LuLaRoe Admins Agree To Pay Up $4.75 Million In Settlement Of Washington Class Action
Washington-based LuLaRoe members will soon be able to receive their paychecks after LuLaRoe management has agreed to settle a class action lawsuit filed against them concerning its alleged illegal pyramid scheme operations.
According to the latest online reports, top management from LuLaRoe has agreed to pay $4.75 million as part of its settlement with the state of Washington’s Attorney General’s office – the leading plaintiff to the complaint. This comes on the heels of an upcoming trial scheduled a few weeks as of writing in which the court is set to review more deeply the claims made against the company.
Denying any wrongdoing, the LuLaRoe CEO Mark Stidham has released a statement saying that the continued dragging of the case in court would incur a heavy economic and financial toll to the company; ergo, the agreed-upon settlement made economic and practical sense.
Stidham believes that the company will win its case eventually, but the burden of the whole litigation process will end up hurting not only the company’s coffers but also the company’s leadership.
The company adds that senior management would be preoccupied with the case and how it progresses, which will hinder their business operations, further justifying their decision to settle.
Washington residents who were a part of LuLaRoe’s network of sellers in the state would be considered as a Class.
They are entitled to a compensation package that would be sourced from the settlement fund.
Since the settlement is still in its infancy and is yet to be finalized, the final amount each affected class member is yet to be determined.
Another important thing to note in the settlement is the inclusion of a “consent decree.”
This is aimed to halt LuLaRoe from further exploiting other unknowing persons of its allegedly illegal pyramid scheme of business.
This clause requires the company to disclose to its potential distributors their potential earnings if they decided to take part in the company.
LuLaRoe’s Meteoric Rise To Legal Obstacles
LuLaRoe was established in 2012 in California by husband and wife Mark Stidham and Deanne Brady.
The tandem then resorted to establishing a nationwide network of distributors ready to sell their clothing lines.
Mostly known for their brightly-colored leggings, many middle-aged Moms across the United States joined in the bandwagon to become certified LuLaRoe distributors in their localities.
There was even a point in time that there are neighborhood clubs of certified LuLaRoe Moms Distributors in almost every county across America.
The company’s name was on everybody’s lips, and even influential business owners had started to pay attention to the company.
Officially operating as an MLM or multi-level marketing company, LuLaRoe distributors need to recruit other people to join the company.
Then this recruit will also need to ask someone to join and be a distributor. This process continues as more and more distributors are included in the company’s nationwide network of certified distributors.
MLMs are essentially legal, but the territory LuLaRoe tends to operate is said to be downright illegal, which many have complained to be a pyramid scheme.
Pyramid schemes are illegal and are closely regulated by federal authorities.
A classic pyramid scheme is characterized as its benefactors earning money in recruiting others instead of selling a product per se.
With how LuLaRoe works, different camps have a different say on the issue.
Nevertheless, the cracks soon began surfacing amidst the company’s success.
Riddled with product quality concerns and its distributors experiencing financial ruin, and soon authorities have started looking into the company and its operations.
Reiterating that their company’s conscience is clear, the company maintains to this very day that its business operations are legitimate and are in accordance with the existing laws.
Yet this is not the only time LuLaRoe has been involved in some form of legal action regarding its business conduct.
In 2018, a California class action lawsuit claimed that the company is using shell companies in order to hide its wealth from its creditors.
Just last year, LuLaRoe also agreed to settle a complaint made against the company in Pennsylvania, alleging that they did not refund its distributors in the area.
Editor’s Note on LuLaRoe Washington Class Action Settlement:
This article is published to inform you of the latest class action settlement LuLaRoe company administrators have agreed upon to end litigation in a Washington class action lawsuit.
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