LuLaRoe Faces $1 Billion Class Action Lawsuit Alleging Pyramid Scheme
LuLaRoe, a California-based clothing company known for its colorful leggings, has been hit with a class action lawsuit claiming the company encouraged women interested in selling their items to take out loans, run up credit cards and even sell their breast milk. According to an NBC news report, the federal class action lawsuit seeks $1 billion in damages from LuLaRoe, which had $2 billion in sales this year. The company basically operates by recruiting people to buy inventory and sell the clothing to other customers.
Pressured to Sell Inventory
The suit, filed on behalf of three women from Sacramento County, states sellers were told to keep at least 10 items in every size in all styles. They said they were told to keep around $20,000 worth of inventory on hand and are inundated by the company’s catchphrase: “Buy more, sell mover.” The lawsuit also says as many as 80,000 people paid thousands of dollars upfront for inventory.
Many of these consultants faced financial ruin because they maxed out credit cards and took out loans to purchase inventory. Another lawsuit alleged that LuLaRoe changed its refund policy to sellers saying it presented challenges for those who wanted to leave the company and return inventory. LuLaRoe has called these lawsuits “baseless and inaccurate.” They have promised vigorously fight these allegations.
What Class Action Lawsuits Do
Despite the antagonistic stance taken by Congress recently over class-action lawsuits in a vote that favors large financial institutions over the average consumer, it is a fact of life that class action lawsuits are the consumer’s last recourse for justice. When large corporations act unethically or shortchange consumers, class action lawsuits give the average Joe the opportunity to band together and take action against wrongdoers. This is an opportunity an average citizen would never have otherwise, given the prohibitive expense of litigation and the enormous power exercised by large corporations.
As California class action attorneys, we will be closely watching the course these lawsuits against LuLaRoe take. The stories of consultants who have lost their life savings and more while trying to go into the business of selling leggings are heartbreaking. We hope these individuals are compensated for their losses and that they get their day in court. If these allegations are true, the company should be held accountable.