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Business News/ Money / Personal Finance/  5 money lessons from LuLaRich: Disaster lurks in every pyramid scheme even in fashion industry

5 money lessons from LuLaRich: Disaster lurks in every pyramid scheme even in fashion industry

The docu series ‘LuLaRoe documentary’, on Amazon Prime Video, will show you how pyramid schemes blinded many women with promises of big bucks and illusory living, compelling them to invest their life savings in stocks of clothing.

Money lessons from LuLaRichPremium
Money lessons from LuLaRich

This docu series on Amazon Prime Video about leggings will blow your mind.

The message came through social media, or from emails from long lost friends, or a conversation you started at a mall because you saw someone wear a really cool outfit and appreciated it. And then you went down the rabbit hole because you were blinded by the promise of big bucks.

LuLaRoe is a women’s fashion clothing company started by DeAnne Brady and her husband Mark Stidham in 2012. It is named after Brady’s three grandchildren:Lucy, Lola, and Monroe.

Before you go, ‘Aww, so cute!’ understand that this really cool reality show style docu series has many red flags for you and your money.

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An ingenious idea that worked… Up to a point

Imagine buying a design that only 999 other women will own, with the design split into 20 different styles of dresses, leggings, shorts, skirts and tees! The chances of you bumping into another person in your city wearing leggings of the same design are practically zero!

Now imagine the exclusivity: you cannot buy the clothes off any rack. You have to buy it through a consultant. A clothes consultant that helps you find the right size and fit without judging you is a friend worth having! Plus they tell you about new designs that you will love, and they would be right!

In fact, friends who bought leggings from LuLaRoe believed that they were made from unicorn hair because no matter what size you were, they seemed to fit as if they were made to order!

But where did this ‘perfect clothing’ idea go wrong? Consultants were made to believe that they would sell all their inventory and more! To become a consultant, each woman would need to invest $5,000 to $10,000. And the company made you believe that you could sell everything!

When you watch the series, and learn about the class action suit the women brought against the company, you wonder why none of these women saw through the pyramid scheme?

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Join this mega money business idea! It’s easy!

Easy money isn’t easy. You have to pay a price. But when you are a new mother/parents or someone who just wants to get back into the workforce after a break, someone who wants to become an entrepreneur, it becomes very easy to be blinded by the promise of making money and join a club with beautiful people on a yacht, dancing with thousands at a special event (with live music).

The visuals are stunning, the promise of big bucks and a lifestyle that involves luxury only inches away is so convincing, it is easy to understand why so many women invested their life’s savings and ended up with garages/homes filled with inventory.

Pyramid schemes: Recognise them!

Pyramid schemes are plentiful in India as well. And they are often disguised as house parties where you buy cookware and bakeware, jewellery and yes, clothing too. Happens on a smaller scale, but happens nevertheless. Also, do you remember the chit fund scams that make headlines?

It’s just that the chit funds make only one or two people rich beyond belief and the money is not recovered. Here, the ‘consultants’ for LuLaRoe made money, but then at some point, they realised that women will buy only that many leggings!

The consultants are then pushed, demeaned and insulted in many ways. It’s tough being in the company of people who want you to look good 24/7. The demands become monstrous.

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Pricing? Quality? What led to the downfall?

If you are paying $50 for a top, it had better be top quality too! Refunds and returns become a nightmare for the customer as well as the ‘consultant’. Plus in a multi level marketing scheme, this loss is tough because consultants are being pushed to sell more and more of the products.

The unrepentant family who sat on the top of a pile of people’s cash thought nothing before spending money on organising ‘events’ that lured in more women to join the pyramid to prop the owners. It feels awful to see how the most vulnerable women - new mothers who wanted to work from home, women who wanted to join the workforce again - were easy targets of this multi level marketing scheme.

You will be aghast at how strange cultish rituals pop up when you’re trying to sell leggings, but you understand how difficult it must have been for the women who became consultants to make money and then got roped into rituals!

Did the California law help?

In California (USA) there is a State law called SAMP (Seller Assisted Marketing Plan) Act that helped the ‘consultants’ of LuLaRoe bring a billion dollar class action suit. But the company takes shelter in the contracts with the consultants that ensure the company saves itself by putting ‘mandatory arbitration’ in fine print.

That makes it tougher to fight the company, which still operates, but has changed the word ‘consultant’ to ‘retailer’. If you put your money into anything, make sure you read the fine print. Also best to stay away from pyramid schemes, isn’t it?

So before you join your cousin’s group that sells diet shakes and keeps her in such good shape, or accepts your friend’s house party to preview designer jewellery and clothes, take this advice: learn to say, ‘No, thank you!’ or better yet, keep your wallet at home!

Manisha Lakhe is a poet, film critic, traveller, founder of Caferati — an online writer’s forum, hosts Mumbai’s oldest open mic, and teaches advertising, films and communication. She can be reached on Twitter at @manishalakhe.



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Published: 03 Jun 2023, 12:38 PM IST
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