Madison LuLaRoe sellers react to $1 billion lawsuit

Madison LuLaRoe sellers react to $1 billion lawsuit

A women’s clothing company is facing a $1 billion lawsuit from California-based consultants who claim it’s acting like a pyramid scheme.

LuLaRoe sells dresses, tops and leggings with bold patterns through independent sellers across the country.

Some sellers said they were misled into investing thousands of dollars in merchandise hoping to make huge profits, but were stuck with clothes that wouldn’t sell.

The plaintiffs allege the company promoted the idea of part-time work with full-time pay, but they were overworked and invested and lost more than $9,000 in just a few months.

Two Madison sellers have made a sizeable profit selling LuLaRoe clothes, but have mixed reactions to the lawsuit.

“I don’t think LuLaRoe is a pyramid scheme, I just think that they need to be a little more honest and realistic about what the business entails and how it will affect your family,” said Shanda Frydenlund.

Frydenlund said she was the first LuLaRoe consultant in Madison two years ago, but now she is going out of business and leaving the company.

“It has changed so much and I think it’s because they’re trying to work out the kinks to make sure that they are addressing the pyramid scheme claims, but I think very overwhelming and confusing and frustrating to consultants,” said Frydenlund.

In the beginning, Frydenlund invested $5,000 in LuLaRoe merchandise. She made a profit in the first year, but said she didn’t so much as break even this year.

“You know the concept that everything sells, well it’s hard because not everything does, unfortunately,” she said.

Frydenlund is now desperately trying to sell the $10,000 worth of wholesale clothing she has. A new company policy says she can’t return the items because they are considered seasonal or she traded them with another seller.

The company said their 80,000 sellers have sold more than $2 billion in apparel this year, putting hundreds of millions of dollars into their pockets.

They said most sellers are happy and successful, like Sara Pederson.

“I hit the ground running and I started selling the day I got my stuff and I haven’t looked back since,” said Pederson.

The Madison mother was able to recoup her original $8,000 investment in just three months. She said she made about $75,000 before taxes this year.

Although Pederson is successful, she said she is in it for the clients.

“I’ve had women walk in after a double mastectomy… the ability to put on a shirt that made them feel beautiful, that’s why I do what I do,” she said.

Pederson admits she works full-time, but went into it knowing building a business requires big risk and a lot of work.

“I was motivated. I wanted that money back in my savings account and I think that drove me,” she said.