- LuLaRoe is a designer of women’s clothing that recruits independent consultants to market and sell its products directly. The company launched in 2012 and shot to fame within four years with top consultants claiming to make a six-figure salary from selling the brand’s clothes and managing other sellers.
- The company is now facing a lawsuit from consultants who claim they have been misled in a “pyramid scheme” that focuses on recruiting consultants and persuading them to buy inventory rather than selling clothing.
- On Friday, Bloomberg reported that the company’s co-founder, DeAnne Stidham, also encouraged consultants to get gastric surgery.
LuLaRoe’s troubles are mounting.
In the past year, the women’s clothing company, which recruits independent consultants to market and sell its products, has gone from being a way to help stay-at-home mothers make a quick buck to facing lawsuits from both customers and consultants who claim they have been duped by the brand.
The largest class-action lawsuit against the company alleges that it misled its salespeople in a “pyramid scheme,” which focuses on recruiting consultants and persuading them to buy inventory rather than selling clothing.
According to Bloomberg’s interviews with several consultants, the company’s co-founder DeAnne Stidham may have had other tactics to make a profit:
“DeAnne asked if she had any interest in getting gastric surgery. “She’s like, ‘Courtney, oh my God, you have got to go get it. I’ll have my sister call you next week,’ ” former top consultant Courtney Harwood told Bloomberg.
According to Bloomberg, four other consultants claimed that they had been approached by DeAnne or her sister Lynnae Knapp and told that they could be taken to a clinic in Tijuana called “Obesity Not 4 Me” to get a gastric sleeve.
LuLaRoe declined to comment to Business Insider.
Stidham’s nephew, Sam Schultz, who at one point worked as Event Manager for the company before he quit, had the surgery himself and told Bloomberg that the sisters were making a profit from this venture.
“Lynnae charges $US5,000, but it only costs $US4,000. You pay her through PayPal, she gets a cut, then takes you to Mexico,” he said.
Another consultant, Stacy Kristina, who also left the company, told Bloomberg: “I was told by DeAnne herself that she likes her leaders to be a size small or medium.”
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