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.