Washington AG Suing Corona-Based Retailer LuLaRoe, Alleging It’s a Pyramid Scheme
The Washington state attorney general has filed a lawsuit against Corona-based clothing company LuLaRoe, contending the business is a pyramid scheme.
According to the retailer’s website, it has created a collection in collaboration with Disney. In 2017, LulaRoe issued refunds following several complaints that its leggings “rip like wet toilet paper.”
Attorney General Bob Ferguson announced the lawsuit filed in King County Superior Court in a prepared statement released Friday, saying thousands of Washington residents have lost money selling clothes for LuLaRoe.
In an email, a LuLaRoe spokesperson said the claims in lawsuit are completely without merit and the company will fight vigorously against them. “We are enthusiastic about the strength of the LuLaRoe brand, strong consumer demand for our new apparel designs and enhancements, and the passion of tens of thousands of Independent Fashion Retailers across America,” the company spokesperson, who declined to give a name, wrote in the email.
Ferguson said the company misrepresented and failed to honor its refund policies in violation of the state Consumer Protection Act.
“LuLaRoe tricked consumers into buying into its pyramid scheme with deceptive claims of high profits and refunds for unsold merchandise,” said Ferguson in a prepared statement. “Instead, many Washingtonians lost money and were left with piles of unsold merchandise and broken promises from LuLaRoe. It’s time to hold LuLaRoe accountable for its deception.”
More than 3,500 Washington residents have become “Independent Fashion Consultants” for LuLaRoe since the start of 2014, and fewer than 2,000 are still active with the company, he said.
Ferguson is asking a judge to stop LuLaRoe from continuing what he says are unlawful business practices in Washington state. He also wants a judge to order the company to pay restitution to customers.