Whereas regulation of the MLM sector came mostly to a standstill thanks to Trump’s shutdown, in some corners government employees are still active.

One such corner is the Washington state AG’s Office, who are suing LuLaRoe for being a pyramid scheme.

Named defendants in the
AG’s lawsuit
are LuLaRoe and owners Mark Stidham and DeAnne Brady (right).

Jordan Brady, cited as “a Leadership and Culture Development role at LuLaRoe”, is also a named-defendant.

According to the Washington AG, since its launch in 2013

LuLaRoe operated an unlawful pyramid scheme in the State of Washington.

This is based on inventory loading and a compensation plan that up

until July 1, 2017, … gave Consultants a right to receive compensation entirely based on the recruitment of other persons as participants in the LuLaRoe MLM.

In other words, your classic MLM autoship recruitment scheme.

This regulatory non-compliant model sees affiliates of an MLM company typically sign up with some sort of package.

By way of a monthly product order affiliates are either required to or continue to pay a monthly fee to maintain the status quo.

Commissions are then earned when others are recruited who also sign up and pay monthly autoship fees.

In LuLaRoe this was referred to as the Leadership Bonus.

Following an internal investigation, the Washington AG claims

Income earned through the Leadership Bonus Plan significantly dwarfed retail profits for top consultants.

Ironically, at LuLaRoe events the fact that genuine retail sales were insignificant was celebrated;

At a Leadership Conference themed, `Be the Light” hosted at the Riverside Convention Center in California in January 2017; Defendant Brady asked Consultants to publicly state their last month’s total retail sales and bonus checks.

Consultants, at Defendant Brady’s direction, announced the amounts of their monthly bonus checks, which ranged from

$85,000 to $307,000.

Compared to their monthly retail sales, which ranged from $12,000 to $25,000, it was clear that the primary opportunity for compensation was not through sale of LuLaRoe apparel, but bonuses earned through recruiting.

Shortly after this convention, ‘
LuLaRoe revised their Leadership Bonus Plan to compensate Consultants based on actual retail sales rather than inventory purchases
‘.

In other words, LuLaRoe moved away from having a compensation structure that primarily rewarded Consultants based on recruiting towards a compensation structure based on bona fide retail sales to consumers.

After four years of running a pyramid scheme however, LuLaRoe’s compensation changes were evidently too little too late.

During the offending period the Washington AG cites examples of LuLaRoe marketing material pitching

an easy path to financial freedom and independence … (through a) process” to sell merchandise (that) emphasized recruiting.

LuLaRoe’s affiliate Policies and Procedures prohibit income claims.

Yet at a corporate level,

Defendant Brady led panels and

🤖 Quick Answer

What allegations does the Washington Attorney General make against LuLaRoe?
The Washington AG alleges that LuLaRoe operated an unlawful pyramid scheme since its 2013 launch. The lawsuit names LuLaRoe owners Mark Stidham and DeAnne Brady as defendants, along with Jordan Brady. The allegations center on inventory loading practices and compensation structures that prioritized recruitment over product sales until July 2017.

Who are the defendants in the Washington AG's lawsuit against LuLaRoe?
The named defendants include LuLaRoe as a company, owners Mark Stidham and DeAnne Brady, and Jordan Brady, who holds a Leadership and Culture Development role at LuLaRoe. The Washington state Attorney General's office filed the lawsuit alleging illegal pyramid scheme operations within the state.

What evidence forms the basis of the pyramid scheme allegations?

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