Founding of LuLaRoe
LuLaRoe is an apparel company that was founded on May 1st, 2013 by DeAnne and Mark Stidham. DeAnne is the President of the company while Mark is the CEO. As stated on its website, its mission is to boost lives and build up families through fashion. They “instill confidence and bases itself on quality products made with you, the Customer, in mind.” So before we get to the question of is LuLaRoe still in business, let’s address the foundations of the company.
LuLaRoe is a social selling company made up of social selling entrepreneurs. It’s also made of the proceeds supported by the Stidham family and their local community. The name LuLaRoe came from their first three granddaughters named Lucy, Lola, and Monroe.
In 2014, LuLaRoe expanded its apparel by adding dresses and skirts to its line of products. Later on, they added leggings, making it their most famous product. The company had twenty-three employees and over 700 distributors. In fact, they were doing so well that they made nearly $10 million in sales. By the next year, they had over 2,000 distributors. An interview in August 2016 with CEO Mark Stidham revealed that LuLaRoe was going to make $1 billion in sales. By that point, they had 26,000 distributors, shipping exactly 350,000 units every single day. Then, by 2017, LuLaRoe had 80,000 distributors.
First Legal Issues
Most likely you’re questioning is LuLaRoe in business today because you’ve heard about their legal troubles. Things took a turn in 2017 when a class-action lawsuit was filed by customers against LuLaRoe. They claimed that the point-of-sale software did not calculate the sales tax rate correctly on interstate sales. Additionally, in jurisdictions where they don’t charge sales tax on clothing. Along with many complaints that the products were of poor quality, this led the Better Business Bureau (BBB) to downgrade its rating to an “F” in January of 2017.
Later in October of the same year, another lawsuit was filed for $1 billion in California where it accused LuLaRoe of being a pyramid scheme. The lawsuit claimed that LuLaRoe was engaging in “misconduct, including unfair business practices, misleading advertising, and breach of contract.” LuLaRoe claims that all of it is baseless and apparently they advised distributors to “borrow money […] take out credit cards, and some were even asked to sell their breast milk” to buy additional inventory according to those in the lawsuit.
More Legal Issues
Then in 2018, LuLaRoe faced controversy once more. The National Down Syndrome Society (NDSS) terminated its relationship with LuLaRoe. This was after one of LuLaRoe’s top distributors mocked people with mental disabilities during a live stream sale. The NDSS then asked LuLaRoe to end ties with the distributor. This is something that LuLaRoe refused to do because they had accepted the apology from the distributor. This prompted outrage across the Internet.
At the end of the year, between all of the layoffs, sellers dropping them, and mounting debt, LuLaRoe’s chief clothing supplier sued them. Providence Industries sought almost $49 million claiming LuLaRoe insolvent. This meant that they were unable to pay their debts because the company had not paid their bills for seven months. The lawsuit also accused DeAnna and Mark Stidham of hiding their wealth in shell companies or offshore accounts for their “lavish lifestyle” and to “hinder, delay, and defraud the creditors.”
And Even More Legal Issues
Eventually, in 2019, the Washington State Attorney General’s Office filed its own lawsuit against LuLaRoe along with Mark and DeAnne Stidham. This alleged that their multi-level marketing company is a pyramid scheme, misleading income claims, and encouraging to focus on recruitment over selling. Providence Industries filed another lawsuit to seize the company’s assets. Then, more complaints came in, over 300 this time, leading to LuLaRoe getting another “F” rating by the BBB. So, is LuLaRoe still in business?
Well, in 2019, LuLaRoe, after closing distribution centers and laying off employees, filed a counter lawsuit against Providence Industries for $1 billion. It wasn’t until finally in February 2021 that LuLaRoe agreed to pay almost $5 million for the Washington lawsuit, though they still admit to no wrongdoing. The settlement claims that LuLaRoe is prohibited from operating as a pyramid scheme and to publish their income disclosures correctly, along with other similar measures in order to upgrade their transparency. However, they ended up with another “F” by the BBB.
Present
IsLuLaRoe still in business today? Yes. They are still attempting to make their business work in a more positive light. As of May 2022, LuLaRoe has managed to get its rating up to a “C” by the BBB.
The tale of the rise and fall of LuLaRoe was so interesting for many people that two documentaries have been made. “The Rise and Fall of LuLaRoe” is on DiscoveryPlus. The other is “LuLaRich”, a documentary miniseries on Amazon Prime.
This story should come as a lesson to up-and-coming entrepreneurs. Don’t skimp out on your suppliers, your distributors, and your customers. The poor management from the Stidham family is why a business with respect, loyalty, and of course, not breaking the law.
