There's more legal trouble for the clothing company LuLaRoe. The Washington state attorney general has filed a lawsuit alleging that the business is a pyramid scheme. It is alleged that thousands of people have lost money selling clothes for the company. According to the lawsuit, LuLaRoe made claims of high profits and allegedly tricked consumers.
LuLaRoe offers moms a chance to make extra cash from home. The woman pay to become consultants and then sell directly to their social networks.
In an email, a LuLaRoe spokesperson told the Associated Press that the claims in lawsuit are completely without merit. The company plans to fight vigorously against the claims.
13 Action News first reported signs of trouble in 2017.
"A large percentage of the leggings I sold were being returned to me for damages," said Megan Merrill.
In 2017, Merrill told 13 Action News the leggings would easily tear and she had to deal with unhappy customers. At the time, the company told Action News 99% of buyers were satisfied.
As we wait for the courts to determine the truth, financial analyst Steve Budin is providing general advice on how to make sure you don't fall for a pyramid scheme.
"Always remember there's no such thing as a get rich quick scheme," said Budin.
If you want to take part in a side hustle, Budin says to research the company to see if there's pending litigation.
Also, he says to make sure the market isn't already saturated.
"A lot of these companies have websites, you can put in your zip code and they'll give you a list of distributors," said Budin.
Finally, Budin says to make sure you have passion for the product.
"If it's something you like and you believe in ... it would make it easier for you to market and sell," said Budin.
