Is LuLaRoe, RueNoNo? The fashion company is under fire for return policies

LuLaRoe under fire for business model and policy change

It is one of the most popular work from home businesses these days.

We're talking about LuLaRoe, a fashion company known for leggings and T-shirt dresses with big bold prints. It uses a multi-level marketing model where consultants buy products and then sell them to friends and family.

But now some are saying it's more like a pyramid scheme. 

Unlike a lot of multi-level marketing companies, LuLaRoe consultants have to buy thousands of dollars worth of product upfront. They place orders for styles and quantity, but when it comes to actual patterns and prints, the "company" decides on what they are going to sell. That didn't seem to be a problem for some consultants, until the company made a major policy change.

LuLaRoe looked like one big happy family during its annual convention last year.

The company's funky fashion line has been booming since launching in 2012, hitting one billion dollars last year according to published reports.

And the number of independent consultants spreading what's called LuLaLove, has grown to eighty thousand, mostly women, looking to become entrepreneurs.

"I wanted to be able to contribute financially. That was my main thing," said Amanda Morgan.

And in the beginning, she did.

"I think I sold 120 items in 24 hours," Amanda said.

But sales quickly slowed, as more consultants fought for the same customers online. And she wasn't earning anywhere near the money she laid out...nearly ten thousand dollars for clothing and supplies.

"Between the garment racks, hundreds of hangars, cameras. You need a laptop, you need a label printer, all your shipping materials," she explained

We talked to local consultant Heather Hall who says some leaders in the company are very insistent on consultants under them buying more and more inventory. But, she says "when you purchase inventory, you can only pick quantity and size, it's always a mystery what prints you get.  So if you get a box full of ugly, too bad," she said.

LuLaRoe issued a waiver in August, offering to refund 100% of the wholesale amount consultants paid for their merchandise, with no restocking fee and free shipping.

But that recently changed, with the company saying it would only refund ninety percent, and shipping was on the consultant.

"Oh my g-d I just started crying," said Amanda.

Critics say, based on the company’s own reports, many consultants earn just $85 in commission a year.

It's why Amanda has since walked away, but not without about five grand in debt.

When we asked about the complaints from consultant the company issued this statement which read:

LuLaRoe provides a fair and generous path to Independent Fashion Retailers who want to exit the business.  Last week, we simply reiterated a long-term written policy that each Retailer agreed to when he or she signed up. We had temporarily provided a waiver on some of the policy requirements between April and September 2017.

© 2017 WKYC-TV


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