The company is also facing multiple lawsuits, including class-actions regarding the quality of LuLaRoe’s leggings, issues with its return policy, and allegations that LuLaRoe is a pyramid scheme.

LuLaRoe distributors have filed two California federal class actions regarding the company’s return policy. The first complaint filed in October claims damages in excess of $5 million and seeks to represent a nationwide class of distributors who either attempted (unsuccessfully) to return inventory or purchased inventory during the five-and-a-half month period in which LLR had a “100% Buy Back” policy. The second case filed about three weeks later demands $1 billion and claims that LuLaRoe maintains “a secret policy and practice to delay and/or ignore return requests, and/or refused to send return authorizations, and/or charged Plaintiff substantial fees for any returns.”

In October, two class action lawsuits were filed in California federal court alleging that LuLaRoe is a pyramid scheme. The first suit seeks $1 billion in damages and alleges that tens of thousands of distributors were “unknowingly recruited into Defendants’ pyramid scheme through manipulation and misinformation.” The second suit filed four days later claims that “[t]he only people who make money from the LLR pyramid scheme are the very few at the top of the pyramid.”

In April, a consumer whose pair of $25 LuLaRoe leggings ripped the first time she wore them and who couldn’t obtain a refund from the company filed a lawsuit in Oregon state court. The lawsuit alleges that the company is fully aware that the leggings are defective but “recklessly continues to manufacture, market, and sell them to Oregon consumers anyway.” It seeks to require the company to pull the leggings off the market.

In March, two customers, who operate a Facebook page dedicated to complaints about defective LuLaRoe leggings and clothing items that has more than 25,000 members, filed a federal class-action lawsuit alleging that the company has failed to employ proper quality control measures to avoid shipping out defective products and that it represents that the products are fit for normal use despite knowing about the defects.

The lawsuit also alleges that the company shifts the burden of the defective products to its distributors who have to deal with consumer refunds and returns. The distributors, according to the lawsuit, have difficulty reaching the company to obtain credits for returned goods and have reported that when they call LuLaRoe they are placed on hold for an hour, then disconnected, and their emails are not answered. The suit states:

Aside from investing thousands of dollars and having to sell hundreds if not thousands of pieces of Defendants’ clothing to make a return on their investment, excluding the time and expenses involved Fashion Consultants’ ability to be profitable is also greatly diminished because of the defective Products they receive from Defendants.

The suit claims that during a weekly conference call, the founders told distributors not to spend time and energy sending defective products back to the company but to resell them instead.

LuLaRoe said in a statement to TINA.org that it stands by the quality of its products and that the lawsuit is without merit.

The company established a new returns policy in April allowing customers who aren’t satisfied with a purchase to return it for a full refund, credit or exchange within the first 30 days and a credit or exchange within 90 days. In addition, a new “Make Good Program” allows anyone who purchased a clothing item between Jan. 1, 2016 and April 24, 2017 that is defective to return it to the distributor for a gift card, refund or replacement if they file a claim by July 31 2017. The returns do not cover items that ripped because of improper care or normal wear and tear, among other exceptions.

But a lawsuit filed in May in federal court in California alleges that the new return policies fail to provide adequate relief for consumer and aggressively shifts the burden of the company’s defective product issues to distributors.

One lawsuit filed against the company alleges that it illegally used a design developed by a Hungarian artist as a pattern on its clothing. The artist filed the lawsuit in January alleging that the company misappropriated his “Cool Lion” design and marketed items with a similar pattern. LuLaRoe said it is investigating this claim and is trying to resolve the matter.

Another complaint, a federal class-action lawsuit filed against the company in February, focuses on the taxing issue that was the subject of many FTC complaints. It alleges that the company collected sales tax on purchases in locations where there are no such tax. LuLaRoe’s payment platform charges customers a retail tax based on the location of the distributors selling the item, though retail sales are only subject to taxation regulations based on where the goods are delivered.

LuLaRoe told TINA.org the tax issue stemmed from a software failure that misidentified the accurate location of its purchasers and that it is in the process of providing refunds to all affected customers.

It is not the first tax issue company owners Mark and DeAnne have faced. The IRS and California have placed liens against their properties and businesses totaling more than $700,000 in the past decade and property records show several remain outstanding. The company said the Stidhams have been “very transparent about the financial challenges they faced prior to the launch of LuLaRoe and the success of the business” and that “all viable liens have been satisfied and resolved.”