Is LuLaRoe A MLM Scam Or Genuinely Legit Business?

Welcome to this brief LuLaRoe review since many of you want to know Is LuLaRoe A MLM Scam or can you make money by joining this company. When you think about clothing, in certain cases, people like to wear things that are edgy, distinct, and comfortable.

This is exactly what businesses like LuLaRoe claim to be selling. Perhaps you have tried the company’s leggings and wondered if you could sell them for extra cash! Many people love their items and make money selling them. So in the end, it’s your choice. Let’s look closely at the company, what they’re selling, their journey, and at other businesses, you may like to consider before joining!

Is LuLaRoe A MLM Scam – Company Overview

• Headquarters: Corona, California
• Founders: (In the picture above) Deanne (Brady) Stidham and Mark Stidham (CEO)
• Website: http://www.lularoe.com
• Founded: 2012
• Industry: Multi-Level Marketing and Women’s Clothing
• Number of Consultants: 80,000+
• LuLaRoe Product Line: Leggings, Shirts, Skirts, and Dresses

The company is an MLM business started by Mark Stidham and DeAnne Brady, now DeAnne Stidham, in 2012. Its name is derived by joining parts of Mark and DeAnne’s granddaughters: Lola, Lucy, and Monroe.

The company’s mission is to help people better their lives and families using fashion. They assert fashion is helping people by “instilling confidence” and with quality merchandise while thinking of the customer. Like any other MLM business, they have “social sellers” who have the freedom to operate on their own and to be an owner.

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Is LuLaRoe A MLM Scam – LuLaRoe Is Not Without Controversy

The company asserts to be philanthropic and has given more than $7 million to “numerous organizations.” However, none of these organizations is the National Down Syndrome Society. The National Down Syndrome Society stopped accepting funds from them when an associate was seen on video making fun of a disabled individual.

The associate apologized and the company said the person’s action did not represent LuLaRoe’s overall beliefs, but they refused to end the associate’s contract. As a result, NDSS has decided to have no partnerships with the company.

Washington State has not been kind to LuLaRoe. According to a new lawsuit filed in Washington state, Attorney General Bob Ferguson is arguing that LuLaRoe is a pyramid scheme that misled consultants and played shenanigans with consumers.

Attorney General Ferguson said LuLaRoe violated the state’s Consumer Protection Act and the Antipyramid Promotion Scheme Act. Also, the attorney general argues that LuLaRoe’s bonus structure and misrepresentations regarding sustainability, profitability, and inventory refunds violated Washington state laws that were established to protect consumers. Ferguson’s suit seeks the maximum penalty associated with each violation – $2,000 – as well as costs, fees, and restitution for Washington consumers.

Other Problems Facing LuLaRoe

Start-up costs for participating in this network marketing company were a real issue. The start-up cost of becoming a LuLaRoe clothing retailer was usually between $2,000 to 9,000 dollars. Also, according to LuLaRoe’s past bonus structure, associates’ monthly income was dependent on the amount of inventory they and their recruits purchased and not on how much they sold in retail.

Amid growing outcry, LuLaRoe changed the structure in 2017. LuLaRoe claimed that some consultants were earning between $10,000 to $500,000 a month. However, most Washington associates of the company made less than $10,000 in profits and nearly one-third reported making no money at all, according to Ferguson.

LuLaRoe Product Quality Is Questioned

As we can see, the company had its own newsworthy controversies. Now let’s look at what they’re selling and how to join. The company mainly sells women’s clothing, like:

• Denim
• Bottoms
• Dresses
• Leggings
• Layers
• Tops
• Skirts

Of these, their funky ultra-soft leggings are the most famous. They focus on women primarily, but they also provide a few men’s items too. Regarding their product’s quality, many say that their leggings are soft, but the method used to soften them makes the leggings weaker and of poor quality.

This is a big problem that customers have described, and the leggings develop holes quickly, after just one wash. Many people like that the clothes are “moderate.” In all fairness, the clothes are more conservative than current trends, though I wouldn’t call skin-tight leggings “modest.”

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Becoming An Associate Is A Process

You first sign up to become a consultant with the company. As is with other MLM businesses, you need a Sponsor to sign up. The sponsor is somebody who already sells their items and helps you with the processes.

You can ask the company to select your sponsor, or if you know someone already and would like to work with them, you’ll have to enter that Sponsor ID and you can start working. The next process step is purchasing inventory. There are many contradictory claims on different sites about the costs, but on their site, the starter pack is $499.

This gets you some initial items – 65 pieces for you to start. This enables you to display and sell them. You’ll be able to wait 8 weeks before beginning onboarding. While you wait, you should focus on having your business up and running and making some plans ready.

You’ll Have To Schedule Home Parties To Make Sales

When you onboard, your Sponsor is going to go through the nuts and bolts of how to be successful and how to earn selling the company’s items. To sell the company’s items, you’ll be doing the same as you do with other MLM businesses.

Also, you could have virtual parties or home parties. Then you’ll be able to display the merchandise and try to convince people to buy. Home parties do have more satisfactory results than virtual parties as potential customers will be there and take a look at these products, thus giving you a better chance of converting them into purchases.

Is LuLaRoe A MLM Scam – You Get What You Pay For

Many consumers have complained that LuLaRoe’s leggings are too expensive. LuLaRoe leggings cost on average $30 to $40 each which are far from the cheapest options available. Interestingly, If you make the point about the cost to a LuLaRoe rep, they’ll quickly respond that “you get what you pay for”.

That brings us to the issue of quality. If you do a quick search on Instagram, Facebook, or Google you’ll find a tremendous number of complaints of LuLaRoe customers who have holes in their leggings after just a few uses. The point is if LuLaRoe is going to justify charging a higher price, then the quality of their merchandise needs to be of a higher quality that lasts much longer than a few days or weeks.

According to an article in businessinsider.com, LuLaRoe doesn’t even hide the fact that their leggings are getting holes too quickly. Here is a statement from their head of production:

“The leggings may get holes because we weaken the fibers to make them buttery soft,” Patrick Winget, the head of the production for LuLaRoe, is quoted as saying in the January 17 email. “We have done all we can to fix them.”

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Is LuLaRoe Similar To A Pyramid Scheme?

The biggest question regarding any MLM business today is this: Is it or is it not a pyramid scheme? Well, in LuLaRoe’s case, the business seems to be right on the border of being a pyramid scheme. Also, if you read the FTC’s explanation of what constitutes a Pyramid scheme, you could make the case that the facts presented by the FTC could fit LuLaRoe and hundreds of other network marketing companies.

According to the Federal Trade Commission, many pyramid schemes do include selling products or services. Similarly, here’s some guidance from the FTC on when a scheme selling products might be a pyramid scheme: Recruits are forced to buy more products than they could sell often at inflated prices. This is a way to make a pyramid scheme harder to catch!

Why Women Are Quitting LuLaRoe

I rarely post YouTube videos on my blog posts, but here is an excellent video describing the truth behind LuLaRoe.

Many have complained that LuLaRoe associates are “inventory stacking”. Inventory stacking is buying thousands of dollars of merchandise with the hopes of eventually selling it off or even trading with other LuLaRoe associates.

Also, many spouses have complained that they are in credit card debt because of purchasing thousands of dollars of inventory from the company. You do have distributors selling retail products and people can purchase LuLaRoe merchandise without joining the business.

The State of Washington, in January 2019, filed a suit against the company for deceiving people into “purchasing into its fraudulent scheme using misleading assertions of great profits and unsold item refunds.” Similarly, in December 2018, California’s Superior Court filed suit asserting the company had “cheated creditors and suppliers.”

This isn’t to say the company is fraudulent or a scam, but from what I have seen, you have red flags making me feel skeptical. As is with MLM businesses, it pays to do due diligence when getting involved, because you need to feel confident that you are associating with a legit business. LuLaRoe is similar to other network marketing businesses I’ve reviewed on this blog such as:

• Vasayo.com
• NutriCellix
• Kannaway

Startling Facts About Multi-Level Marketing You Need To Know

• 26%: The meager amount of people who earn a profit participating in MLMs
• You are 38%: more likely to make money with your own small, home-based business than by joining an MLM
• 50%: Percentage of MLM reps who quit within 1 year after joining
• 60%: percentage of people involved with MLM earned less than $500 within the last 5 years of joining
• There is a 10% – 20% higher rate of making a profit with an online business than it joining an MLM
• You would have a 300 times higher chance of winning a game of roulette in Las Vegas from 1 single spin of the wheel than you would make a profit with an MLM
• 99%: According to the Federal Trade Commission this is the number of all MLM participants who lose money
• 47%: The number of participants who flat-out lose money according to the AARP Foundation
• 27%: the percentage of people who make no money whatsoever in an MLM – AARP Foundation
• 53%: This is the percentage of MLM participants who earn less than $5000 a year
• 39%: the number of people who QUIT MLMs because trying to sell services and products to family and friends damaged their relationships
• 95%: The respective number of reps who quit within 10 years
• 75%: The number of people who after participating in an MLM said that never again would they join another MLM in their life
• 1,049: The number of MLM reps who make less than 70 cents an hour according to a 2018 poll of MLM reps representing various companies
• 20%: of people involved with MLMs never made a sale
• 32% of people involved with MLM financed their MLM “business” by getting into credit card debt

References

References for the above facts are from the following sources:

• Jon M. Taylor, MBA, Ph.D., Consumer Awareness Institute The Case For And Against Multi-Level Marketing
• 3 Mind-Blowing Statistics About MLMs: Due.com
• Multi-level marketing: Wikipedia
• Multilevel Marketing: “The Research, Risks and Rewards”: AARP

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I Do Not Recommend LuLaRoe

There are too many red flags with LuLaRoe for me to recommend this as a “business opportunity” worth looking into. I would not call LuLaRoe a SCAM, but I certainly can’t recommend this as a business opportunity. However, what you decide to do is an individual choice at the end of the day.

For example, LuLaRoe was ordered to pay $4.75 million to resolve Washington state Attorney General Bob Ferguson’s consumer protection lawsuit over accusations that LuLaRoe was a pyramid scheme.

• For example, LuLaRoe advertised that retailers could make “full-time income” for “part-time work.” At recruitment events and calls,
• LuLaRoe also posted annual income disclosure statements on its website that were incomplete, outdated or otherwise not representative of incomes earned by Washington retailers.
• LuLaRoe’s profitability claims were unfair and deceptive, violating the Consumer Protection Act. Misleading claims about income potential is a hallmark of a pyramid scheme.

Nevertheless, seeing some negative aspects of the company that haven’t changed and the majority of associates overwhelmingly saying they don’t make much income, I would not recommend LuLaRoe. These are the facts you ought to be aware of before being involved.

This company is not the best to start a home business. There are other methods of making money that is less controversial and less stressful. As noted in the above statistics, 99% of people who get involved with multi-level marketing fail to make money. Also, because of the fraudulent “gurus,” marketing their exaggerated “schemes” that just don’t work out, many people fail at making money online.

However, there’s some good news. There is a much better way to make money from home. Creating your own affiliate marketing business with the help of Wealthy Affiliate.

Warning: The RED Flags of MLM Schemes and Scams Online

It would be best to watch out for these things with multi-level marketing companies, as they are red flags you should not ignore. Taking note of these eight signs can save you considerable time and money.

1. A FREE Trial Is NOT Offered By the Company

This is a big one to look out for. Most information products are worthless, and if you could jump directly into those products and “try them out” before investing in them, you would never invest in low-quality substances. That is why they hide behind a payment. If their information is so good, should they not prove it by giving you a taste?

Does LuLaRoe MLM Opportunity Offer a Free Trial? NO 

2. Companies That Don’t Clearly Outline Pricing

If you go to a sales page for a product and they don’t disclose the price clearly, you will likely get “duped.”  Any legitimate company will offer clarity on pricing and have a pricing page on their website.  MANY companies in this industry HIDE their pricing; it is unethical, and it will almost certainly scam you. Also, if the company charges hundreds or even thousands of dollars for their products or for joining their business “opportunity,” it should be of concern.

Does LuLaRoe MLM Opportunity Outline Clear Pricing? YES

3. MLM Companies That Use Video Sales Pages / Squeeze Pages

If you visit a “sales page” and the only thing you see on it is exaggerated promises of quick money, this will almost certainly be an expensive, overpriced scam. This marketing tactic is used to HIDE pricing and hide the product itself. They typically ask for your email or a small payment, and then you will be put through an extensive and expensive sales funnel.

Does LuLaRoe Use a Video page for their opportunity? YES

4. Companies That Don’t Have a High TrustPilot Rating

LuLaRoe has a Trustpilot rating of 3.7 which is not a very good rating. TrustPilot is where you should get real consumer reviews about products/services you plan on buying.  If a company doesn’t exist on this website or has a rating lower than 4.5 out of 5 stars, then you may want to seriously reconsider joining. There are going to be better programs and services available without the financial risk.

Does LuLaRoe Have A High Trustpilot Rating? NO 

5. Multi-Level Marketing Companies That Sell “Riches” Without Telling You the Process

If you are being pushed by the idea that you are going to be “rich” or that you’ll be able to “make money in a short period ” without telling you what you will be doing to earn this money (in a specific way), then they are selling the “sizzle”…and chances are there is no “steak” after you make your purchase. Avoid programs these types of programs like the plague.

Is the Younique Income opportunity confusing? YES

6. Companies Without an Easy Way to Contact Them

If you don’t have a direct way to contact the company to answer questions about their program, they are hiding behind something. That is the first clue, and I recommend you test it. If the company has an email address, email it. If you don’t get a response within 48 hours at most, then that is probably the sort of help you can expect in the future.

Can you easily contact the administrators at LuLaRoe? YES

7. Companies That Don’t Offer Direct Access/Communication with the Owners

Who owns the product?  Can you get help and communicate with them directly?  If NOT, then this program is more than likely in the business of taking your money.  CEOs in the opportunity world who are unwilling to communicate with their customers directly have a “too good for you” mentality, which should be avoided.

Can you contact the owners of LuLaRoe directly? NO

8. Companies That Are Just “Information” Only

If they are providing you with “ideas” about how you could create a business without offering you all the tools, services, and levels of ongoing support that you need to succeed online, you will have a tough time succeeding. Many companies charge you for their information and then tell you that you need to purchase all sorts of stuff actually to use the techniques taught.

Is the LuLaRoe opportunity just information products? NO

When you look at the above eight points discussed, multi-level marketing platforms like the Allbit Trade are not business opportunities you want to get involved with! My rating of this so-called “make money online opportunity” is 0 out of 8!

As you can conclude from the above information, multi-level marketing companies are not all what they claim to be. Too often, people put their hope and trust in someone else making money for them instead of learning how to leverage the power of the internet with their own online presence. People look for others to rescue them financially when, in reality, YOU have to come to your financial rescue!

However, there is a BETTER OPTION if you want to create your own online business. There is a platform available that will teach you step by step how to build your own online business, an ethical platform whose primary focus is to help everyday people learn how to make money online, a platform where you can immediately have access to individuals who are highly successful with their online businesses. Introducing Wealthy Affiliate, The Industry Leader in the Online Business Space…

However, there is a platform available that will teach you step by step how to build your own online business, an ethical platform whose primary focus is to help everyday people learn how to make money online, a platform where you can immediately have access to individuals who are highly successful with their online businesses.

Introducing Wealthy Affiliate, The Industry Leader in the Online Business Space…

1. WA Offers a Free Trial
2. WA Offers Clear Pricing
3. WA Offers a comprehensive website
4. WA has a High TrustPilot Rating
5. WA is not a get-rich-quick scheme 
6. WA offers a clear way to contact the company  
7. You can contact Kyle & Carson directly 
8. WA offers tools and support

(1) Companies That Don’t Offer a Free Trial.  

This is one of the key reasons that I want to introduce you to Wealthy Affiliate. You can get a “test drive” to Wealthy Affiliate, but that doesn’t end, and there is NO credit card requirement. This is their Starter membership, and it includes more than any paid product I have seen in this industry. Here are just a few things that you get within the COMPLETELY FREE Starter membership.

• One Free Profit-Ready Website (Hosting Included)
• Getting Started Training, 10 Full Video Lessons
• 7 Days of Full Mentorship & Expert Help
• Communication Directly with Kyle & Carson (the founders)
• Keyword and Market Research Tools
• The Affiliate Opportunity Platform
• Ability to Network with Millions of Fellow Entrepreneurs
• 100’s of training resources
• And Much More!

(2) Companies That Don’t Clearly Outline Pricing.   

Wealthy Affiliate’s pricing page clearly outlines three available memberships: a Starter membership (FREE), a Premium ($49/month), or a Premium Plus+ ($99/month). There are no upsells, and nothing more complex than this. You are not obligated to upgrade, but if you do decide to, you can run a million-dollar online business utilizing the platform and tools that Wealthy Affiliate offers. 

(3) Companies That Use Video Sales Pages / Squeeze Pages.  

Wealthy Affiliate offers a comprehensive website where you can learn more about the exact process of building an online business and all of the platforms, technology, and services involved that are offered to you as a member; this includes a thorough outline of WA’s education, hosting, website, domains, community, and success elements.

(4) Companies That Don’t Have a High TrustPilot Rating.  

 WealthyAffiliate.com has a 4.8 STAR rating on TrustPilot.  The owners personally get back to every comment, and this leads to the industry.  It is tough to achieve a rating like this in any industry, let alone the make-money-online niche

(5) Companies That Sell “Riches”.   

One thing you will not hear from Wealthy Affiliate in their training or marketing is “get rich quick.”  The reality is that to build a business, you first have to build a solid foundation and understand it. Wealthy Affiliate provides you with the tools, training, and platform you need to create a business of any size online (even million-dollar websites). Still, it would be best if you were realistic about the process. It will take some hard work and dedication. 

(6) Companies Without an Easy Way to Contact Them.  

You can contact Wealthy Affiliate directly from their website without being a member. They have a contact form, and the owners freely share their email addresses if you need to contact them or have any questions. They are kyle@wealthyaffiliate.com and carson@wealthyaffiliate.com. Feel free to reach them directly if you have questions, and of course, as a member, you will have access to them within the community. Which leads me to…

(7) Companies That Don’t Offer Direct Access/Communication with the Owners.   

Wealthy Affiliate is the most transparent company in the space and offers you access to Kyle and Carson, the founders, directly within the community. If you want help from them directly, ask. You can even access them for their help and mentorship within the first seven days of the Starter membership…so without paying a dime, you can access both owners directly!

(8) Companies That Are Just “Information”.  

Many things are required to build a successful online business, and Wealthy Affiliate includes all of them.  To build an online business, you need a website, top-tier hosting, marketing and research tools, ongoing education of the latest marketing strategies, writing tools/platforms, and a way to find the TOP opportunities online.  Not to mention support, mentorship, and expertise.  These are ALL things that Wealthy Affiliate provides you with any membership level, equipping you to create, grow, and manage a business of any level online.

No other company in the industry offers a free “test drive,” as they likely don’t have the confidence that someone would purchase a trial. WA gives you access to its platforms, websites, hosting, research tools, community, and support within the free membership…so there is ZERO risk, and you can decide if you ever want to purchase a premium membership.

Wealthy Affiliate Will Help You Build Your Own Online Business

There is no online platform that makes building your own affiliate marketing business easier than Wealthy Affiliate does. If you’re new at online marketing, if you have zero technical skills, this is the platform for you.

Even better is the fact that the owners Kyle Loudon and Carson Lim have made possible the opportunity to create a FREE account. Similarly, this allows you to try everything out before you commit. How cool is that! As far as Affiliate Marketing is concerned, here’s what you won’t have to deal with:

• No recruiting
• Spending money or maxing out your credit cards on excess inventory
• Never have to talk to friends or family
• Trying to afford the monthly auto-shipments
• Sales or opportunity meetings
• Traveling
• Going to opportunity meetings in someone’s home you do not know
• Having people you don’t know in your own home for meetings

All of the above you don’t have to endure when you have your own online business! Therefore, STOP procrastinating and get your FREE account NOW at Wealthy Affiliate.

Talk Soon,

Howard

PS:

What You Need To Do Next:

OK…Here’s what you need to do next – It’s very simple: First: STOP making excuses! The hard reality is if you don’t have enough money to create a better life for yourself and your family, you need to DO SOMETHING NOW. Not tomorrow, not next week, or next month. You need to take action NOW. Second: Sign up for a FREE account at Wealthy Affiliate. Third: Get to work!

Why You Need To Do This:

You need to do this so you can give yourself and your family a better quality of life. No one is going to knock on your door and give you a way out of your money problems. YOU have to participate in your financial rescue. It’s as simple as that. 

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