Is LulaRoe a Pyramid Scheme? The Ugly Truth

Welcome to my LulaRoe MLM review!

Today we will be answering the question is LulaRoe a pyramid scheme and explain everything you need to know about this MLM opportunity.

Is LulaRoe a pyramid scheme? No, LulaRoe is a multi-level marketing company that reached millions of dollars in sales in the first few years of business with the help of thousands of consultants. Yet, after the massive sale came piling the lawsuits and complaints.

Multi-level marketing as an industry has been around since the early 1920s but it’s still being debated up until today. With the thousands of MLM companies nowadays, it can be quite difficult to choose which company to join.

Maybe a business opportunity was presented to you by a family or a friend? Maybe you’re looking for a way to earn some extra bucks? Whatever reason that you may have, I’m pretty sure you’ve landed on this page because you’re looking for a complete review of LulaRoe.

Before we get started I would like to commend you on taking the time to do your due diligence so you don't get taken by all of the scams and rip-offs that are found everywhere on the internet.

That's how you find the legit way to make money online!

I would like you to know that I'm not in any way paid by or associated with LulaRoe. This is an honest review for the purposes of providing you, the consumer the information necessary so that you can make an informed decision on whether or not LulaRoe is for you!

In this article, I will discuss how LulaRoe started and the products that they offer. I will also review the compensation plan of the company and the lawsuits that were filed against them. At the end of this article, you can judge for yourself if LulaRoe is a pyramid scheme or a legit company.

LulaRoe Review Summary

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Product Name: LulaRoe

Founder:  DeAnne Stidham

Product Type:  Clothing; Multi-level Marketing

Price:  LulaRoe produces fashionable clothes like leggings, t-shirts, dresses, and skirts which have great patterns and a wide variety of colors. The prices would typically range from $18-$65 per item.

To become a consultant, you need to purchase an initial order that’s worth between $5,000 up to $10,000 depending on the number of items you wish to get.

Best For: No one

Rating: 10 /100

Recommended: No

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How did LulaRoe Start?

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LulaRoe is multi-level marketing (MLM) company that was founded in 2013 by DeAnne Stidham. Like other MLM companies, the history of how this company started is rather wholesome.

As a single mother who had to raise 7 children, she used her background in network marketing to create her own business. LulaRoe comes from the names of DeAnne’s granddaughters namely, Lucy, Lola, and Monroe. 

At first, DeAnne made the dresses for her children. But soon after, she received many orders from her friends and other people. With the idea of creating her own clothing line and experience in entrepreneurship, she started to grow her business.

Who are the sellers

LulaRoe’s target sellers are women who are stay-at-home. Its main goal is to promote “flexibility and freedom” to women who would like to have an opportunity to build their own business at their own pace.

To get to know LulaRoe better, here’s a video on how it works:

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LulaRoe Products

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A lot of MLM companies choose to sell clothing lines because the products are easy to distribute and it does not expire. LulaRoe is well-known for its unique colors and patterns. Also, it only produces 2,500 copies of a specific pattern which is why you won’t get to see lots of the same patterns.

The retail price of LulaRoe would typically range from $25 to $70 which will depend on the design and style of the clothes. What’s great about this company is that the sizes would range from XXS to 3XL.

Source: https://www.lularoe.com/

Plus, the company does not only sell clothes for women, but they also have products that are great for kids and men. Here’s a quick summary of all the product lines of LulaRoe:

Product Line

LulaRoe offers a wide range of products which are available for all gender and sizes. Here are the product lines of the company:

1. Women Collection – This includes denim, layers, bottoms, tops, dresses, and skirts.
2. Men Collection – LulaRoe only offers top shirts for their men collection.
3. Kids Collection – This includes leggings and dresses for the kids.

Shop with a Retailer

Source: https://www.lularoe.com/

Unlike other MLM companies that sell their products at their website, LulaRoe forwards their buyers to the closest retailer in the area. This helps them improve the opportunity of their retailers to sell more.

Why is LulaRoe Popular

Many people choose to buy LulaRoe, not only because of the business opportunity but also because of the following reasons:

1. Comfort

The motto of LulaRoe is “Simply Comfortable: Where fashion meets comfort.” A lot of people, mostly women, love to talk about how comfortable the leggings of LulaRoe is. Most consumers say that they can use the leggings in any activities that they do. Whether it be doing their exercise, bringing the kids to schools, doing yoga, and more.

      2. Quality

The material used is thick enough in which you don’t need to wear any underskirt, even if the product is light in color. What’s also good to note is that the fabric they use is wrinkle resistant.

3. Unique Prints

LulaRoe only prints out 2,500 of a specific style that they manufacture. This is rather unique against all the other MLM companies that you see because you won’t see the same style and print anywhere you go.

LulaRoe Compensation Plan

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You can differentiate MLM companies based on their products, but what’s similar to all of them is the compensation plan that they present. 

It’s intriguing to see that LulaRoe doesn’t have any starter kit or sign-up fee for the people who are interested in becoming a “fashion consultant”. You won’t get to see a lot of companies doing this because it can be a risky strategy. But for LulaRoe, they’ve got this covered.

So, now that we’ve tackled the products of LulaRoe, let’s dive into the income opportunity that they offer.

Becoming a Fashion Consultant

Source: https://www.lularoe.com/

If you want to become a fashion consultant, all you have to do is look for a current retailer that you want to join and fill-up this form. One thing that I don’t like about this process is that it would take around 6-10 weeks for LulaRoe to confirm if your application is approved.

You’re probably wondering now, where’s the catch?

Since there’s no starter kit, you would need inventory for you to start selling. This is where the real costs start. The minimum order that LulaRoe accepts for initial investment is $5,000 up to $10,000. 

With these amounts of investments, it will give you between 275 to 335 pieces of clothing. The funny thing is that you won’t know what kind and what sizes of the products will be given to you. There will be a mixture of leggings, skirts, dresses, jeans, and so on.

Compensation Plan

The compensation plan of LulaRoe is rather easy to understand, unlike other MLM companies. For starters, let’s go through the 3 ranks in the company and the requirements.

1. Consultant – This is the lowest rank in LulaRoe. As a fashion consultant, you are required to have a minimum order of 33 pieces of clothing per month to be qualified for commission and have an active status.

You can earn around 35%-50% retail commission from your personal selling at this level. This means that the more you sell, the more chances that you can earn bigger.

      2. Sponsor – You are required to have a minimum order of 175 pieces of clothing per month. On top of your personal retail commission, you get a 5% override commission for the sale of your team.

      3. Trainer – You are required to have a minimum order of 1,750 pieces of clothing that can come from the entire order of your downline team. On top of your personal retail commission, you get a 3% override commission from the sales volume of your team.

Before I go to the next section which would be the reviews and rating, I would like to emphasize the entire point of LulaRoe. you or your team must purchase as much inventory as you can for you to earn a commission.

If you haven’t noticed, LulaRoe requires its consultants to purchase inventory every month just to stay active. You have to remember that you won’t know what style or size you’ll get.

So if you have a customer that’s looking for a specific size or style, you would need to purchase the minimum 33 products per order policy. This would only increase the amount of inventory you have.

This is the reason why most consultants of LulaRoe say that their initial investment is not $5,000, but rather it’s already amounting to $14,000. This does not include all their expense in buying racks for all the clothes that they have.

Reviews, Complaints, and Rating

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In this section, you’ll discover the complaints that LulaRoe has received on top of the lawsuits.

There will always be complaints about all businesses, but what can be alarming if your own retailers file the complaints and lawsuits against your company. This is what happened to LulaRoe.

In BBB.org, you’ll be able to see more than 500 complaints both from consumers and consultants. Most of the concerns are in regards to having a problem with the service or product of LulaRoe. 

With this in mind, the site has not yet accredited LulaRoe has given them a B- rating for their customer serviceability.

Here are some of the reviews you’ll see on the site:

I know that you’re not much concerned about this which is why the next thing that I’m going to talk about is the lawsuits that LulaRoe is facing.

If you check out the alert on BBB.org, you’ll notice that the State of Washington has issued a complaint against LulaRoe. Here’s a screenshot of the complaint.

 

For more information about this lawsuit, you can visit this page for all the details.

In addition to this, LulaRoe is facing a lawsuit from its old supplier, Providence Industries with an amount of $49 million. The allegation is that LulaRoe has failed to pay their bills on the said supplier for months already. 

But LulaRoe has countersued for $1 billion because of alleged fraud and by doing “disturbingly inappropriate personal attacks”. 

For more information about the counter lawsuit, you can visit this page for all the details.

Is LulaRoe a Pyramid Scheme or Legit?

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Before I put my final thoughts about LulaRoe, I want to clear a couple of things when it comes to calling a company a pyramid scheme.

There are three criteria to consider:

1. Founder – LulaRoe has a real founder, DeAnne Stidham
2. Products – LulaRoe has real products and consultants can earn by selling this alone
3. Compensation Plan – LulaRoe offers a compensation plan in which you can earn by selling the products and making your downline team sell it too. 

With these thoughts in mind, I can definitely conclude that LulaRoe is a legit company.

The downside of LulaRoe, however, is that you are required to purchase the products yourself (if you’re not in the Trainer level) in order for you to be qualified to have commissions. 

Study shows that a lot of consultants are stuck with thousands of inventory on their hands just to be qualified with their commissions. Not only that, but because of the increasing supply and business opening, there are almost no consumers to sell the clothing line to.

This can be extremely difficult if you’re just starting out in the business and trying to make a name for yourself.

Based on the research done by AARP Foundation, 997 out of 1000 people who have joined MLM are either in debt just to stay active or have not earned even a penny. If you check out this article, you’ll know the difference between being your own boss and being a consultant.

Affiliate Marketing Recommendation

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In regards to LulaRoe, I definitely do not recommend anyone to join this company. Not only is the risk ($5000) too high, but also there’s a high probability that you’ll end up like the previous consultants who are waiting for their refund or lost all their investment.

If you’re looking to create your business, then I suggest that you take a look at how affiliate marketing works. By using this kind of marketing instead of joining an MLM business, you’ll be able to handle your own pace and success.

Wealthy Affiliate is one of the most successful programs that has helped me and a lot of people when it comes to marketing our own niche. We didn’t have to pay any start-up fee, recruit other people, or even do hard selling to be where we are today.

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