California-based clothing retailer LuLaRoe (who recently purchased a $16 million dollar facility in Blythewood, S.C.) is now facing a $1 billion dollar lawsuit – after four class-action suits were filed this year – accusing the company of operating under a pyramid scheme, defrauding up to 80,000 customers in just a few years.
The lawsuit argues that LuLa Roe’s main source of revenue isn’t customer sales, but inventory purchases by individual sellers. Of their 80,000 independent sellers (who are non-salaried individuals, mostly millennial women) each spends – on average – $5,000 in inventory purchases.)
Aside from complaints of poor product quality, the company tightened their return policy in September, leaving sellers with thousands of dollars in non-returnable merchandise.
Currently the Blythewood plant employees 500 people, with another 500 person shift set to be added in 2018. Whether this lawsuit will affect the S.C. plant + the 1,000 jobs it would bring to the area is TBA.
Read more from The State.
