DeAnne and Mark Stidham co-founded LuLaRoe in 2012, incorporating the clothing company in California in May 2013. Mark Stidham serves as CEO. DeAnne Stidham, whose maiden name was Brady, is presented on the company website as the primary force behind the brand, having gained prior experience in network-based marketing before launching LuLaRoe.
The company's name, LuLaRoe, combines the first three letters of DeAnne Stidham's first three grandchildren's names. Stidham frequently shared a personal philosophy that acting as if one has already achieved a goal can lead to its realization, a principle she attributed to her success with the company. While details of her previous network marketing ventures remain private, LuLaRoe reported approximately $1 billion in sales by 2016, indicating substantial commercial growth in its early years.
Despite its rapid expansion, LuLaRoe has faced numerous civil lawsuits from former affiliates and customers, though no public enforcement actions by regulatory bodies have been reported. In February 2017, a lawsuit filed in Pennsylvania alleged the company unlawfully collected sales tax from customers residing in states that do not impose such taxes. The following month, two California customers initiated a class action lawsuit, citing widespread complaints about the quality of LuLaRoe apparel. These complaints had previously surfaced across social media platforms like Facebook and Twitter, and through inquiries with local business bureaus.
The most substantial legal challenge came in October 2017 with a proposed $1 billion class action lawsuit. Three former LuLaRoe affiliates were the plaintiffs. They claimed the company pressured them into significant debt, encouraging them to secure loans, take out credit cards, and even, in some cases, to sell breast milk to fund their required inventory purchases. The lawsuit was voluntarily dismissed without public explanation on January 12, 2018.
LuLaRoe initially sold maxi skirts, expanding to include other skirts and dresses in 2014. The company introduced its line of leggings in mid-2014, which quickly became its most recognizable product. Today, the LuLaRoe website also features dresses, tops, layering pieces, and children's clothing. The company asserts that "the production and development that goes into each style, print and design touches the hands of thousands of artists and craftsmen around the world. From Korea to Guatemala, to the US and Vietnam, together we are blessing the lives of over 100,000 families." Retail pricing for these collections is not publicly displayed on the company's website.
The LuLaRoe compensation plan operates on a break-away structure, paying residual commissions. Direct commissions are paid to affiliates until their recruited downline members reach the "Trainer" rank. In a break-away model, once a downline achieves a certain rank, they "break away" from their upline's direct commission structure, forming their own independent line, which often shifts the upline's earnings to a smaller override commission on the new group's total volume. This structure typically incentivizes continuous recruitment and significant inventory purchases to maintain rank and commission eligibility.
The pressure on affiliates to purchase substantial inventory is a common characteristic of such structures, and was specifically highlighted in the 2017 class action lawsuit alleging affiliates were urged to incur debt for product acquisition.