Is Lularoe a pyramid scheme or not? That’s a question many people have been asking since the company has been hit with a lawsuit. But that aside, what are the Lularoe products like, and are people making any money with the Lularoe business opportunity?
We’ll get right into the review very shortly, but first of all I wanted to say how glad I am to see you here. The very fact that you’re on my site proves you’re smart enough to do some research before you jump into anything.
That’ll help you avoid the scams as well as wasting valuable time on something that’s just not worth it.
Now read on to discover the truth about the Lularoe MLM scheme…
Company Name: Lularoe
Founders: DeAnne Brady & Mark Stidham
Price To Join: $5000+
My Rating: 2/10
~ Lularoe Reviews ~
These days there are network marketing schemes all over the place, with the majority of them having their headquarters in the USA. Never before have there been so many MLM schemes going around.
I’ve written a lot of reviews on a variety of network marketing opportunities over the years, and I’ve even been involved in a few myself in the past. When Lularoe came to my attention recently, it sounded like a good one to research and write a review on.
While we’re all trying to avoid online scams, reviews are also one of the very best ways to search for and find the good stuff as well. I created Laptop Freedom Living because I wanted to help people make money online just like I do, and that’s why you’ll find so many reviews of training and make money schemes on here.
It was always my goal to work for myself from home, and the internet has given me the vehicle I needed to achieve that. I now make more than a fulltime income without having to work fulltime, and you can do it too.
With so many people searching for options online nowadays, all the scammers are also online trying to sucker people into their dodgy schemes, so we always need to be wary.
Anyway, let’s now see if the Lularoe MLM scheme is legit and offers any real value or not.
Here's a far easier way to make money online. Click below to learn more…
What Is Lularoe About?
Lularoe was founded by DeAnne Brady & Mark Stidham in the United States in 2012. It is a women’s fashion and clothing company that distributes its products via the multi level marketing method.
Here’s their company slogan:
“Empower women to be financially independent or even financially free”
So this is partly about clothing and fashion, and partly about helping people (women mostly) to make a great living by selling Lularoe products and recruiting others into the business.
Sounds like your typical network marketing scheme so far. I’ll give it one thing though, at least it’s not in the done-to-death health and wellness niche.
Very recently a number of lawsuits, complaints and legal action have been levelled at and filed against Lularoe.
One lawsuit claims the company is running an illegal pyramid scheme (MLM schemes often get accused of this). Other class action suits are against the company’s policies of encouraging members to do whatever they can to get the money to purchase more Lularoe products.
Most MLM schemes suffer from controversy somewhere along the line, so it’s hardly unusual. I won’t get right into the legal actions in this review, as Lularoe is still in business, and my review is more focused on whether you can make money with Lularoe.
I do talk a bit more about the “pyramid scheme” drama in a section further down in this review.
MLM, no matter what company you’re involved with, is a really tough way to make a decent income. I much prefer the simplicity of affiliate marketing. It’s easy to get started when you follow some really cool training. You can even join for FREE!
The Lularoe Products
As I said above, this review is more about the business side of Lularoe, but I’ll briefly mention the product line here.
For more detailed information, jump on over to the Lularoe website.
Most of the product range focuses on women’s clothes and clothing for kids. There is definitely a strong female slant with this company, with a target market of not just women in general, but mothers especially.
There are a few items for the gents, but not many.
One of the most popular Lularoe products is their range of leggings. These are apparently super comfortable and come in a large range of patterns, styles and colours.
One thing to note is that the Lularoe clothing range changes all the time. They manufacture 5000 items of a certain pattern or design and sell it until it’s sold out. Then a new range of 5000 is released.
This makes it difficult to list their product line here, so I won’t. I’ll list the 4 main categories though, and they are:
Under the Women’s section you’ll find things like leggings, tops, skirts, jackets, dresses, bottoms, layers and so on.
Normally the prices for products in any MLM scheme seem way too high, but after doing some research, the prices of the Lularoe product range are far more reasonable than what I’m accustomed to with network marketing schemes and their compensation plans.
The Lularoe Compensation Plan
With MLM there are always two primary ways to earn an income from the business, and they are:
- Sell products to customers
- Recruit and build a sales team
You don’t need to buy a Starter Kit or pay a joining fee with Lularoe, but what you do have to do is invest in a pile of stock.
When you join you will be what they call a “Fashion Consultant”. This is the fancy term for being a Lularoe MLM distributor at the base level.
As a seller of the products there are some pretty decent commissions on offer, and they range between 35% to 50% mark up on the wholesale price. Once you reach the level of “Sponsor”, you’ll also earn a further 5% commission from sales made by your direct recruits, and 3% from sales made by their recruits.
Selling products for MLM schemes is not the way to make money though. That comes with recruiting. You need to rise up the company ranks to have a real shot at a decent income, and the only way to achieve that is with team sales volume.
In my opinion some 90% of your efforts should be directed at recruiting. It’s the only way to succeed in network marketing of any kind.
Lularoe use the old school sales method of hosting parties in your home or the homes of people within your circle of friends and relatives. They call this a trendy sounding name, a “pop-up boutique”.
Sure, you might make a few sales this way or recruit someone, but it won’t take long for that revenue stream to completely dry up.
Other methods the company suggests is to post on Facebook and other social media, or just generally hassle the hell out of everyone you know.
Here are the ranks in the Lularoe scheme:
- Fashion Consultant
- And more…
The higher the rank you are, the more products you need to purchase every single month to be considered “active”. If you don’t purchase the required amount (or sell), then you forfeit any commissions and bonuses owed to you.
You can see the Lularoe compensation plan PDF here.
Is There An Income Disclosure Statement?
I couldn’t locate one on their actual site, despite the fact that they’re supposed to have one available, but I did find some basic stats regarding income for the 2016 year. It’s not super recent, but it gives us something to go on.
The average yearly earnings in 2016 for all ranks combined was just $525.94. So that’s including ranks at the very top right down to the bottom.
That’s an atrocious average. That means the average for Fashion Consultants was probably a few dollars a year at best.
You have to remember too, these figures are total average earnings and don’t include any expenses incurred in earning that income.
The Reasons Why I’m Not a Fan of MLM
I’ve done MLM in the past and, even despite my experiences, there are a number of key reasons why I’m really not a fan of MLM and how their compensation plans work.
While there are loads of benefits for the actual company, it’s not the same story when you break it all down and clearly see what the deal is for the distributors.
The reason many people don’t notice the downsides is because they’re constantly sold on hype from the very moment they show an interest in a network marketing opportunity.
Obviously there must be a good reason why so many companies are opting for network marketing these days – especially in America – over regular retailing. And there is.
Apart from workers directly employed by the company to run operations day to day, everyone else who works for businesses like Lularoe all work for free, basically. The biggest workforce in any MLM operation by far is its distributors, and none of these people are on the payroll.
They are really just sales reps who don’t get a wage or even a retainer, and are responsible for all expenses incurred in doing their work. Distributors all work diligently with the hope of making commissions and bonuses only.
In many cases you actually have to pay the MLM company for the right to work for them for free.
What the hell is that deal?
One thing with Lularoe is they don’t charge a joining fee, but they do enforce that you buy heaps of product when you join.
Distributors do most of the work, but yet earn the least. They’re buying the products, selling the products, hosting parties, buying business materials, paying all their own costs, advertising the company and the list goes on.
And this is all done for no pay.
When you start to break it all down it really is not an attractive deal to be a distributor for any MLM company.
Let’s go on.
I said in the Compensation Plan section of this Lularoe review that the only true way to get ahead in any MLM is with mass recruitment, and that’s true. These schemes are structured in such a way that you really have to recruit to earn the decent money.
What this means is the company now has a massive distributor base all running around growing and expanding their business for them, and again totally free of charge. This also brings in stacks more money for the company as well.
The deal just gets better and better for the MLM company.
So why is MLM so popular then?
I’ll sum it up in one very powerful word: HYPE!
All multi level marketing companies really know how to sell the dream and tell people what they want to hear. It’s the same tactics used online by get rich quick schemes. So many businesses use this tactic because it simply works on the vast majority of people.
Go along to any MLM meeting and you’ll be dazzled with wealthy lifestyles, including stacks of cash, exotic cars, massive houses, private jets, getaways to romantic destinations, the works.
There’s absolutely nothing wrong with wanting to aspire to this type of lifestyle, but MLM is selling a false dream for the most part. Unless you own the company or are one of the very first ones to join, the chances of you achieving this kind of opulent lifestyle through any MLM scheme is close to zero.
In fact, less than a half of one percent of people involved in all network marketing companies are living this kind of life as a direct result of MLM.
Even in spite of the terrible statistics attached to getting involved in MLM, it’s still popular because of the way these companies promote their opportunities.
Another way they sell the deal is by telling people they’ll have their very own business. Sorry to burst the bubble, but no one owns a business in MLM except the person or people who own the actual company itself.
Everyone else is just an unpaid sales rep, despite what hype and untruths they choose to tell people. The company owns everything. The company is in total control. The only thing the distributors ever own is the products they purchase and that’s it.
You don’t create your own brand or build up an asset you can later sell. You just get to work for the company in the hope of earning bonuses and commissions, and you do this all at your own expense.
Another thing I really don’t like about MLM is the way they make all their workers also become their main customers. Most network marketing companies require their distributors to purchase (or sell) a minimum amount of product every single month to remain eligible to earn.
Lularoe adopt this very tactic in a huge way. Even when you first get started you have to purchase around $5000 worth of Lularoe products upfront and hope to be able to sell them.
That’s a huge business expense for somebody who technically doesn’t even have their own business.
The way Lularoe have set things up is far worse than any other MLM company I’ve ever seen when it comes to forcing their distributors to buy product, as the higher your rank in the company is, in order to maintain that rank, you are required to buy even more products every single month.
What a total rort!
Can you see how these companies aren’t really interested in just selling products to the general public? They just want to hook people into their business deal and then sell all their wares to the workers instead.
This totally sucks in my opinion!
These are the reasons why I never recommend MLM as a good way to make money.
Is Lularoe A Pyramid Scheme?
Even though Lularoe has been accused numerous times of running an illegal pyramid scheme, and there are even lawsuits against them, this is not an unusual allegation for any MLM company.
They are often accused of running illegal pyramid schemes simply because their compensation plans operate on a pyramid structure.
To fully understand why their schemes are not illegal, you first have to know what an illegal pyramid scheme actually is.
The illegal version of a pyramid operation is what’s called a “naked” pyramid scheme. This means the person or company running the operation has no products or tangible services of any value. Everything relies on bringing in new members and having them invest in the scheme.
It’s this new money that pays company profits and the commissions of previous members.
It’s all about recruiting and nothing else.
Lularoe isn’t running a naked operation. The company has stacks of products to sell. People might not like the way MLM works (I sure don’t), but that doesn’t mean what they’re doing is illegal.
I believe possibly the biggest lure of all when it comes to MLM is the (false) promise of people having their own business.
A lot of people want to do something for themselves, but don’t want the hassle or expense of setting up their own operation from scratch. You get presented with a deal like Lularoe is offering, where everything is there ready to go, and it looks really inviting.
Add in a few healthy splashes of sales hype, sell the dream lifestyle and people are hooked. They think they’ve just stepped into their dream business and will very soon be living the highlife, sipping cocktails somewhere on some exotic beach.
These schemes are sold on hype, big dollars, easy money and all in quick time. However, the reality is totally different to the dream they sell.
While some people do really well in MLM, almost 100% of people who get involved fail miserably.
What I Do Like
- You don’t have to pay a joining fee or buy a Starter Kit
- At least this company sells fashion and not health and wellness products
- There is a 6 month warranty on all of the Lularoe products
What I Don’t Like and Red Flags
- This is only available in the USA and no other countries
- Nearly 100% of Lularoe distributors have failed to make a profit
- It’s super expensive to get started because of the massive amounts of product you have to purchase upfront
- The higher the rank you are in the company, the more products you have to purchase per month
- MLM totally sucks for distributors as all the benefits go to the company
- Distributors are nothing more than unpaid sales reps who pay all their own operating expenses
- You never really own a business when you join MLM, and it’s the same with Lularoe
- There are a number of lawsuits, class action suits and numerous complaints levelled against the Lularoe company for a whole variety of reasons
- The idea of hosting product parties to make sales and recruit is a very old school promotional method in the modern internet age
How Much Does It Cost To Join Lularoe?
There is no joining fee with Lularoe, which is a pretty rare thing in the network marketing world. There are also no Starter Kits to purchase.
Now this all sounds very attractive so far, but what Lularoe don’t charge you to join, they sure make up for in the amount of product they make you purchase to get started, as well as the amount they make you buy every single month if you want to maintain your active status and be eligible to earn.
Let’s see what the costs really are here.
Apparently, according to some recent surveys, the average start up costs to join Lularoe is around $7000, with the absolute minimum being $5000.
When you start you must buy inventory in the range of 275-300 items of clothing from the Lularoe range.
Now this is just to get started. From that point on you will have to purchase a minimum order of inventory every single month, and the amount increases with your ranking.
The prices will vary depending on what you order, but here are the minimum item order amounts required:
- Fashion Consultant – 33 items per month
- Sponsor – 175 items per month
- Trainer – 1750 items per month (which includes items purchased by your downline)
If you don’t maintain this order requirement every single month you won’t be considered active and you’ll forfeit any commissions and bonuses due to you and will no longer be eligible to earn from the business.
Talk about taking full advantage of your workforce and making them your main customer base.
Is Lularoe a Scam or Legit?
I don’t think Lularoe is a scam at all. It’s just your usual MLM fare, only worse in some areas.
There are some good things and some really bad things about this company as a business opportunity in my opinion.
A lot of people like their clothing, and the prices are more reasonable than most other MLM products. However, there have been complaints arising of late that the quality of the clothing is really suffering.
There is the 6 month warranty on defects though, which is a good thing.
The main thing I really don’t like – apart from all the typical reasons why I don’t favour MLM – is the massive cost and stockpiling of clothing items distributors have to bear right from start up and every single month after that.
It’s going to be incredibly hard to make a profit in this business when you are forced to buy so much stock all the time whether you need it, want it or not.
The owners of Lularoe would be laughing all the way to the bank while the distributors are filling their garages with Lularoe products that they can’t find a market for.
Seriously, I’d stay well away from this one. Way too expensive and the company just seems intent on rorting its workers, not helping them make any money. Otherwise they wouldn’t enforce such massive monthly orders. They’re just taking advantage.
Why anyone would join this, I don’t know.
I don’t like it at all, to be honest.
Here’s Something WAY Easier Than MLM!
No matter what MLM company you happened to join, it’s loads of work and expense, and you have to constantly be recruiting to make headway.
I much prefer the ease and simplicity of affiliate marketing. It has it all over multi level marketing in every way as far as I’m concerned.
There are no joining fees, no starter kits, no monthly product purchases, no actual selling and definitely no recruiting for the most part with affiliate marketing.
When you do affiliate marketing and build your own affiliate website, that becomes both a brand and a business asset you can later sell if you want. With MLM you only promote the company’s brand and don’t have your own business asset.
The quickest and easiest way to get started with affiliate marketing is to follow a proven training blueprint like I did.
Some marketers do really well and strike it rich as affiliates. Many others are content to be affiliates in their spare time to bring in regular extra cash. Many others like myself prefer to have it as our main money earner; but not just for the cash, but also the lifestyle it allows you to live.
Let’s list just a few of the many advantages:
- Live the true laptop lifestyle and make money while you travel
- Be your own boss and work your own flexible schedule
- Have lots more time with your loved ones
- Earn passive income from a global market day and night
- Have the ultimate freedom lifestyle with both time AND money together
- You don’t need any money to get started
- All you need is the internet and a computer
- There are no limitations on how much money you can potentially make
- And so much more…
To help you get started and learn more, I’ve written a handy make money online from home guide. It only takes a few minutes to read and you can check it out by hitting the banner below.
I’ve barely even scratched the surface with the list of benefits I wrote above. I expand on this section within my guide, and also explain the processes of affiliate marketing for anyone who doesn’t know how it works.
I was put on the right path from the very start because of the training I followed. I talk about and recommend this training to you in my guide, because I know it’ll work equally as well for you too.
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