In early 2016, Amy Jo Reece became a retailer for clothing company LuLaRoe, paying $6,900 for apparel to sell from her home in Culpeper, Va. Two years later, Ms. Reece says she is stuck with $14,000 worth of LuLaRoe inventory sitting in boxes in her basement.

Ms. Reece was among the tens of thousands of women drawn to LuLaRoe’s message of financial empowerment and community, and loved the brand’s brightly patterned, buttery-soft leggings.

That dream has now soured. Accusations and at least a dozen lawsuits seeking class-action status are piling up against the company. Some allege the California-based apparel maker’s billion-dollar empire is essentially a pyramid scheme, with its founders and top recruiters raking in profits at the expense of the majority of the brand’s sellers.

Other lawsuits say LuLaRoe’s clothing proved defective, and that the company didn’t honor its return policy, leaving people like Ms. Reece—who is a plaintiff in one lawsuit—saddled with unsalable merchandise. Some lawsuits claim the company grew so quickly that retailers began to compete for customers in saturated markets.

LuLaRoe denies the accusations and is fighting the lawsuits. “LuLaRoe exploded in popularity overnight, and like other fast-growing businesses, our success has generated competitive attacks and predatory litigation,” the company said in a statement.