Lawsuits, mountains of unsold leggings, and families drowning in debt: the tumultuous story behind a multilevel marketing brand that promised millennial women a pathway to financial freedom.
In a photo she posted on Instagram of her 2017 cruise to the Caribbean, Katie Willis smiles at the camera, her hair perfectly braided and her teeth blindingly white. She and her husband sport matching straw fedoras and clutch drinks, while standing in front of a crystal-blue ocean, a massive cruise ship in the background. In another photo, she wears a kimono and sunglasses, standing in the middle of the ocean with her arms outstretched, as if she can't quite believe she's really there. A third simply shows her perfectly manicured toes resting on a window, the expanse of blue sea in front of her. "And this, my friends, is the LuLaRoe life," reads the caption.
In reality, Willis now says, she was completely miserable the entire trip, which she had been invited on after being one of the top sellers for LuLaRoe in 2016.
"I sat in my room and cried probably four out of the seven nights just because it felt like everybody hated me, it was so cliquey, it was so cultlike, is the best way I can describe it," she told me over the phone late last year.
In many ways, Willis was the ideal LuLaRoe consultant. She said she paid $10,000 to join the company in April 2016 with the hopes of hustling enough on nights and weekends to pay off around $120,000 in student loans from nursing school. In her prime, she estimates she had $80,000 in inventory and was doing approximately $12,000 to $18,000 in sales a month. After just eight months, she was able to quit her job as a NICU nurse to do LuLaRoe full time.
Willis was living the dream of a lot of millennial women, many of whom are in the never-ending of working, raising their families, and simultaneously. More than believed they could do it too, and in just four short years, this army of women turned LuLaRoe from an informal side hustle by twin Mormon grandmothers into a company worth an estimated $2 billion.
But by the time Willis, a 36-year-old mother of two from Kenosha, Wisconsin, finally quit the multilevel marketing company, or MLM, in 2018, she said she had around $50,000 in credit card debt from her business. She had to cash out her 401(k) to pay it off. After approximately two years and countless hours of working for LuLaRoe, she said she never made a profit after the first year (and that year, she said traveling to LuLaRoe events and other expenses ate away at any profit she had made). When she wanted to quit, she still had around 3,000 pieces of LuLaRoe clothing in her home, stuffed into every spare nook and completely cannibalizing her dining room. She ended up selling her last 500 pieces for a dollar an item, just to get rid of them.
LuLaRoe was largely so successful because the dream of working from home, setting your own hours, and supporting your family by running your own business is so deeply baked into the company's DNA. It was founded in 2013 by DeAnne Stidham, a California woman described by the company as a "" who had the idea for the company after sewing a skirt for her daughter. Through pure grit and determination, LuLaRoe says on its website, DeAnne "launched LuLaRoe with a vision to ." She named the company after her three oldest granddaughters and named items of LuLaRoe clothing after different members of her large, extended Mormon family. Five of her adult children and their spouses pitched in, and eventually joined their mother, working for the company in a quest to make LuLaRoe a success. And for a few years, it was — generating at its height in 2017 — until it was rocked with .
LuLaRoe is now facing a $49 million lawsuit from its (LuLaRoe countersued the supplier for $1 billion) and a class-action lawsuit from angry customers alleging they were sold defective clothing they couldn't return. Another $4.5 million lawsuit was filed in California in November 2019 on behalf of a group of consultants, who are alleging LuLaRoe is running an illegal pyramid scheme. The state of Washington is also the company for operating a pyramid scheme. Last fall, the company laid off in their Corona, California, warehouse and permanently closed it. And according to both the company's former chief merchandising officer and its former supplier, DeAnne's husband, Mark Stidham, has threatened "multiple times" to ransack the company's coffers and flee to the Bahamas rather than admit wrongdoing in court. (Mark has denied this; he and DeAnne Stidham declined an interview with BuzzFeed News for this story, but a spokesperson for LuLaRoe provided BuzzFeed News with a detailed response to several of the allegations described in this piece.)
