LuLaRoe Consultant, Samantha Langston, had enough about two weeks ago. She had joined LuLaRoe in June 2016 and believed it was her path to financial success. The company, she says, encouraged her to take out loans to not only buy stock to sell, but an iPhone which was necessary to use LuLaRoe software for sales. As a result, she currently has about $15,000 in debt due to her LuLaRoe career. After finding out about the accusations of LuLaRoe stealing artist Micklyn Le Feuvre's designs, she sent her resignation letter.
She received "permission" to go out of business (GOOB in LuLaRoe parlance). This is a lengthy process that involves checklists and, most importantly, returning unsold merchandise. When Langston sent her resignation letter, LuLaRoe policy was to give a 100 percent refund on unsold merchandise and pay for return shipping. Langston has $16,000 worth of returns--just enough to pay off her debt.
So, on Wednesday night she was ready to sit down and enter the merchandise in order to ship it back and found out that, without warning, LuLaRoe policy had changed that day. Now she was only eligible for a 90 percent refund, had to pay her own shipping, and would be subject to strict scrutiny on returns.
"I haven't slept since," she said. If LuLaRoe accepts all her merchandise as resaleable, she'll be out $1600 for the clothing and another $1100 in shipping costs, a total of $2700, for a business that was supposed to come with a "happiness guarantee." If some of her merchandise doesn't meet their qualifications for resale, they'll keep it anyway.
Langston isn't alone in her stress and anger. Another consultant, emailed me to report:
My [GOOB] acceptance was received 8/29/2017 with instructions on filling out formstacks for my inventory and also included verbiage that in up to 10 days I would receive my return shipping labels. Yesterday's bombshell from the company no longer honoring the 100% buyback for those that did not have shipping labels marked day 15 of waiting. Their stall tactics has me left with $30,000.00 in wholesale, sitting in boxes in my living room, with no clear way of sending it back. They also changed that everything must be in original packaging (i have none), we will not get refunded for ANY holiday capsule we return, and we have to pay shipping to return the items. My shipping cost alone would be over $2,000.00.
LuLaRoe's Facebook and Twitter page are blowing up with angry sales consultants venting their frustration at not only the policy change but the way it was handled, and LuLaRoe's unresponsive customer service.
Heather Blithely runs a Facebook page for disgruntled LuLaRoe customers and consultants called LuLaRoe Defective/Ripped/Torn Leggings and Clothes, which has over 40,000 members. She confirmed that there was no official announcement before the change, and also explained to me why the group has become the place to make complaints:
We let them post any opinion, good or bad, but we also post anonymously for them. Some mentors and coaches began threatening to remove members of their groups who posted in LLR Defective or for even just being a member. (I have video proof of one instance). Being kicked out means potential loss of customer base, being cut off from their team members and any help at all. But if they remain active their upline still is eligible for bonuses based on their sales.
I reached out to LuLaRoe for comment and heard nothing back. I know that other media outlets have also attempted to get a response. I will update if I get a response.
Not all consultants were upset, of course. Several pointed out that the model of 100 percent refund plus free return shipping could be financially unsustainable for LuLaRoe and that a 90 percent refund was more than generous. However, the original purpose of the whole refund was to stop consultants from discounting their stock when they decided to go out of business, damaging the sales potential of other consultants. Regardless of whether this move makes fiscal sense for LuLaRoe, springing it on consultants with no warning is unfair.
In the meantime, LuLaRoe looks like it's on a downward spiral. Their willingness to make changes that dramatically negatively affect their consults, lack of response, and sketchy business practices regarding their designs indicate it's a company on the road to destruction.
Update: I received a response from LuLaRoe.
Statement by LuLaRoe
LuLaRoe provides a fair and generous path to Independent Fashion Retailers who want to exit the business. We are simply reiterating a long-term written policy that each Retailer agrees to when he or she signs up.
Background Points for Reference:
- More than 80,000 Independent Fashion Retailers sell LuLaRoe. The vast majority are running great businesses and are happy with their experience -- as evidenced by the 20,000 Independent Fashion Retailers who attended our annual conference last summer. Those exiting the business is a very small percentage.
- LuLaRoe is not changing its written policy. The only change is that the company is ending a temporary waiver offered to Independent Fashion Retailers leaving the business since April. LuLaRoe is making this change now because it has addressed issues that led to the waiver.
- LuLaRoe grandfathered in Independent Fashion Retailers exiting the business who either received an email confirmation from LuLaRoe of a refund amount due to them, or received valid return shipping labels from LuLaRoe. These Retailers will not be impacted by this announcement.
- Starting and maintaining a business has inherent risk. By agreeing to buy back product from Independent Fashion Retailers who want to exit the business at 90 percent of wholesale value, LuLaRoe is helping mitigate the vast majority of that risk for Independent Fashion Retailers.
- In order for LuLaRoe to continue to administer this benefit to Independent Fashion Retailers, we need to ensure that product returned to us as part of this policy is provided in resalable condition. In recent months, LuLaRoe has seen rampant abuse of the policy, with Retailers returning product in extremely poor condition.