Founding of LuLaRoe
LuLaRoe is a clothing company founded on May 1, 2013 by DeAnne and Mark Stidham. Mark is the president and CEO of DN Company. As stated on its website, its goal is to improve life and build a family through fashion. They are “confident and based on quality products made with you, the customer in mind.” So before we get into the question of whether LuLaRoe is still in business, let’s address the foundations of the company.
LuLaRoe is a social sales company made up of social sales entrepreneurs. It is also made up of income supported by the Stidham family and their local community. The name LuLaRoe comes from the names of their first three granddaughters Lucy, Lola and Monroe.
In 2014, LuLaRoe expanded her wardrobe by adding dresses and skirts to her product line. Later, they added leggings, making it their most famous product. The company had 23 employees and more than 700 distributors. In fact, they were doing so well that they sold about $ 10 million. By the following year, they had more than 2,000 distributors. In an August 2016 interview with CEO Mark Steadam, it was revealed that Lularo is set to sell $ 1 billion. By then, they had 26,000 distributors, shipping exactly 350,000 units per single day. Then, by 2017, LuLaRoe had 80,000 distributors.
The first legal issue
Perhaps you are questioning Lularo in business today because you have heard of their legal problems. Things took a turn in 2017 when customers filed a class-action lawsuit against LuLaRoe. They claim that the point-of-sale software did not accurately calculate the sales tax rate for interstate sales. In addition, jurisdictions where they do not charge sales tax on clothing. In addition to many complaints that the products were substandard, it managed to lower the Better Business Bureau (BBB) rating to “F” in January 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 alleges that LuLaRoe was “involved in misconduct, including unfair business practices, misleading advertising and breach of contract.” LuLaRoe claims that this is all baseless and apparently they have advised distributors to “borrow money” […] Credit cards were issued, and some were even asked to sell their breast milk. “
More legal issues
Then in 2018, Lularo once again faced controversy. The National Down Syndrome Society (NDSS) has ended its relationship with LuLaRoe. This came after one of LuLaRoe’s top distributors ridiculed people with mental disabilities during a live stream sale. NDSS then asks LuLaRoe to end the relationship with the distributor. This is something that LuLaRoe refused to do because they apologized to the distributor This has given rise to outrage across the internet.
Towards the end of the year, in the wake of all the layoffs, sellers abandoned them and debt increases, LuLaRoe’s main clothing supplier sued them. Providence Industries LuLaRoe has filed for bankruptcy seeking $ 49 million. This meant that they were unable to pay their debts because the company had not paid their bills for seven months. The lawsuit alleges Diana and Mark Stidam hid their assets in a shell company or offshore account for their “luxurious lifestyle” and “hindered, delayed and deceived creditors”.
And even more legal issues
Finally, in 2019, the Washington State Attorney General’s Office filed its own lawsuit against LuLaRoe with Mark and Diane Stidam. It alleges that their multi-level marketing company encourages them to focus on a pyramid scheme, misleading income claims, and hiring on sales. Providence Industries has filed another lawsuit to seize the company’s assets. Since then, more complaints have surfaced, this time over 300, resulting in another “F” rating by LuLaRoe BBB. So, is LuLaRoe still in business?
Well, in 2019, LuLaRoe, after shutting down distribution centers and laying off employees, filed a counter lawsuit against Providence Industries for 1 billion. It wasn’t until February 2021 that LuLaRoe finally agreed to pay Washington about $ 5 million for the case, although they have yet to admit any wrongdoing. The settlement claims that LuLaRoe acts as a pyramid scheme and prohibits the proper disclosure of their income, along with other similar measures to upgrade their transparency. However, they ended up with another “F” by BBB.
IsLuLaRoe still in business today? Yes. They are still trying to operate their business in a more positive light. As of May 2022, LuLaRoe has been able to get a rating of “C” by BBB.
The story of the rise and fall of LuLaRoe was so fascinating to many that two documentaries were made. “The Rise and Fall of Lularo” is on DiscoveryPlus. The other is “LuLaRich”, a documentary miniseries from Amazon Prime.
This story should come as a lesson for entrepreneurs. Don’t skimp on your suppliers, your distributors and your customers. Why poor management from the Stidham family is a business with respect, loyalty, and of course, not breaking the law.