LuLaRoe Business Review: Still a Scam

Written by MichelleM

Pink Truth recently published an article exposing the grim reality of LuLaRoe as a business opportunity for women. The huge response to that article made it clear that information from consultants about their LuLaRoe experiences needs to be published to inform anyone who is thinking about spending several thousand dollars to join, or anyone who has joined and needs to know that they are not alone in their Lula-nightmare. Not rainbows and unicorns, but real experiences of real women. Based on what LuLaRoe consultants are reporting, the real picture is looking worse all the time.

Like Mary Kay, LuLaRoe is a multi-level marketing company. Anyone who joins an MLM is an independent consultant who purchases inventory at their own cost, pays an additional Social Security self-employment tax of 7.5% on any income due to not being actually “employed,” has part of the cost of their order go to their uplines as commissions, and shoulders all of the risks of being in business without any of the advantages. Repeatedly, statistics have shown that 99% of MLM members lose money, and those that don’t lose money make minimum wage or less, unless they are at the top of the pyramid benefiting from others’ losses.

The cost of joining LuLaRoe STARTS at over $5000 for inventory, plus the necessary non-inventory materials which can’t be sold. That’s your money sent to LuLaRoe and your upline (your recruiter and her recruiter, too) .

The inventory you paid for that you plan to sell? Well, you don’t get to choose those great (and not-so-great) patterns; you get whatever LuLaRoe feels like sending you. Google “LuLaRoe fails” for some of the worst patterns, and you’ll see unmatched fabric and embarrassing results, which prompted the theory that LuLaRoe is spinning scrap fabric into gold. Even worse, many consultants report items missing from their inventory order, with their money taken and kept by LuLaRoe, and the missing pieces showing up MONTHS later.

Interested in being creative with your selling ideas? Sorry, your LuLaRoe contract will dictate exactly what you can and can’t do with that inventory that you paid for and now own. LuLaRoe prohibits advertising, setting up a storefront, and many other typical sales techniques. (This is common in MLMs. You don’t own a business, so you don’t decide how you get to sell.) Consultants are limited to selling one-on-one and through Internet “pop-up parties,” which require HOURS of work photographing items, presenting each individual item on Facebook or Periscope, and tracking “sold” comments – not to mention invoicing and packaging for shipment. At $25 for a pair of leggings, your $12.50 “profit” is a mirage with this selling model.

Although LuLaRoe promises a work environment that allows you to control your schedule and be home enjoying your family, the reality is long days and late nights, ignoring your family in a desperate attempt to make your “business” work. That “free” cruise that the envy-baiters are showing off on Facebook? You will only qualify if you buy enough inventory. That’s enough money from you to pay for several cruises.

And speaking of your sister consultants, LuLaRoe has been onboarding (accepting) 250 to 500 new consultants PER DAY. About a year ago, there were 5,000 consultants. Now, there are over 77,000, which results in profit-killing competition for customers. In addition, you must compete with the over 108,000 LuLaRoe items on eBay, put there by desperate consultants and ex-consultants trying to get back some of their lost investment.

In addition to competition from eBay and other LuLaRoe consultants, your customers can find cheaper, higher quality leggings on sites like Amazon and Alibaba, among many others.

Have you managed to sell a lot of your inventory? Hooray! Now you’ll have to deal with the quality issues and customer returns. Join Facebook’s “LuLaRoe Defective/Ripped /Torn Leggings and Clothes” group for a lengthy list of items that arrived with holes, mismatched fabric, and inconsistent sizing. The fabric seems to be getting thinner all the time, with new instructions from LuLaRoe to “roll” the leggings on like nylons, and to hand wash the leggings to avoid ripping them.

In an unprecedented move for a retailer, LuLaRoe has instructed its consultants to check each item for defects before trying to sell it – what?? How long do you think it takes to scrutinize the seams of several hundred items (the typical size of an original inventory order is between 330 and 460) before you can begin to sell them? And if you are looking for satisfaction from LuLaRoe for the defective clothing they shipped to you, good luck with that. The reported average wait time for Customer Service is 2 hours, after which many calls are disconnected.

If you are lucky enough to contact someone to process returns for defective clothing, the balance is not refunded to you. LuLaRoe keeps your money, calling it a credit for your next inventory purchase – which must be a minimum of $500 to $800. Of course, you will have to immediately refund the entire amount to your customer. It looks like you have lost triple your money on those defective leggings: the $12.50 you spent for them and the $25 you refunded to your customer.

Oh, and be careful how and where you vent your frustrations about these problems – your contract actually prohibits you from saying anything “negative” about LuLaRoe. One Rep reported being banned from continuing to use her Facebook group to sell after sharing complaints about not receiving inventory, even though she and her downline still had thousands of dollars in remaining inventory.

Here are some other details that are surfacing about what REALLY happens after you get to the front of the LuLaRoe onboarding queue:

  • Audrey, the LuLaRoe invoicing and billing system, was charging sales tax to customers who live in tax-free states, or charging more tax than the customer should have paid, resulting in a federal lawsuit which is gaining more publicity and could eventually reach class-action status.
  • When Audrey was finally replaced by the new LuLaRoe system Bless, LuLaRoe consultants claimed that their private information was sold without permission and that they received hard credit checks, which affected their credit scores. Additionally, the new system can only be accessed with an iPad or iPhone. You can’t use a real computer or an Android smart phone.
  • LuLaRoe claims to have a return policy that would protect consultants who couldn’t make a go of it. However, consultants report one obstacle after another, such as the requirement that inventory be returned in its unopened original packaging (but they had to open the package to check for defects, right??), and having their returns ignored.
  • LuLaRoe brags about paying bonuses to consultants on top of regular sales profit, the reality is in their 2015 income disclosure. The median annual bonus payments made to ALL U.S. Consultants at all ranks in 2015 was $85.80. That won’t even pay for the iPad you need to use their new billing system.
  • When the Better Business Bureau reviews got too negative, LuLaRoe consultants allegedly were instructed to bombard the site with fake positive reviews.
  • LuLaRoe’s anti-negativity policy has resulted in bullying among consultants, with stories of consultants sending screenshots from each other’s Facebook pages to LuLaRoe corporate in hopes that they would be suspended and reduce competition – so much for the sisterhood.

Speaking personally, what is most abhorrent to me about LuLaRoe and all MLMs is their psychological manipulation. It starts with selling to you – not selling a product, but selling hope. Hope that you will be able to stay home with your children, hope that you will be able to end this bout of unemployment, hope that you will be able to tell your husband that he doesn’t need to work two jobs any longer.

But any “business opportunity” that requires you to SPEND money is not a job, it’s a scam. When you purchase LuLaRoe inventory, you are the customer. LuLaRoe has their (your) money, so there is no need for them to worry about defective clothing, incorrect billing, or anything else that’s keeping you up at night. Please, please do not get sucked into the scam that is LuLaRoe.

43 Comments

  1. Neverpink

    Thank you, MichelleM and all the other people who contributed to this article. The more time passes, the more LuLaRoe is exposed for the scam that it is. I have a friend involved and it’s so sad to see her large family (5 kids) take on this much debt for so little payout. She’s not making sales.

  2. pinkvictim

    Kaybots use the same “sisterhood” thing to manipulate women, which make up almost 80% of MLM victims, to join, thinking that they are getting into more than just starting your own “business”…

    All the clothing, jewelry, beauty product, ionic menstrual pad, etc. MLM’s use this lure on women. Here’s a warning:

    “I’m hesitant to suggest it’s advisable for a woman to rationalize her experience through her social returns at the expense of significant financial losses.”
    —Stacie Bosley, economics professor at Hamline University in St. Paul, MN

    https://psmag.com/why-do-so-many-women-love-lularoe-f14bb7db1fae#

  3. Jamming Berry

    A year or so ago I had never heard of LLR and went to one party/pop-up. I live in a pretty secluded area, mind you… Now there are consultants, invites and pop-ups everywhere! It’s like it exploded. I bought one pair of leggings and one shirt I like and got another set as a gift. They are the thinnest leggings I own. I’m glad I got plain black, after looking at the mistake site. Hahaha— Such a sad business. I don’t know a lot of the women, but I see them on FB and they’re always out out to sell!

      1. mstar1125

        This saddens me so so much, because for many women, one of the draws of purchasing LLR is that they are helping a fellow mommy and supporting a small business. While we here all know that is BS, what’s worse is the part they don’t see: that by purchasing LLR, they are supporting the exploitation of the factory workers (many of whom I assume are women), who are probably working long hours in poor conditions for low pay. All for some ugly leggings, shirts, and dresses that are unflattering to literally every single person who I’ve ever seen wear them.

  4. MichelleM

    It was great to be able to put this article together because, for some reason, LuLaRoe has captured my attention more that any other MLM/scam. I think it’s because they are using (abusing) the idea of making women feel comfortable and beautiful as their hook. It’s a great idea! Cute comfortable clothes that express your individually, right? But LuLaRoe is a total scam for all of the reasons listed above, and I hate that they get to use this idea to hide their exploitation. I would love to see a legitimate company do this right. Let consultants choose and market the clothing, sell it at a competitive price, maintain quality, stay away from ridiculous prints, etc.

  5. Shawna

    A friend just had a “Pop Up” party and I did not attend. I first heard of LLR back in October at a mom’s night out. The other moms knew all about these great leggings that felt like butter! Short story, I was curious and ended up buying two pairs a few months later. What a piece of cr#p!!!!! My thumb when right through the material just trying to put them on! Mind you, I bit my nails at the time so it wasn’t a sharp finger nail that punctured the fabric, just my smooshy finger pad. It happened with both pairs. Threw them in the trash and will never purchase again.

  6. MLM Radar

    Thanks for the link to the income disclosure statement for LLR. It was just such a disclosure statement, with real earnings numbers from the company’s own records, which persuaded a friend of mine to not join an MLM. What a great enthusiasm-killer!

    Some people are persuaded by emotional triggers (recognition) or altruism (helping others). Some people are persuaded by numbers. Having the real numbers makes a big difference. I only wish all USA-based MLMs had to publish such disclosures.

  7. enorth

    Just like Mary Kay and other MLMs, top “mentors” and “coaches” are traveling across the country and speaking at events. Of course, there’s a fee. Topics include:
    –conquering fears that might be holding you back from reaching your full potential
    –building a successful business and team
    –boost your sales
    –time management
    –be a better leader
    –hostess prep
    –how to live the life you want.

    1. enorth

      The FB LLR Defects page had a thread going where people were asked to post their ugliest LLR items. I actually laughed out loud at some of them. Yes, they really were that preposterous.

  8. Susie

    I was at a home show last weekend and there was a LLR rep who had a booth there jam packed with all of her LLR clothing. It caught my attention because this booth had a large crowd around it and really none of the others did so of course I had to find out what was going on! LOL and lo and behold LLR. You couldn’t even get up to touch the clothes there were so many girls and ladies standing around and yes, they were purchasing. The patterns on the clothing that I saw were ugly. I wondered if that rep was “allowed” to put up a booth like that but really I think LLR, MK, etc. consultants should be able to sell the product however they want since it is “their business”. I really hope this lady did well-she must have had thousands and thousands of dollars of clothing.

  9. enorth

    Remember, the legging holes that develop are not defects. They occur because of the brushing process that makes the fabric soft and cannot be helped. Repeat: the holes are not defects. You want soft leggings, so deal with holes. Your fault.

    Sizing is off because of the large pile of fabric that is cut at one time in the factory. They have to cut a large pile to keep up with demand. Your demand. Your fault. The sizing may differ depending on where the item was in the pile. No big deal.

    Don’t be so negative. Think like a retailer. Everything sells; if not, you didn’t work hard enough.

    We love you.

  10. A current consultant

    Its nice to see that you allow opposing views. You are a waste of server space.

    In some miracle the host lets this post though, I posted a very long, point by point rebuttal, pointing out all the places that the author was dead wrong, with made-up information, but it is has been awaiting moderation since the day the article posted.

    You have your facts wrong here in multiple places and allow no one to give the truth.

    Now who is preying on people?

    1. TRACY

      Fear not, your lies and half truths will be published. I just wanted to provide the proper forum for them, and also have an opportunity to respond to your nonsense. Patience, my dear!!!!

    2. Joelyn

      @A current consultant,
      Girlfriend, don’t be so rude. If you posted a very long point by point rebuttal, then give the host a chance to respond. She may have other things to do first. I’ve never been in May Kay, but much of what I have read on this blog is true. I have dozens of friends and acquaintances who have quit MayKay and are now trying to get rid of their inventory. All of these gals were hard workers, but the market was oversaturated with May Kay consultants.

      Frankly, I think Mary Kay products stink. I can certainly do better going to a department store and getting a far better deal for my hard earned money.

    3. Lazy Gardens

      Its nice to see that you allow opposing views. You are a waste of server space. Way to make friends!

      You have your facts wrong here in multiple places and allow no one to give the truth.
      Well, if you can point to independently verifiable information disproving any point, no one on this website will have any problem with correcting the errors.

    4. A successful consultant

      Good luck. I posted to her last article explaining that I was making money off sales, alone, with numbers and screenshots of my account and the people commenting simply said I was lying.

      Yeah, they got me, an anonymous consultant spent hours editing screenshots to make the people on this site believe them…makes sense.

      Like you said, a waste of server space.

      They don’t care about facts here, they skew their point by posting only the opinion of consultants who have had a bad experience and don’t post any opposing views.

      On the other MLMs that I have done, I agree, they suck and the only way to make money is to recruit, not with LuLaRoe though.

      I urge you not to wast too much time trying to convince people who made their mind up before they clicked the link.

      1. TRACY

        We absolutely DO care about the facts. You posted various numbers that didn’t compute with the claims that you made, and we asked you about them. You admitted that you gave wrong information in various places, leading me to question what parts of your story we should really believe. You weren’t willing to provide additional information, and the story ended there. Whether you were lying or mistaken doesn’t really matter at this point, because you were so offended by the fact that we noticed your inconsistencies.

        1. A current consultant

          Hello Tracy, I apologize for wasting your time. I didn’t know there was a post about Lularoe before this, and went and read it, and the comments.

          While the person before clearly made a typo (or more, I didn’t read it thoroughly) when she was posting, I didn’t see any reason to believe she was lying, which is what your other readers accused her of. In fact, they suggested she post her un-sanitized tax returns or she was making it all up…that’s just a bad idea and is a ridiculous request.

          No need to post my long rebuttal, as I see from the comments on your last post that its not really wanted here. I didn’t really realize this is just a forum for people generally against MLMs to gather.

          I will just say this to anyone trying to decide to join LuLaRoe that finds this article:

          If you approach it like a small business, that’s what you will get, but the money and time invested upfront would be like any other start-up, a lot for little gain up-front. I made $30k after the first year of building and reinvesting most of my profits back in, and ended the year with 5k+ pieces, a huge in-home space with a sitting area and dressing rooms, a bank account just for my business over $4K, and no debt. I would also recommend starting your business as an LLC. This year I’m n target to make over $100k after taxes and expenses, but I generally work full time.

          I was in a group chat just this morning where we were all sharing how we fared on taxes, and I’m about average for the girls doing this full time. Obviously the women only doing it part time sell much less, but are generally happy with the returns.

          If the reviews are bad and you don’t trust it but want to sell clothes, then look into doing it on your own. I’m using some of my profits now to branch out to do just that, but I honestly like LuLaRoe as the middle man for a few reasons, and then there is the bonus potential (not a lot for me, but its nice) and the cruse. There are plenty of places where you can buy very fashionable quality clothing to sell on your own. The start up costs and time invested are the same though, a lot up-front for little gain the first year or so.

          I won’t be responding to comments about my honesty here. It’s absurd to believe that I would come here anonymously with no gain to myself and lie. I’ll just say that much of the info stated in the article above, is not the experience I’ve had, and many of the statements have no basis in reality (especially dealing with up-line and the cruise)

          1. TRACY

            Again, it’s easy to come here and say you make a zillion dollars and it’s so easy. Of course there is no way to disprove you. As always, I admit that there are a handful of people who are able to do this. Unfortunately, it’s not the experience of 99% of people in MLM.

            MLMs flourish because of unsubstantiated earnings claims. They are the bait that gets people to sign up. And they’re almost always fake, which is why I am skeptical of anyone who makes such claims.

            Yes, the statements throughout the article are VERY true.

          2. Lazy Gardens

            I will just say this to anyone trying to decide to join LuLaRoe that finds this article: If you approach it like a small business

            If you approach it like a BUSINESS, a real small business, and do a market analysis of the product and the competition and have a lawyer read the contract … you will not join.

            The marketplace is already flooded with retailers and copycats, the places where businesses dump excess inventory or try to minimize their losses (eBay and others) are awash with excess goods. The contract is ludicrously one-sided, in LLR’s favor.

            It’s a lose-lose proposition, with only the early-in people being able to look at a small profit. The chance of their business continuing at that success level is small.

          3. pinkvictim

            LLR as the middle man? You still haven’t gotten it: YOU are the middle man. You buy wholesale from LLR; you sell retail to end users.

            YOU are the one in the middle. When buyers stop buying due to defects and higher quality/lower priced competition entering the market, you will be stuck with all that inventory.

            LLR dropped their 90% buyback… DeAnne and Mark are probably planning their exit with all YOUR cash.

          4. Rose

            @pinkvictim: they aren’t even the middle man! Then are LLR’s end customer! They don’t even buy at wholesale – they are buying at retail. The retail value of those stupid leggings in $12.

            @Lazygardens: Yes, no businesswoman would ever sign a contract like that. It’s not even a contract you could negotiate! Real business people negotiate their contracts; MLM suckers don’t. It does not make any sense whatsoever. If I got in the business of selling clothing, would I take my supplier’s word what the market is? FFS, a legitimate supplier for retail would not even talk you about that, as it is not their place to do so. They just supply what you order and that’s it. The onus is on you as the retailer to do market research and determine what sells.

  11. Lizzie

    The wheels are falling off the bus pretty quick , huh?

    Two class action lawsuits filed in the last month and the company isn’t even 5 year old. Two more civil lawsuits for copyright infringement and breach of contract. More lawsuits to come in the future, I suspect, over the unauthorized credit checks.

    They had a nice scam going for a while because women actually wanted some of the products. But they screwed up big time cutting even more corners on producing the clothing and now this MLM can’t even argue with any veracity that it has a product of reasonably good quality.

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  13. Amy

    I do not do lularoe but you clearly have not researched this. The part where you talk about people losing money, and that the income goes to their up line? you know this is false right. The income does not come from the consultant but instead from the company. You make all your money and the company pays an extra percent to the upline. You are clearly against them (wondering if you have ever tried it before, guessing no), but getting the facts right would make the article alittle easier to believe. There were more points in this article that clearly were not looked into. MLS provides viable income for many, including myself..

    1. TRACY

      Amy – You didn’t read carefully. What the article actually said was:

      “…part of the cost of their order go[es] to their uplines as commissions…”

      This is 100% true. When a consultant buys products from the company, money from that order is distributed to the upline by the company. (The point here is that MLM products are overpriced, and part of the reason is that a bunch of levels of the pyramid must be paid.)

      Unfortunately, MLM does NOT provide viable income for many. 99% of participants in MLM lost money. And that 1% that makes money? It’s only because of the fact that 99% lost money.

    2. MLM Radar

      Amy- what Tracy says is right. If you think the money really does come from the company, where do you think they get that money? They aren’t printing it. They aren’t paying it out of the goodness of their hearts either.

      The company collects the money from the consultant, deposits it in their account, calculates the percentage, then forwards that money to the Director.

      That’s why they waste no time taking that money back from the Director when the consultant returns her inventory.

    3. Lazy Gardens

      Amy … “The part where you talk about people losing money, and that the income goes to their up line? you know this is false right. The income does not come from the consultant but instead from the company. You make all your money and the company pays an extra percent to the upline.

      Money goes from the consultant, as the $5,000+ order they placed, to the company and then from the company to the upline as a “commission” or “bonus” or whatever they call it. But it’s coming 100% from the consultant pockets through the MLM offices to the upline. No customer money is in there.

      In contrast, when I got a bonus from Philips, that money didn’t come from any Intel employees or resellers. It came from our customers like Honeywell, Dell, Apple and Ford who bought our products to resell (as part of their products) to real end customers.

      1. Amused Observer

        This is hilarious because in this example you are LLR! Your “customers” are buying at wholesale (slightly inflated to keep the capitalist wheel turning) to sell retail. They are the consultants. So your bonus comes from the exact same place as a LLR consultant’s bonus.

  14. MichelleM

    “And that 1% that makes money? It’s only because of the fact that 99% lost money.”

    Tracy, that says it all. It also shuts down the “but I’m making moneeeeeee!!!” that the kool-aid drinkers keep throwing out.

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