LuLaRoe Founders Respond to Pyramid Scheme Allegations

Screencap via CBS 
Screencap via CBS 

After recent reports that dozens of LuLaRoe sellers have filed for bankruptcy in the last year, plus a $1 billion lawsuit alleging that the company is running a pyramid scheme, LuLaRoe’s founders are speaking out against the allegations.

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Co-founders Mark Stidham and DeAnne Stidham appeared on CBS News this Wednesday to dismiss complaints that LuLaRoe, which enlists around 80,000 independent “consultants” to sell merchandise at home, is a pyramid scheme. “What that is is an uneducated opinion,” Mark Stidham said. “They haven’t looked at who we are because we sell product through to a consumer, and it’s highly-desirable product. That is not a pyramid scheme.”

LuLaRoe consultants invest thousands of dollars in the brand by purchasing merchandise to then sell, and women are encouraged to keep a lot of merchandise on stock, but more than half of the company’s sellers just make $1,000 or more per month. A small group at the top makes $500,000 or more per year in bonuses based on sellers below them.

The women in the class action lawsuit say that they never even turned a profit because of a saturated market and that LuLaRoe “made payments to consultants based on how much product those consultants and their recruits purchased on a regular basis.” But according to Mark Stidham, these complaints are not “entirely organic” and he believes someone is setting up the company by generating these allegations. As for who exactly that person would be, he doesn’t say.

Hazel Cills is the Pop Culture Reporter at Jezebel. Her writing has been published by outlets including The Los Angeles Times, Pitchfork, Rolling Stone, The New York Times Magazine, ELLE, and more.

DISCUSSION

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If you have to say it’s not a pyramid scheme....it’s probably a pyramid scheme.