- [Blair] Before we
get into today's video, I want to give a very
big thank you to NordVPN for sponsoring this video, and supporting creators like me. If you want to secure the way you browse the internet, check out the link in the description box to get started, or use code "iilluminaughtii" at checkout. Multilevel marketing companies, shortened to MLMs, are company models that ride the gray line between direct sales and pyramid schemes. And, as you guys have
seen on this channel, they are no strangers to going to court from floods of accusations of operating a pyramid scheme, and defrauding customers and sellers. I've covered countless videos going over various class action lawsuits, and I definitely poke fun at their horrible sales tactics and pyramid-y shenanigans. Which is a lot considering that I too am a pyramid. However, there are a few key players that stand out in my weekly videos, "Hunting Down the Huns", and today we're going to take a look at one of the most notable
and most controversial. LuLaRoe. You see, when I go to look up a company's Wikipedia page, and its top categories
include legal issues, business model, and customer complaints, I instantly smell something
fishy is going on, and I wanna take a dip into these waters and catch a Great White. So let's take a look at how LuLaRoe became the abomination it is today, and why it continues to spiral down the drain. All right, but listen, before we get too far into this, I need to make sure I have proper hun bot protection
on as I research this. And that's why I use, and
have been using NordVPN for over a year. I bought NordVPN using
Internet Etiquette's code because I wanted to get it and support a creator I enjoyed watching. And so when NordVPN approached me, I had this little thought in the back of my head like, "Oh my God, this is it, "I get to do the thing "like the creators I look up to." And look, now I have my own URL. Nordvpn.org/iilluminaughtii How cool is that? But listen, here's why you need this, if you don't have it already. So I use Nord to hide my location. Personally, I like to hide in Canada when I'm in a good mood, and England when I'm
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internet is kinda useful. And you can use it for
more than just that. They have over 5500 super fast servers in over 60 countries. So you'll have no problem
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up and keeping me safe on public wifi, in and around the country. And even if you don't travel, you can use it to set yourself to a different country, to unlock more of Netflix
that you don't get in your normal country. So couch potato binging, commence. You can now have up to six connections at a time, and you can use it on almost every operating system, including Windows, Mac, iOS, and Android, and there's a 30 day money back guarantee just in case you find out this isn't really your thing. So if you wanna try NordVPN, now is the perfect time. So normally if you want to try NordVPN, you can go to nordvpn.org/iilluminaughtii, or use code "iilluminaughtii" at checkout, and you would receive 70% off of a three year plan, and you would get two months for free. However, since 'tis the holidays, and it's time to jingle these bells, they're having a special holiday deal where you will get your three year plan at 81% off, plus you're gonna get actually two gifts. You're gonna get four months instead of two months, and you're gonna get NordPass, which is their password manager app. And the whole thing is valued at like $194.61, that
you're gonna get for free, because of their holiday deal. And once again, you'll just kinda get
that added on for free when you either use my link, or use my coupon code at checkout. Now hopefully you will be as I once was, purchasing and using NordVPN. It's a product I love to use, and it's a product that's really easy for me to promote as it's something I've been using for about a year. And this is going to be really important to use as we travel through the internet to find some of the worst MLMs around. LuLaRoe. So let's get started. (dramatic music) - I am a former LulaRoe consultant. (dramatic music) - Why I left LulaRoe. (dramatic music) - And, I wanted to come on today, and talk about why I
decided to leave LulaRoe. (dramatic music) - If you have the inability to see through bullshit, and simultaneously wanna be in a business that you're not on an even playing field, come join LulaRoe! (whooping) - I wanted to give you
my reasons for leaving. I don't think my story
is that much different than a lot of other consultants. - I would get two of the same size pairs of leggings, and one
would be super duper tight and a lot smaller, and then another one
would be really loose, and really odd fitting. So I felt like some of the quality was diminishing just a little bit. - One leg will be longer than the other. - I realized that my values really didn't align with them anymore. - The consultants are LulaRoe's customers. And I think they lose
sight of that sometimes, and I think the consultants are treated a little bit poorly. - Wasn't really helpful because, you know, you got stuck with all this inventory, and you just had to find
the customer for it. - All the top sellers
would just be rolling in box after box, after
box of the new inventory. Whereas lower sellers were just hoping to get like a couple of pieces. Like, if you got lucky enough, you would get the not popular size, not popular item. - You're going into debt selling this, because all of your
upline keeps telling you to buy, buy, buy. Well, guess what? I think that's your own problem, of money mismanagement. - Just kept seeing consultants get more into debt. - Credit card. Get a credit card, put it on your credit card. Once you have stellar
out of this world credit, you may not even get approved for enough to start up this company. Then of course, there was the advice of take out a loan, or ask
a family member, like-- - But, if you wanna be a part of something that's way bigger than yourself, something that has gotten
other thousands of women majorly deep into debt, and no support to get you out of it, and your business shuns you, and has compliance issues with you, and you're just trying to make some money to feed your kids that
you've been neglecting, and you just know that this is for you and you want all the
stress, anxiety, depression, and crap that comes along with LuLaRoe, then, please join, because you know what? It is everything it's cracked up to be. - [Blair] LulaRoe is a company responsible for leggings like this, this, this, and a lot of these. You may have seen your mom, cousin, aunt, or the girl who used to
bully you in high school trying to sell these through Facebook or Instagram. And when you ask them
what they do for a living, they have probably told you they are a small business
owner, and a boss babe, and probably post very inspiring messages like this. But in reality, it is much darker than what they let on. And normally, once they've seen the light, so to speak, they usually
become embarrassed or super outspoken about
what really goes on behind the scenes. There are countless videos of women talking about
why they left LuLaRoe, the truth behind LuLaRoe,
and why it's a scam. But each person who leaves this company and speaks up about what happens, makes LuLaRoe that much closer to closing their doors permanently. Although just by looking
at their track record, it looks like they're doing just fine at ruining their own brand
while embodying this, "This is fine" mentality,
while everything else is going up in flames around them. One of the most interesting
things about LuLaRoe is it's one of the many younger MLMs to have popped up, but one of the few to gain an extreme amount of notoriety. Phineas Barnum, one half of the owners of Barnum and Bailey Circus once said, "There's no such thing as bad publicity." But that model doesn't
seem to be working out for this MLM fashion giant. Although, I guess we are still talking about a circus, so that
part can remain the same. I went onto LuLaRoe's website, so you don't have to. And again, I had NordVPN on, 'cause I don't want them knowing where I actually am. And their mission says
it's to "Create freedom, "serve others, and strengthen
families through fashion. "It's a community, where
lives are being improved "through love, purpose, confidence, "trust, and growth." Ah, yes. When I think about family and community, I definitely think of this LulaRoe seller that openly mocked
someone with Down Syndrome during a livestream in January, 2018. - [Woman] My number's in
there, so it's working-- - Okay, okay. (laughing) (slurring) My name is Robert, and I'm special. (woman laughing) My name is Robert, and
I am really special. - [Woman] Roe call is the video on our VIP page today! - A Roe call is always on our VIP page. Anyways, there's a contest, there's only 87 numbers
in there right now. - [Blair] And in case you're wondering, here's portions of that apology video, where he literally uses
a woman named Anissa as a prop during the apology video. - Hi ladies! - Hey ladies. Okay. We'll wait for a few people to get on here right now. But, this is my public apology for what happened today, This is my wife Tea, and this is Anissa, and my mom is actually here. And... - [Mom] Is Anissa in the camera? - Yeah.
- Anissa. This is Anissa. Okay, so this is a public apology for what happened today. I kinda want to talk about what happened. I will not be responding to any questions until after, I wanna go
ahead and scroll this up so I could see. So, what had happened today on the live was this
kinda just kinda blew up out of nowhere, in the
last 30 minutes, and-- - Start with kinda what happened, too. - Okay. So, what happened today, on the live show, was I had made a mistake. I didn't get the text ready. Hello everyone, how's it going? Welcome. I made a mistake today
on the live show, and... - He was trying to do a
contest with everyone. And he thought the
contest had gone through, and everyone kept telling us the contest wasn't working, contest wasn't working,
and come to find out he hadn't made the contest. - And so what happened was, I mocked special needs, essentially. And, when I said I mocked special needs, I'm sure you've all seen
the video at this point, because at this point, there's some people that decided to share the video in places where not so many nice people are, or where people were offended. - [Blair] This is
literally this dude saying, "I can't be racist "because I have a black friend card." (punches thwacking) Oh, and another little side note about this pathetic apology, LuLaRoe was actually partnered with a charity called the National Down Syndrome Society, and they were the ones that asked LuLaRoe to remove this seller. And LuLaRoe chose this seller over their partnership with the charity, so the two parted ways. At least they subtly made it clear where they really stand, and who they actually stand for. What was it? Oh right. A community where lives are being improved through love, purpose, confidence, trust, and growth. - My name is Robert, and I'm special. Special. Special. Special. - Sure, Jan. - [Blair] But anyway, let's talk about how they all started, because I definitely want to know where they got the idea for
their mission statement. So anyway, I made my way over to LuLaRoe's "About" section, and I quote this dramatic reading, because this is how it's actually stated, verbatim on the website. "As DeAnne's children became older, "she continued doing what she loved. "Designing and creating clothing. "One day, her daughter came to her, "and asked if she could custom make "her a maxi skirt. "Excited with the beautiful piece, "DeAnne's daughter showed all her friends, "and they each instantly
needed one for themselves. "It was in this moment
that DeAnne realized "the potential of her skirt. "In less than six months, "DeAnne sold 20,000
skirts at in-home parties. Wait a second there, sis. That doesn't quite make any sense. I mean, I know what it says
on the LuLaRoe website, I'm reading it, and I'm showing it to you. But, LuLaRoe actually released a video a few months ago, titled "What is LuLaRoe:
The Untold Story." And here's also what DeAnne said about how LuLaRoe was started. - I remember walking to
the open air market area where there typically is produce. And there was a guy there that had racks and racks and racks of little girls' dresses. And I had this idea. What if I went and asked him if he would come to my house, I would invite all my friends over? I brought it to his attention. I was shaking, I was so nervous. I thought, "Okay, if you come to my house, "and then maybe if we sell a bunch "of stuff, maybe I can get "a couple of dresses for free." And he said, "Oh, okay, that'd be great." There was no parking for blocks and blocks and blocks around. And I think by the end of that day, for about three hours, we sold over 300 little girls' dresses. And I said, "Okay, I
think that's everybody." And I was so nervous. And he said, "DeAnne, you can take "as many dresses as you want." And I said, "Well, here is the list "of all the names of all the people "that wanna do parties." And he said, "Oh no, I
do not wanna do that. "I'll give you the profit
to all these dresses "that you just sold,
and I'll let you start "buying your own dresses." And I started to book popups. We called 'em dress parties. Because they were only
little girls' dresses. So I called 'em, "Come
to the Dress Party." - [Blair] So color me confused, but that doesn't make any sense. Why would you say one
thing on your website, and then another thing in this obvious propaganda-type video for your company? What's the truth here, DeAnne? But, I digress. Let's go back to what
the website says is fact. "After seeing the success
she was achieving, "DeAnne wanted to take "her business one step further. "Partnering with her husband, Mark, "they came together and devised a plan "to help families around the world. "In 2013, LuLaRoe was founded, "and became a truly remarkable business, "taking fashion to the next level. "The innovative business model "gives independent fashion retailers "the ability to set their own schedule, "pace, and the opportunity to do "what they love, and
profit from it as well. "Today, DeAnne is forward focused, "consciously striving to improve lives, "while building a legacy
for generations to come." Now, a little fun fact
you may not know about me is I used to sew. I can still do some things here and there, where I really need to. And I found the task
of making 20,000 skirts in six months to be a little bit daunting. So I broke it down. I found a little online forum dedicated to sewing, since
maxi slash A-line skirts were never really something I created. And I consulted with the forums about how it takes to make a basic skirt. And I found a range of answers varying from two hours to six hours. So let's go ahead and just take the average time on that, which is four hours. Now, let's look up the time. In a six month period, there are 182.6 days in six months. So let's go ahead and round that up to 183 days. In each day, there's 24 hours. So that's a total of
4,392 hours in six months. And if each maxi skirt takes four hours on average, that means our dearest LuLaRoe founder spent 80,000 hours making skirts. And that's not actually possible, because there's only 4,392 hours available in six months. But let's just say she
could do it in two hours. Well, that's 40,000 hours, which still isn't possible. Even if it took her only an hour to make each skirt, that
would be 20,000 hours. And we haven't accounted for this woman sleeping, eating, taking time away from sewing. So since she's not a Sim, she needs to stop what she's doing, or she would die trying
to reach that goal. And obviously, she hasn't passed. So here's what we can actually take away from the LuLaRoe company bio. The first is that she's lying. And based on what I've
seen from the company, I would be less than shocked. Secondly, she might've hired other people, or outsourced her designs
to a manufacturer. However, when you're a small business, and you make small steps to expand your production capabilities, as a matter of fact, I would argue that is something you would want to share, and show how empowering she is, and how much of a boss babe she truly is. But it's left oddly quiet. And to me, it reads as
if she's trying to say, "Look at me, I did this by myself, "and now I'm so successful." And I find that to be really deceptive. Much like how most of
the company operates. Maybe it's just me reading
too much into this, but it seems so strange that you would put something like this in your company's "About" section, but not be transparent about the fact that your company was growing, and you needed better
production capabilities. Oh, wait, wait, wait, wait, wait. I found the answer. But it wasn't in the "About" section on their company website. I actually had to check
back into their Wikipedia. And they came in clutch, by stating the following. "The firm initially focused
on selling maxi skirts. "Within that year, the
company grew to 10 employees, "145 distributors and 3 million in sales." Well that doesn't sound
like what they posted in their "About" section at all! Hmm. I guess I'll let you make your own judgments about that. But anyway, where were we? Oh, right. The beginnings of this company. So, LuLaRoe started in 2013, after some absolutely
unbelievable seamstress work from its owner, DeAnne. In 2014, they released their leggings, which is what the brand
is mainly known for. And it seemed like they were trying to fly under the radar until 2016. (upbeat electronic music) In 2016, LuLaRoe was sued by LA-based clothing company, that served as LuLaRoe's
primary clothing manufacturer at that time. The first of many, many lawsuits was for nonpayment of goods and how the owners Mark
and DeAnne Stidham, had failed to pay the company, despite having revenue reports of over $2 billion. But it's gonna get a lot juicier later, and we will return to
these two not being able to pay their bills on time, I promise. (upbeat electronic music) Early 2017 marks LuLaRoe's initial and constant downfall. And they have continued to tumble since that point. On February 17th, 2007, LuLaRoe was hit with its
first class action lawsuit. In this lawsuit, the defendants claim LuLaRoe was improperly charging sales tax to its consumers. They claimed LuLaRoe was using tax rates based on where the consultant lived, rather than where the buyer lived. So for example, if you live in Oregon, which is a state that
does not have sales tax, and you purchase leggings from a hun bot that lives in California, the buyer was being charged
California state tax, despite the fact she lived in Oregon and there was no sales tax. So she was being overcharged for some already less
than quality leggings. By the end of 2017, emails were being sent
out to those involved in the class action, that they were going to be refunded for the amount of money overpaid. However, going back to early 2017, just a week later after
that lawsuit was made, another article with a different complaint about the company was brought into light. Let's take a look at this article from Business Insider, from February 22nd of 2017 called, "This clothing company is facing claims "that its pants rip
like wet toilet paper." This article discusses a
now infamous Facebook group dedicated to talking about how terrible LuLaRoe's leggings are, and how they break
within one to two washes, and in some cases, how the break in a matter of hours. In some cases, the leggings would rip as the women were putting them on. The complaints actually began in 2016, but didn't really pick up traction until early 2017. All of these complaints eventually gave LuLaRoe
a BBB company grade of F. So what was LuLaRoe's response to this? Well, they had an independent
consultant come out with a handy dandy guide of how to put on leggings. And yes, you heard what I said. How to put on leggings. Because, no, it's not actually their fault that LuLaRoe makes a cheap, crappy product, oh, no. It's that you're a dumb, babbling buffoon, who doesn't know how to
put on a pair of leggings. You know, the thing that most of us wear in some capacity every day. But just when you thought
2017 wasn't going well for LuLaRoe, in October, they were slapped with yet another class action lawsuit from California, alleging they were a pyramid scheme, and engaging in misconduct, including unfair business practices, misleading advertising
,and breach of contract. In another article from Business Insider, they start the article
with this terrible way to introduce a company. And here's what they said. "Direct sales clothing brand LuLaRoe "is no stranger to controversy. "From torn leggings, to salespeople who claim "they were encouraged
to incur massive debt. "The company has struggled to maintain "its emphasis on community
and self-empowerment "during a period of massive growth." And that's how they
introduce their readers to this company. Not really the best introduction. Accurate, but not flattering. The article continues
by saying the following. "The suit, which four plaintiffs "across the US, "alleges that the company
deceived salespeople, "who are called consultants, "by telling them they could
return unsold inventory "for a full refund, if they
decided to leave the company. "A sudden change to
the policy in September "lowered the promised refund "from 100% to 90% of purchase inventory, "with additional restrictions. "According to Yahoo, "many consultants said
they felt comfortable "joining the company "because of the buyback guarantee, "thinking they wouldn't
face financial stress "if they weren't able to sell "as much clothing as they had hoped. "The plaintiffs allege
that in changing the rule, "the company misled consultants, "who thought they would still be able "to sell the clothing with
a 100% buyback guarantee." Essentially the company
allegedly encouraged its fledgling boss babes to stop paying their bills, or go into debt, to amass large inventories
of LuLaRoe product. Now, the company already makes a profit by getting them to buy the inventory. So the company profits are squared away at that moment. And then the burden for
the remaining profit falls on the independent
consultant's ability to sell those leggings. So when the company changed its return policy and found
ways to omit certain items and forcing those selling
to be stuck holding the bag, they filed a lawsuit. "I was urged to stop paying my bills, "to invest in more inventory", one seller told courts in August. "I was even urged to get
rid of my television. "I was urged to pawn my vehicle. "I just had to get on anxiety meds "over all of it, "because I started having panic attacks." That just does not sound like something that happens in a normal business, or even in a small business. And furthermore, if you truly were a small business owner, like they claim to be so badly, then they would have no boss telling them what to do, or encourage
them one way or another. But we'll get to that point a little later on in the video. (upbeat electronic music) In early 2018, LuLaRoe was sued by a former warehouse employee for racial discrimination. But the details of the lawsuit revealed the company worked employees in a hostile environment, was not providing employees with meal or rest breaks, and violating various health codes. But back to the exciting
timeline of LuLaRoe mistakes. Remember these guys from earlier? - My name is Robert, and I'm special. (woman laughing) My name is Robert and I am really special. - [Blair] Well, he's back again. Because now, this is the actual timeframe. One year later, as LuLaRoe is dealing with a class action
lawsuit and mounting debts from their warehouse distributor company, which will come back and bite them later, I promise, they then have this seller pulling this messy, messy behavior. And LuLaRoe chose to
stand behind this seller and his behavior, instead of standing with a charity whose very cause is helping those with Down Syndrome, which is the thing he mocked. Very classy, LuLaRoe. Also in December, 2018, LuLaRoe was sued by its chief clothing supplier, Providence Industries,
for about $49 million. Remember the 2016 non-payment
lawsuit from earlier? Well Providence Industry is essentially that company's big brother. In the lawsuit, the company alleges LuLaRoe hasn't paid its bill for months, and the owners Mark and DeAnne Stidham are hiding their assets
and shell corporations to continue funding
their lavish lifestyles. The suit claims Mark
Stidham is directly quoted as saying the following
on September 7th, 2018. "Look, guys, I am not
going to pay you guys "a fucking dime unless a
judge orders me to pay it. "And DeAnne and I will take
our two to $300 million "to The Bahamas and fuck everything." But what are some of these
lavish lifestyle expenses? Mark told two Providence
Industry employees about his plans to buy
the property next door to his $7 million Wyoming ranch, so he could have exclusive
access to a river that ran between the two properties. - Consists of 245 acres. Borders national forest on one side, and has three quarters of a mile of the salt river, which is a unique offering in that area. It's hard to find a ranch property in the west that has
river bottom riparian, as well as direct access
to national forest. The improvements on the ranch consist of the main log home, which is 7,600 square feet, with the master bedroom and
bath on the ground floor, and four bedrooms on the second floor. It took the owner approximately four years to complete. - [Blair] Mark also purchased at least two Koenigsegg cars. Sorry if I butchered that. Including a prized Agera RS, that cost an estimated $2 million and is only one of 28 in existence. And for DeAnne's most
recent birthday party, she had a masquerade theme birthday party in a historic hotel, which costs hundreds of
thousands of dollars, between the giant cutouts of her face, to catering and alcohol, as well as payment for the venue. These are just a few of the things that were disclosed among
the millions of dollars they allegedly hide as
play money in The Bahamas. (upbeat electronic music) Then in January of 2019, LuLaRoe was once again being sued for being a pyramid scheme. And this time, it was from the Washington state
Attorney General's office. I actually did cover this specific lawsuit in a separate video on my channel, because the details of this lawsuit are utterly fascinating, But here's a snippet of what was inside. "LuLaRoe operated an
unlawful pyramid scheme "in the state of Washington, "through the leadership bonus plan "of its independent fashion
consultant programs." This is the stuff we're here for. So here's what they're saying is a problem here, is the unlawful compensation structure. So any consultant who signs up for the LuLaRoe program has to pay an onboarding fee. So to be a seller of LuLaRoe, you have to pay between 2000 to $9,000, for a package of LuLaRoe bullshit, which is essentially that stockpile. LuLaRoe incentivize existing consultants to recruit and sponsor new consultants, and to encourage them and their recruits to purchase large amounts of inventory by basing its bonus structure
on the dollar amount of wholesale orders,
instead of retail sales to end customers. The more your downline
buys, the more you make. So obviously, you know, if you're in this position
where you're a hun, a higher up hun, and you've got 10 mini huns below you, and you get 10% off of
each hun spending $1000, that's $100 per hun. So that means you're getting $1000 per every 10 huns, so what do you want them to do? You want 'em to spend as much as they fucking can. Also in 2019, Providence Industries filed another lawsuit for a seizure of assets against LuLaRoe. What that means for all non-legal people like myself out there, a seizure of assets is defined as a form of confiscation of assets by the state. In the United States, it is a type of criminal justice financial obligation. This means that Providence was requesting the legal right to take back all items LuLaRoe had purchased from
them in their warehouses, in an attempt to recuperate expenses that LuLaRoe failed to pay. What they want to take
away are the leggings, skirts, dresses, et cetera, and hold those pieces hostage from LuLaRoe, until the company is paid. And once again, by February, 2019, there were nearly 300 new cases filed to the Better Business Bureau, from ranging topics of
bad customer service, ripped leggings, to
pyramid scheme complaints, and the company's rating was once again, downgraded to the failing F rating, which not really surprising at this point. But what is surprising is what LuLaRoe is doing in the face of losing literally everything. LulaRoe's response to
all the mounting debts, lawsuits, and problems, are to lower the cost of joining the boss babe ranks. They dropped their cost from $5000 as a startup fee, which, yeah, take a moment to take that one in. And they lowered it to only $499. A mere fraction of the original cost. During my research, I stumbled across a
channel called LoLaGeek, who had a video talking about her thoughts on the new lowered cost as
a former LuLaRoe consultant. Here's what she had to say. - So, my overall thoughts of what I think this means for LuLaRoe. I think it makes them look desperate. There was a time, not that long ago, when there was a wait list of weeks, or maybe months long, for people who were eager to spend 10 times that
amount to join the company. And now they're trying to draw people in at this under $500 price point. So I've heard some consultants are worried that this will devalue their brand, and I don't think that it will, like because people are buying in at a lower price point, and it lowers the overall
of all their items. I think if anything, it's gonna devalue them, because of the desperate thing that I just mentioned. And a lot of consultants also seem upset at the fact that they paid full price, and now new consultants are joining at this huge discount. But in the case of LuLaRoe, I feel like it could
have the opposite effect, by encouraging people
who are even less ready and less qualified to run this business, to sink a bunch of money
that they don't have into something that is
just doomed to fail. - [Blair] And honestly, I
agree with her main message. It seems desperate. And in lieu of everything
I've already mentioned, and what is happening to the company, it really looks like they're trying to milk the last bit of
money they can out of anyone before the company goes under. So now with all this information, you might think, "Wow, there's no way "anyone would want to become "an independent consultant for LuLaRoe." And if there's someone who
still would want to join, despite everything that
has been presented, let's take a look at the breakdown cost of what it actually means to try and be
successful in this company. So what does it mean to actually become a
boss babe with LuLaRoe? Since even through everything I may have presented, there might still be a doubting boss babe out there, who's going to brush off the multiple lawsuits, and clear lack of care from this company. So let's talk about your
very own bank account, and what is most likely to happen to you if you join into this mess of a company. So for this example, we're gonna be looking at their initial $5000 investment, and not the 499 one, since that has been
their running standard. LuLaRoe requires an initial
$5000 investment of product, to become an independent consultant. That means if you want to sell these horribly tacky clothing items, you need to be willing to give them $5000 for the opportunity of being able to sell for them. Which in of itself makes
little to no sense. And with the new modified $500, that still doesn't make any sense. I don't remember getting
hired by a company and having to give them
large amounts of money for the opportunity of working for them. But you do for LuLaRoe, apparently. In data obtained by Business Insider, they found that 80% of LuLaRoe's sellers generated less than $5000 of sales, which means 80% lost money. This 80% also includes just about 11,000 representatives who sold $0 of product, which means they lost all 5000 of it. But let's break this down into even more devastating numbers. And this breakdown of LuLaRoe investments comes from a website called Bottle Soup, and links for all my sources will be in the description box, if you want to check that out or get any clarity on where exactly I found my sources or where these numbers would be coming from. But in a 2016 article,
they said the following, "According to LuLa in Love, "the retail value "of a $5,500 startup purchase is $12,500. "This assumes that each piece "will net an average profit of $18. "And you have approximately
381 items to sell." According to the chart, you need to sell an average
of 70 items per week, or an average of 10 pieces per day. "If you meet the sales goal, "70 times four weeks in a month "is 280 pieces sold. "Your kit contains 381 pieces. "That means you'll have
101 pieces left to sell, "and you'll still be in the hole, "$460 for the first month. "If you're scratching
your head, let's back up. "If you invested $5,500 "in your starter kit or inventory, "you earned $5,040 from selling 280 pieces "of LuLaRoe clothing. "5,500 minus 5,040 is $460 negative, "which is just shy of
your initial investment." "Sure, if you sell 101 more items "on an average of $18 per profit, "you will earn $1,818. "But oh wait, you need
to subtract that $460. "So $1,818 minus $460
leaves you with $1,358. "You will have broken even, but you'll also be out of inventory. "Also, wasn't that inventory supposed "to be worth $12,500 from retail? "Yes, the retail price will add up "to $12,500 in revenue, "but you will not earn $7,000 profit "from your $5,500 investment. "Reality is, with so many
LuLaRoe fashion consultants, "many consultants end up "having to price items competitively. "And in business, competitive means cheap. "The lowest possible cost. "Why? "Well, you need to make sales. "If you don't make sales, "then you will lose your investment. "For the record, for the $12,500 value "to be accurate, "each piece would need to have "an average retail face value of $32.80 "The LuLaRoe butter
leggings everyone loves, "they sell two for $40. "That makes their retail
face value $20 each, "which is $12.80 less
than what you would need "to actually make this
projected net profit "they think you will make." And then don't forget that after you sell those prices, you would still need to pay for shipping, and shipping envelopes, or boxes to send to the buyer, which will ultimately siphon more money out of your bank account. So once you look at this breakdown of expenses with LuLaRoe, you can start to see the beginnings of why they would be
sued as a pyramid scheme. - The consultants are LulaRoe's customers. And I think they lose
sight of that sometimes. And I think the consultants are treated a little bit poorly. - [Blair] And that's
because the seller model does not actually give any success to the seller by themselves. They're stuck in a vortex
of buying and selling to break even, and are constantly frustrated until they eventually quit selling. And so now here we are at the end of 2018, with mounting lawsuits,
debts and pressure, we have no idea where LuLaRoe is gonna go from here, although I highly doubt
it's going to be up. And so that is where I'm going to wrap up the terrible story of the
company that is LuLaRoe, as of this point. This company was a mess
from the very beginning, and it's still a mess now. While I do feel bad for
the thousands of people who were sucked up into the scam, I only hope those who have fallen will use their voice to
continue to speak out, and why channels like
myself will make videos like this to bring more awareness to just how truly terrible some of these companies are, and to stop future people
from taking the plunge and losing thousands of dollars investing in a dead end. So let me know your thoughts on this video in the comment section down below. And I want to give a
special thank you again to NordVPN for sponsoring this video. Again, make sure to check out the link, nordvpn.org/iilluminaughtii, or use code "iilluminaughtii" at checkout, to protect your
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that help support the channel, and allow me to continue
making awesome videos just like this one, but especially to my top tier Gwendoline. Thank you so much for all
your constant support. And if you want to join the channel, make sure you hit the join button beneath this video to
become one of the family. So again, thank you so
much for making it through another video, and if
you did enjoy this video, make sure to leave a like, if you're new to the channel, make sure to hit that subscribe button. And don't forget to
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