying a lot of LuLaRoe.
05:30I was told constantly to reinvest what I made back into my inventory until I got to a place in
05:39my inventory that I was comfortable.
05:40And I said, I don't really know what that means.
05:42And my upline would say, Well, I would say between five and ten pieces in each size of every style
05:50you carry.
05:51And so my inventory just grew and grew and grew and grew and grew and really got big.
05:55But my upline kept saying, Yes, yes, yes, you're in the sweet spot.
05:59You're exactly where you want to be.
06:00You can't sell a ton if you don't have a ton.
06:03Two leftover classics and two leftover Carly's if anybody is looking for anything like that.
06:08And then I have 30 pairs of TC and 30 pairs of OS.
06:11So there's like so much stuff, you guys.
06:14In LuLaRoe, the ranks are trainer and then coach and then mentor.
06:20So to hit trainer, you have to have 10 people underneath you.
06:24And those people started recruiting people.
06:27And then my tree went from like me with a few people to this massive tree of people joining under
06:34people,
06:34joining under people, joining under people.
06:36And at the height of it, I had 75 girls underneath me.
06:41For me, I am a total like you tell me there's a prize and I'm going to get that prize.
06:48And so when I found out I got a cool watch that I could show off and be like, Oh,
06:53look at me.
06:54I'm a trainer.
06:55You know, I was like, I need that watch.
06:57This picture of Mama and Papa Ro.
07:02So thank you for being the kind of leader that you would follow.
07:07And I got my watch.
07:09Look at my watch.
07:11Oh my gosh.
07:11I'm so excited.
07:15These are the last of the maxis right here.
07:18And it just felt so empowering and so wonderful.
07:21And I was somebody in LuLaRoe, you know, like that's how it felt.
07:24I was completely addicted to dopamine.
07:27Getting a sale.
07:29Sold 88.
07:31Dopamine.
07:31Getting a new box.
07:33Dopamine.
07:34Give me more.
07:34And I remember my upline going, Oh, you'll hit coach.
07:37No problem.
07:38You'll hit mentor.
07:39You'll be mentor by this time next year.
07:41For Roberta, things were at an all time high.
07:45Across the country in Greenville, North Carolina, Courtney Harwood was also part of LuLaRoe.
07:50She joined almost a year before Roberta and reached the coveted status of mentor, which was the highest rank in
07:56the company.
07:58Courtney built a team of 3,500 women beneath her and collected monthly commissions that were called bonuses.
08:05When I hit trainer level, which is the first level, my bonuses were anywhere from around $5,000 to $10
08:11,000 a month.
08:12When I hit coach, my first coach check was around $11,000 or $12,000 and got all the way
08:19up to $20,000-ish a month.
08:24And when I hit mentor, my checks got into the $30,000 per month and my highest bonus check was
08:31$51,000 for a month.
08:34I was on my way to being a millionaire.
08:36Pictures of the kids.
08:38Yeah.
08:39I took that.
08:41Yeah.
08:42To get our bonus checks, we had to buy enough inventory.
08:47We would sometimes get a field report and it would have how many items you had bought for the month.
08:54And then under it, it would have your directs and you got 5% commission off your directs.
09:01So whatever they had bought for the month.
09:04They really pushed recruiting.
09:08Not so much sales at all.
09:11Recruiting, recruiting, recruiting.
09:13And they even said, if it's a warm body, take them.
09:17In LuLaRoe, when you recruit someone, you get 5% of the money they spent on their orders.
09:22As long as you yourself order 175 pieces.
09:25When you reach trainer level, in addition to making 5% from your direct recruits, you also get 3%
09:32from their recruits orders.
09:34You only qualify for this bonus if your entire team orders at least 1,750 pieces in total.
09:41The chain continues as more people are recruited.
09:43And this is how people at the top of the chain, like Courtney, made much more money on recruiting people
09:49rather than selling.
09:51According to guidance issued by the Federal Trade Commission, one of the telltale signs of a pyramid scheme is when
09:57a company promises you'll make money from recruiting others to join rather than selling the product.
10:03Now, a multi-level marketing company can recruit people and be a legitimate business.
10:09The issue, according to the FTC, is whether you are making money solely from what your recruits purchase rather than
10:16sell.
10:17In order for more people to rise up in the LuLaRoe ranks, more sellers need to be recruited and more
10:22clothes needed to be ordered.
10:24To attract people to the company, mentors and other leaders were asked to live their best life and show it.
10:30As a mentor, you were put up on this pedestal.
10:34I was invited to speak out of state a couple of times and to fly on the corporate jet, their
10:38private plane.
10:39I trusted that they had our best interests at heart.
10:42I mean, I jokingly called the owner Mama D.
10:45I felt like she was a second mom to me.
10:47I felt like she cared so much.
10:49And so, yeah, you do trust them.
10:50They're writing your bonus check.
10:52You're not going to bite the hand that feeds you.
10:54Everything seemed to be going so well.
10:56For LuLaRoe, they were onboarding tons of people and had a growing army of 80,000 sellers.
11:01For Courtney, she was making way more money than she ever did in her corporate job.
11:06She was even able to start paying off her debt.
11:09But by the summer of 2016, things started to break.
11:13We were growing so fast.
11:15I don't think the system was big enough.
11:18Lashay Benson was one of the people hired by LuLaRoe to onboard new recruits.
11:22She worked in the company's headquarters, where she saw a lot of things, including where the clothing was stored.
11:29Girl, we get stuff delivered all the time and we wouldn't have enough room in the warehouses.
11:33There would be stacks of clothes sitting outside for days.
11:39They were strictly about getting their money and that's it.
11:44Faulty products started becoming more and more common.
11:48Sellers were receiving clothes with holes, wet clothes, and even moldy clothes.
11:55Roberta was also getting defective clothing, but was asked to stay mum about it.
11:59I received at least four different shipments spaced out through the summer of 2016 that had either disgustingly wretched, stinky
12:13leggings in them or soaking wet leggings.
12:17All three of these pairs that I got were soaking wet.
12:20They came soaking wet.
12:21Here is the tag.
12:23And so I reached up to my upline and our team page and I said, hey, I got these leggings
12:29and they're soaking wet.
12:30Has anybody else got soaking wet leggings?
12:32This is really weird.
12:32They smell like mildew.
12:34And I remember like it being deleted and then getting an instant message from my sponsor going, oh, no, no,
12:40no, you can't post that kind of stuff because it's negative.
12:45And other people will see it and they might have second thoughts about joining LuLaRoe.
12:50In April 2017, LuLaRoe implemented a buyback policy which guaranteed consultants 100% of their money back for all unsold
12:57merchandise and covered shipping and handling.
13:00The policy had no expiration.
13:03There wasn't a timeframe in which you had to buy the clothes.
13:05The only stipulation was that you had to have purchased them directly from LuLaRoe.
13:11With this in mind, Deborah Goldman from Ronda, North Carolina, joined LuLaRoe in May of 2017 and spent $5,000
13:19on her onboarding package.
13:21Unfortunately, she soon felt like the cards were stacked against her.
13:25You would open the boxes and it would smell like old food.
13:30Some of it would have spots on it and some of it would come in and you would open the
13:36packages and it would be wet.
13:39And here I am.
13:42Want some clothes?
13:52Is this the pair?
13:55I have a pair that a customer gave.
13:57Oh, yeah.
13:58A customer bought these to wear to Disney World.
14:00And she was really upset because that's what her leggings did.
14:08See that?
14:11Your fingers go right through.
14:12And it's not about fit.
14:14I mean, we're talking tiny little people can put these on and the same thing happens.
14:22LuLaRoe used to, when I first started, they had a defective or damages policy that all you had to do
14:31was take pictures and then email it to them and they would send you replacements.
14:39And all you had to do was like basically swear, you know, on your honor that you were going to
14:44throw the things away.
14:46Then they changed this whole policy with the damages that you have to keep everything until you have 15.
14:52Less than six months after implementing the 100% buyback policy, LuLaRoe abruptly ended it, claiming the retailers were abusing
15:00the program.
15:01Debra heard from other LuLaRoe sellers they returned their merchandise and months later were still waiting for their refund.
15:08She didn't want to risk it.
15:09So she thought she'd have a better chance making her money back by trying to sell her remaining inventory.
15:15LuLaRoe just said, well, we can change policy whenever we want.
15:19It doesn't matter what your contract says.
15:22That was such a slap in the face.
15:26I wish those people that are signing up to sell it would like call me.
15:29They could, they could just take over my, my business.
15:33I'll just send them everything.
15:36I've heard some whining lately also about, well, my inventory's stale.
15:41No, you're stale.
15:42Your customers are stale.
15:44Get out and find new customers.
15:53So, where is all your stuff anyway, the rest of it?
15:56Where are all your racks?
15:57Did you sell everything when you?
15:58No, I still have all my racks.
15:59You still have all my racks too.
16:01You want to sell my racks?
16:04I thought about like seeing if the Goodwill wants to buy them.
16:08People started going, every time I buy leggings they rip.
16:11Why would I continue to buy LuLaRoe?
16:13So a lot, we lost a lot of customers just because of that.
16:16I always, always said no problem, exchange it, no problem.
16:21Then I would have a box full of holy leggings if someone would send them back to me.
16:25Or defects, smelly ones, wet ones, moldy ones.
16:28I remember trying to get my, my money back or my credit back so that I could buy new things
16:36and just going round and round with them.
16:38I started to see the scam for what it was.
16:41And I, I started to, to realize like I can't be in this.
16:51She was always down in the garage selling LuLaRoe.
16:55And then I was always stuck with my dad.
17:00He's a nice guy though.
17:02I know.
17:02You weren't stuck with him.
17:04I know, but.
17:05It's just not the same, huh?
17:07It wasn't the same.
17:08Yeah.
17:09I said, I can't do this anymore.
17:10I'm leaving.
17:11It's a personal decision.
17:12The end.
17:14It was my sponsor who called me and had a 45 minute phone conversation and turned me around.
17:20She was like, just give it until the end of the year.
17:22Christmas is coming.
17:23Elegant is coming.
17:24There's so much good stuff coming.
17:25You're going to miss it all.
17:26I was like, you're right.
17:27You're right.
17:28I'll stay.
17:29And I came home and my husband was like, did you quit?
17:31And I said, no, I just, I told her I'd stay for three more months.
17:33And he goes, what are you doing?
17:35You just have to quit.
17:36So I sat down.
17:38I wrote it all out.
17:40Everything that I felt, I handed him the iPad and I said, proofread it.
17:44If there's a name of spellings or weird, and then just hit post and he just goes post
17:50and like, just goes back to like, he was watching the news or playing a game or something.
17:53And I was like, it's done.
17:54It's posted.
17:54It's out there.
17:55It's on the internet.
17:55It's for real now.
17:56Like I'm done.
17:57I just announced immediately within 15 minutes, I got a text message from my sponsor.
18:04How dare you do this to me?
18:05How dare you leave without telling me?
18:08I said, Oh, I didn't know this was about you.
18:10All right, cool.
18:11So that friendship is gone, ruined.
18:17It's heartbreaking.
18:20And then it happened with another person.
18:25Someone that I thought actually cared about me.
18:27The more I spoke out, the more I shared my story, the more friends unfriended me.
18:35It's just, it's mind games.
18:38It's cult mind games.
18:42All right, I'm gonna put this over here so it can dry, okay?
18:44Okay.
18:45Yay.
18:46That looks great.
18:46Yay.
18:53And then, I mean, I've got pieces that are hard to let go.
18:57Like I actually wore this more than one time.
18:59And there's just, there's, I guess there's memories attached to some things because I spoke in this when I was
19:06in Detroit, I believe.
19:09And so there's that memory attached to it.
19:13And this is a couple thousand dollars worth of clothes.
19:16Then I have clothes in my twin's bedroom closet.
19:18It's just overrunning everywhere.
19:20When I went on the coach's retreat and felt ashamed because I didn't have a husband there and I took
19:28myself shopping and bought this Louis Vuitton purse.
19:32It was my first ever like really big purchase.
19:36And it was around $4,000.
19:39And then these fobs alone were, I think like $275 each.
19:44And I said, you know what?
19:46I'm buying for this stuff myself because I worked hard.
19:49I worked so hard for this.
19:51And I was so proud of myself that I was able to do this.
20:00I was called by Deanne to speak in Detroit and Indianapolis.
20:09They said to meet in a hotel restaurant for dinner.
20:12I see Deanne and her son talking about what they're going to split.
20:17And Deanne looked at me and she goes, the reason we split meals is because our stomachs are really small.
20:24Because we've all had the gastric sleeve.
20:27Deanne had surgery 23 months ago.
20:30And how many pounds did you lose, Deanne?
20:33I've lost 72 pounds.
20:3572 pounds.
20:36She goes, you know, my sister Lene coordinates it all.
20:40Me and her will work with you.
20:42And you go to Tijuana, you have the gastric sleeve.
20:45Then you can come back to my house the next day in California.
20:49And then we'll fly you home.
20:51How many people do you know that had done surgery with Dr. Michelle?
20:56We have lovingly and excitedly referred to, I think we brought down, I think 18.
21:03I counted the other day, 18.
21:05Deanne actually added me to this group chat called the Tijuana Skinnies.
21:09And it was people that had gone down there and they were thinking about going down there.
21:15Courtney says she felt pressure to undergo the gastric sleeve surgery from Deanne and her sister Lene, both in and
21:21out of the alleged Tijuana Skinnies group chat.
21:26Lene, I mean, she was texting me every day.
21:29Courtney, we've got to get you on the schedule.
21:30I'm taking six people down there.
21:33We have room for one more.
21:34Let's go ahead and get on the schedule.
21:35They had hyped me up so much to feel so beautiful when I was looking in the mirror, going there
21:40looking at me.
21:41And I'm fat.
21:42And I need to have this surgery to be like them.
21:45I needed to be monitored because of my medications.
21:48And so my sister actually was the one that said, Courtney, why don't you try the Orbera balloon in the
21:54U.S. first?
21:55They put inside of your stomach and they take it out after six months.
21:59It's non-invasive.
22:00So it retrained you how to eat right.
22:02So I went and had the Orbera balloon put in.
22:06Two days after Christmas, I walked down my stairs and I looked at my husband.
22:10I was like, and my eyes were like rolling all around.
22:13I was like, I can't walk anymore.
22:14We got to the doctor's office and he said, she needs this removed immediately.
22:17The next thing I knew, I woke up.
22:20And I remember looking around and thinking, I woke up.
22:24I woke up.
22:25I am alive.
22:26So, of course, on the Tijuana Skinny's thread, people were asking, how's the Orbera balloon going, Courtney?
22:30How's it going?
22:31And I said, well, I had to get it removed.
22:32I had a really bad reaction to it.
22:36And I get a text from Lene, Deanna's sister, who said, see, I told you it wasn't going to work.
22:42When can we get you down to Tijuana to have the gastric sleeve?
22:46And I was thinking to myself, lady, I just about died, but you don't say no.
22:51You do not say no.
22:54And I said, well, I need to heal a little bit and then I'll get on the schedule.
22:58So she would text me like every week or two and I'd be like, I need some more healing.
23:02Eventually, she did lay off the text because I think I had strung her out enough where she knew that
23:07I wasn't going to go down there.
23:09Next thing I knew, I was kicked off the thread because I hadn't gone, obviously, and gotten the gastric sleeve.
23:15I was taken off the text chat.
23:19Mom, we're going to have to go through the boutique room, too.
23:21I just...
23:23Because of public scrutiny, LuLaRoe decided to change their bonus structure to abide by FTC regulations in July of 2017.
23:30Bonuses were required to be calculated based on clothes sold instead of clothes bought.
23:35After the bonus structure change, Courtney's bonus checks started dropping.
23:40She felt LuLaRoe was no longer a sustainable business for her.
23:43October 2nd of 2017, I was officially the first mentor to leave LuLaRoe.
23:55Oh, man.
23:56Oh, Lord.
23:58Probably 150, 150 to 200 pieces.
24:01So this is probably...
24:02That would be my guess, too.
24:03Probably about $4,000 worth of clothing at $15 each, average.
24:10My lawsuit against them is for $50,000 for what I'm owed.
24:15And had I set my inventory back, that would have been another $50,000 to $70,000.
24:21I look back and I was like, that's what I used to make in a month.
24:24Now I can make that stretch for a whole year.
24:26We were always told, stick with it.
24:28Your bonus check is going to keep going up.
24:29And that's what I believed.
24:31And it did.
24:32It did for a while until it started dipping back down.
24:34And that's when you really got scared.
24:36And that's when I started trying to like, you know, really budget more then.
24:41Had I been smart, I would have been doing that from the beginning.
24:43But we were told to live a lavish lifestyle, to drive nice cars.
24:47It would attract more people.
24:48You were encouraged to take your teams out to dinners.
24:50I remember I spent $10,000 on a dinner one time.
24:55We were taught and encouraged to spend every month.
24:57So we would be dependent on that next bonus check.
25:01So we couldn't leave, in my opinion, which was a cult.
25:05Courtney has since filed a lawsuit against the company,
25:08alleging breach of contract, amongst other claims.
25:11After leaving LuLaRoe, she invested in her own boutique,
25:14which added to her mounting debt.
25:16I could never pay myself for the goods that I bought back
25:19because I thought the money, the money was going to come back to me
25:22and I was going to be able to pay myself back and my credit cards.
25:26And I had to make the decision to let my house go.
25:43Hey.
25:44Hi.
25:44I'm Jacob with Ty Realty.
25:45I'm going to put in your sign for you.
25:47Alright.
25:59Thank Homer, too, for working with me.
26:12I don't know where I'm going to go now.
26:15So...
26:39It's going to be okay?
26:40I don't know.
26:41We'll find a way, okay?
26:43We'll find a way.
26:44We'll find a way.
26:44We'll find a way.
26:45We'll find a way.
26:50We'll find a way.
26:53We'll find a way.
26:54We'll find a way.
26:55We'll find a way.
26:55We'll find a way.
26:55We'll find a way.
26:55We'll find a way.
26:56We'll find a way.
26:58We'll find a way.
27:00We'll find a way.
27:03We'll find a way.
27:08We'll find a way.
27:09We'll find a way.
27:10We'll find a way.
27:12For Courtney, Roberta, and Debra, it was a chance to feel like somebody.
27:17But beyond the colorful marketing materials and the promise of great success,
27:21LuLaRoe didn't live up to the hype.
27:24Now, numerous articles cite other dissatisfied sellers.
27:28Thousands have taken to Facebook groups to vent about their own experiences.
27:33In 2017, there was a class-action lawsuit brought by former consultants against LuLaRoe,
27:38alleging the company lured them into a pyramid scheme.
27:42The dispute is ongoing and currently in arbitration.
27:45In 2018, LuLaRoe's clothing supplier filed a lawsuit for a breach of contract,
27:51accusing them of owing over $33 million for unpaid merchandise.
27:55The lawsuit is ongoing.
27:57In 2019, the Washington state attorney general filed a lawsuit
28:02claiming LuLaRoe's business model violated the state's anti-pyramid scheme law.
28:06The lawsuit is also ongoing.
28:19Overall, there have been more than 35 lawsuits against the company for various legal issues.
28:25Six years after LuLaRoe began, they're down to 35,000 consultants,
28:30but continue to actively recruit people into the community.
28:35I don't think women will speak out because they are afraid.
28:38They're afraid of losing their friends.
28:41They're afraid of losing their family.
28:44They're afraid of being singled out by LuLaRoe.
28:48And I think the reason that I'm not afraid to speak up is LuLaRoe already took everything from me.
28:54What I need is real information at this point.
28:58That's what I need, not smoke and mirrors and unicorn and fairy dust.
29:05I'm not going to sway someone from leaving, but if someone asks if they should start LuLaRoe,
29:10I'll tell them they're absolutely crazy.
29:12I'll tell them they're absolutely crazy.
29:14Lum Bعل
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