LuLaRoe to pay $4.75M to settle pyramid scheme lawsuit | National News
SEATTLE (AP) – California-based multi-level marketing company LuLaRoe is paying $ 4.75 million to clarify allegations made by the Washington Attorney General’s office of being operated as a pyramid scheme.
LuLaRoe sells leggings and other clothing to a network of independent retailers who can attract other retailers to sell the company’s products.
Attorney General Bob Ferguson sued the company and its executives two years ago, saying they misled people about how profitable it was to be a LuLaRoe retailer. While two people at the top made millions from 2016 to 2019, thousands of others were left with debt and unsold products that they couldn’t return due to the company’s complex and misleading refund policy, he said.
Ferguson said $ 4 million of the settlement will be distributed to approximately 3,000 Washington residents who have been recruited for the company. “Any retailer in Washington that has lost money under the pyramid structure of LuLaRoe will receive a refund,” said a press release in his office.
The company denied wrongdoing in a consent decree filed late Monday in the King County Superior Court in Seattle. However, the agreement prohibits LuLaRoe from operating a pyramid scheme and requires it to be more transparent to retailers. Among other things, an income statement needs to be published detailing how much retailers could make.