Seller beware? With seemingly countless opportunities to go into business for oneself by selling anything from face cream to leggings, it turns out that “consultants” who hawk merchandise for big companies could find themselves in a financially tough spot. Two recent lawsuits against the clothing company LuLaRoe have brought to light some real challenges that people are facing.
The lawsuits, brought by LuLaRoe consultants in October in California, accuse the company of pressuring its sellers to buy thousands of dollars of merchandise to keep on hand as inventory. Those sellers, usually women who are hoping to make some extra money for their families, then find themselves at the bottom of a pyramid scheme.
According to Scary Mommy, “Consultants were told that they should have at least 10 items in every size in all styles. This was purportedly the ‘magic number’ of inventory.” The lawsuit also cites “manipulation and misinformation” on the part of LuLaRoe when it came to getting consultants on board to purchase their products for inventory.”
The article went on to say, “The plaintiffs allege that they were encouraged to max out credit cards to the tune of thousands of dollars in order to keep their inventory fresh. And if that doesn’t work? Sell your breastmilk, apparently.”
Sell breastmilk? Yes, in the video below, you can see LuLaRoe “mentors,” presumably higher up on the pyramid, touting the benefits of selling one’s breastmilk in order to make the money needed to “invest” in this new business opportunity, all while “helping babies in need in the NICU.”
The lawsuit against LuLaRoe alleges that sellers are doomed from the start, and would never realistically be able to offload the amount of product that they are forced to keep on hand. What’s worse is that the company recently changed its return policy. Previously, consultants were able to return their merchandise for 100 percent refund, including shipping costs. Now they can only expect a 90 percent refund, and no coverage of shipping fees. This is leaving countless sellers at a loss.
If you, or someone you know, has struggled to sell LuLaRoe inventory, let us know in the comments below!