in Newswire Published on October 19, 2017

New Class Action Lawsuit Against LuLaRoe Centers on Buy-Back Policy Reversal

by Corrado Rizzi

Last Updated on May 8, 2018

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Lemberg et al. v. LuLaRoe, LLC et al.

Filed: October 13, 2017 ◆§ 5:17-cv-02102

• Read Complaint

Four plaintiffs have filed a lawsuit over LuLaRoe's controversial decision to renege on its 100 percent buy-back program for consultants who wish to leave the gig.

Defendant(s)

LuLaRoe, LLC LLR, Inc.

Law(s)

State(s)

California

Categories

Retail Fashion Fraud

A proposed class action lawsuit filed in California takes issue with defendant LuLaRoe’s controversial September 2017 reversal of its 100 percent buy-back policy, something the lawsuit claims the multi-level marketing company used to induce consultants into ponying up the initial $5,000 start-up fee to begin selling with the popular leggings retailer. The 20-page complaint, filed by four lead plaintiffs from New Jersey, California and Oregon, alleges LuLaRoe, LLC and LLR, Inc.’s 180 on its return policy violated California’s Unfair Competition Law and other state consumer protection statutes, as well as breached the companies’ contract with consultants.

The complaint notes that LuLaRoe in April 2017 announced that any consultant who wished to end their business with the company could return his or her inventory for a 100 percent refund (with LuLaRoe also covering shipping costs). “LuLaRoe isn’t going anywhere and neither is the Contract Cancelation 100% buy-back program,” the company said in an August 2017 Twitter post.

According to the complaint, LuLaRoe, despite its promise, retroactively canceled its buy-back policy in September, effectively shutting out consultants who no longer wish to be consultants who may be stuck with unsellable merchandise. 

“What is worse, for consultants to cancel their status as consultants and receive full reimbursement and free return shipping labels, they must agree to immediately cease all sales of their inventory,” the lawsuit says, adding that throughout the cancelation process, ex-consultants often cannot communicate with LuLaRoe once they “discover this bait-and-switch has occurred.” 

LuLaRoe’s response to this lawsuit, first published by Yahoo Lifestyle, includes mention that consultants are bound to mediation and arbitration clauses agreed upon before they begin selling for the company, which may not bode well for this lawsuit:

“We have not been served with the complaint. We believe these allegations are wholly without merit and intend to vigorously defend against them. LuLaRoe will in good faith continue to abide by the terms of the Policies and Procedures—accepted and binding upon every Independent Fashion Retailer executing the LuLaRoe Independent Consultant Application and Agreement—which includes mediation and legal arbitration as the appropriate forums for addressing any disputes about the Retailer cancellation, return and refund process.”

The full complaint can be read below.

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Last Updated on May 8, 2018 — 5:05 PM

Corrado Rizzi

corrado@classaction.org

Corrado Rizzi is the Senior Managing Editor of ClassAction.org.

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