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“No, you’re stale. Your customers are stale. Get out and find new customers. If you bring a new customer in, then your inventory isn’t stale. The problem is, you try to sell to the same group of people day after day after day.” In a now-deleted video of LuLaRoe’s weekly webinar broadcast to some 80,000 consultants, CEO Mark Stidham did not mince words. Stidham blamed lagging sales and an uptick in consultant resignations on their own missteps, taking the focus off of both the product itself and the varied consumer complaints.

For those who have never been invited to a Facebook group hawking leggings, LuLaRoe is a multilevel marketing business. When a new consultant signs on to sell the company’s product — modest dresses and notoriously soft leggings — they must sign up under a sponsor who in turn receives a small percentage of the new consultant’s sales. Each new consultant buys their product outright; the average price of an initial shipment is $5,000. Bonuses are also available for sponsors whose consultants buy more product.

“No, you’re stale. Your customers are stale. Get out and find new customers. If you bring a new customer in, then your inventory isn’t stale.”

As this system started to receive pushback, Stidham had harsher criticism for consultants who have become disenchanted with LuLaRoe and decided to stop selling the product. He warned those still in business to steer clear of any negativity coming from those leaving LuLaRoe, saying, “You cannot wrestle with the pig without getting a little mud on ya. Don’t wrestle with the pigs, ignore them.”

When asked about the controversial remarks, LuLaRoe insists that Stidham’s comments were purely motivational. In response, the company states: “The comments you are referencing must be taken in context. They were made in a webinar that intentionally included colorful language to energize Independent Fashion Retailers.”

This was not, however, the interpretation of many consultants who were on the call. Rachel Smith,* a former consultant who has liquidated her inventory and now assists other consultants who are going out of business, was shocked but not terribly surprised. “After a year of watching the weekly webinars, nothing surprises me anymore in terms of what Mark and Deanne say,” Smith says, referring to the CEO of LuLaRoe and his wife, Deanne, the founder of the company. “His comment struck me as that of a man who feels superior to anyone who goes against him, particularly women.” Smith says that she often felt his comments on the weekly calls had an underlying threatening tone.

Christina Hinks is a successful sales executive who joined LuLaRoe because she thought it would be a fun way to make some extra income. With an extensive sales background, Hinks is extremely comfortable selling, and after a friend became a consultant, she researched the product and decided it was something she’d like to try. “I googled around and saw these hedgehog and bear leggings — so cute,” she says. But after two months of waiting for her initial shipment (which cost $4,900), what Hinks received was far from ideal. “I live just outside of Chicago. My first shipment included 270 pieces of Southwest-inspired prints. There is no market for that style where I live,” Hinks says, so in December of 2016 she sold all 270 pieces from her initial shipment at wholesale to another consultant who lived in an area where those prints would be in demand. Although this was frowned upon, there was nothing explicitly preventing Hinks from selling to another consultant at that time.

Hinks and all other consultants received an email from home office encouraging them to send screenshots of anyone who was selling product at a discount.

In January 2017, Hinks and all other consultants received an email from home office encouraging them to send screenshots to home office compliance of any fellow consultants who did not fit the LuLaRoe culture — specifically, anyone who was selling product at a discount. According to Hinks, LuLaRoe’s home office in California has a dedicated compliance department with a specific email address for reporting such issues. When asked to respond, LuLaRoe said, “We want to maintain the integrity of the LuLaRoe brand for the benefit of all Independent Fashion Retailers. If Retailers sell clothing to one another at discounted rates, it can have a negative impact on the broader Retailer community.”

“I have been a sales manager for 20 years, and at one point I owned my own retail boutique. Discounting merchandise is a normal practice for retailers,” she says. Hinks spent time reviewing her contract with LuLaRoe, which she says clearly states that individuals can sell the product for whatever they want. “You just can’t advertise the discount prices publicly,” she says. She wasn’t comfortable with LuLaRoe’s instructions, but had no intention of turning anyone in.

But according to Hinks, as encouraged by home office, consultants joined one another’s private VIP sales Facebook groups in order to act as double agents. “The level at which consultants were turning each other in was unbelievable. There was this rabid attitude encouraged by the weekly calls from home office,” Hinks says. In spite of the fact that she was successfully selling the product and managing her business, she decided to liquidate her inventory and stop selling LuLaRoe because of the continued culture issues. “I was reported to my upline and my mentor said that even though it wasn’t in the contract, it was her call,” she says.

Among her suggestions for her fellow consultants is selling to older women at retirement communities.

Additionally, other ethical concerns troubled Hinks. A successful consultant who goes by the name Stacy Kristina claims to make six figures selling LuLaRoe. But among her suggestions for her fellow consultants, as outlined in her videos which are shared in a private group for her downline, is selling to older women at retirement communities. Stacy Kristina suggests that consultants “bribe” the receptionist at such locations with a pair of free leggings in order to skirt their policies on sales pitches. “This really didn’t sit well with me,” Hinks says. “Home office doesn’t do anything about something like this, but they come after consultants for selling below retail? That’s not right.” Stacy Kristina could not be reached for comment, but we will update if that changes.

Previously, Hinks had endorsed LuLaRoe from her website, MommyGyver.com, and so she felt obligated to correct that endorsement after her own negative experiences. She publishes the testimonies of other former consultants as well — Hinks says that she receives on average 100 new email contacts per day from troubled consultants. Although Hinks is no longer a consultant and is therefore unable to access the weekly home office videos, someone still actively selling LuLaRoe records and sends them to her. She was unsurprised by Stidham’s comments. “Any empathic feeling gets a downcast tone from Mark,” she says. “He talks down to you. Motivational speech is meant to uplift, but he utilizes abusive speech. He casts himself into the role of a dad figure dishing out tough love.” In an interview with Business Insider, for example, Stidham insisted that he felt some empathy for disappointed customers whose leggings had ripped, “[b]ut I don't feel that the company is in a place where a blanket apology is necessary.”

Like many of the consultants who contact Hinks, Rachel Smith left LuLaRoe behind after selling off her inventory in a going out of business, or GOOB, sale. Smith was a LuLaRoe consultant for just under a year, but left shortly after she felt pressured to sign a new sales agreement. “The final straw was being lied to regarding the new merchant agreement they were trying to bully us into signing,” she says. According to Smith, “While they were pressuring us to hurry up and sign the new merchant agreement, Mark [Stidham] said there would be no credit check. It wasn't until people were discovering that they did receive a credit check that LuLaRoe changed the story that it was a soft credit check. In reality, it was a hard credit inquiry and many people's credit scores dropped considerably.”

After resigning, Smith turned her Facebook sales page into a group where other consultants could go out of business without fear of backlash.

Smith never signed the new agreement. After resigning, she turned her Facebook sales page into a group where other consultants could go out of business without fear of backlash. There are nearly 10,000 members in her Facebook group, including several hundred consultants selling off their inventory. Smith monitors the group constantly, vetting any new members and keeping the group “secret” so she can provide some safety for the consultants who are going out of business. There have been instances, however, of consultants being screenshot and then removed from their other groups.

Smith’s group is but one of many, however, on Facebook. A quick search of the term GOOB and dozens of similar groups with thousands of members are found, which excludes any of those that have gone secret to avoid infiltration by current LuLaRoe consultants looking to report them to home office. Being reported is of particular concern to consultants who are still active in the LuLaRoe system and trying to sell the rest of their inventory before resigning, because in some cases, their upline and sponsors threaten to remove them from private seller pages if they are discovered to also be in GOOB groups.

In addition to the consultants who have managed to go out of business and break even or make a modest profit, there are many who are greatly in debt. According to Sherry Evans,* a consultant who is still active and attempting to liquidate her inventory, LulaRoe has been financially disastrous. “My sponsor is a single mom of two kids... she raved about how she was able to stay home and support her family, and I was intrigued,” Evans says. “I saw posts about the amount of money people were making and I thought this was my way to protect my family's financial future.” But after a year of selling and still being in debt, Evans was discouraged.

“I have seen friends have their businesses closed down and get locked out of Build, LuLaRoe’s system, because they said something that wasn’t in line with the culture.”

“There is an oversaturation in the market,” says Evans. “When I signed up for this business, I was told it could be done online.” According to Evans, her upline assured her that it was up to her how to sell the product. But she was encouraged to have pop-up sales in people’s homes in order to become profitable: “My sponsor told me to put my kids to work and make my husband load and unload the car.” Evans also says that she bought into the promise that if she bought more, she would sell more, so she incurred more debt in an effort to become profitable. The culture is also of concern for Evans, who says, “I have seen friends have their businesses closed down and get locked out of Build, LuLaRoe’s system, because they said something that wasn’t in line with the culture.” There are sales teams, she says, who encourage their members to find 10 fellow consultants each week to report to Home Office.

Evans struggles to come to terms with the fact that her mentor says she receives bonus checks of over $100,000, while she is currently using the profit from one dress to buy food for her children or pay the power bill. The final straw came when LuLaRoe lied, in her assessment, in response to a lawsuit regarding the quality of the leggings, first vowing to replace any damaged product but later claiming the holes were inevitable because of the unique softness of the fabric. “If they are willing to lie to a court of law, I don’t trust them anymore,” says Evans. “It is all about the money, getting $6,000 or more from every new consultant... they don’t care about the rest of us.”

Sarah Shipman still has about 300 pieces to sell before she is out of LuLaRoe. She has been a consultant for about 10 months, and first heard about the company as a consumer. “My sponsor always talked about how great it was and how she never worked more than four or five hours a week and was making more than she was as a teacher,” she says. As encouraged by LuLaRoe, Shipman put her original investment on a credit card, and her sister also joined, using money she had been saving for a down payment. But unlike the consultant who signed them up, Shipman and her sister work about 20 hours a week and haven’t turned any profit. “We have each only taken $600 as a Christmas splurge,” Shipman says. “Every penny we made was instantly reinvested into a bigger inventory at the advice and insistence of our upline.” Since deciding to go out of business, they have not reinvested in inventory, and have about $3,000 to earn back to just break even from the money invested in LuLaRoe.

“I neglected my daughter to get this business up and rolling, all for nothing. In one of the weekly calls, Deanne Stidham told us to feed our children Spaghetti-Os and focus more on sales.”

Shipman feels her time and money were wasted on LuLaRoe. “I regret this decision with all my heart,” she says. “I neglected my daughter to get this business up and rolling, all for nothing. In one of the weekly calls, Deanne Stidham told us to feed our children Spaghetti-Os and focus more on sales.” Although she feels guilt for her lost time, Shipman is also relieved. “Mostly, I feel free now. My nights aren’t spent taking pictures or in front of the computer. I spend time doing what is best for my family.”

The company has released an official response to the large number of consultants, now referred to as retailers by LuLaRoe, who report leaving the business via Facebook: “We believe there is strong and ongoing demand for our product and significant opportunity for existing and new Independent Fashion Retailers to build their businesses selling LuLaRoe across the country. As of the end of first quarter 2017, approximately 90 percent of Independent Fashion Retailers who started a business maintain their businesses today. If an Independent Fashion Retailer feels their business is no longer viable, we are here to help ensure a smooth transition to exit the business. Specifically, we buy back inventory without a restocking fee and pay shipping costs.”

But retailers going out of business remain wary. This policy has not been officially issued, they say. Some have received emails saying that the company must approve each item before issuing the 100 percent refund, and that if the company decides against that amount, it will not return the item. There appears to be no concrete description of what will or will not be approved. “They have no timeline to verify the refund, and no timeline to expect a refund check to arrive,” says former consultant Mary Watson*. “After failing to give me damage and backorder credits, I have no reason to trust them that I will get 100 percent back in this process.” Instead, she plans to continue selling her inventory at a discount in order to make back her investment with some control.

“When the Titanic was sinking,” she says, “people didn’t ask the captain for a refund.”

*The names of these retailers have been changed at their request.