Multi-level marketing company LuLaRoe is going through rocky times. Not only is the company’s number of consultants down to fewer than 35,000 after reaching a high of 77,000 in February 2017, but also the organization is facing a massive lawsuit from its chief supplier, Providence Industries.
The lawsuit was filed in November 2017, with the plaintiff stating that LuLaRoe had failed to pay its bills since May. Initially, plaintiffs sought damages of $49 million based on $34 million in products that Providence sent to LuLaRoe for which they were never paid. The rest of the amount was for storage of other products at LuLaRoe’s request.
Now, Providence has increased their demand to $63 million as the lawsuit drags on. In new filings, they allege that LuLaRoe is quietly liquidating goods. Providence is asking for a writ of attachment to prevent this. Their initial request for such a writ was denied months ago, but this one is supported by the testimony of nine former LuLaRoe consultants, each of whom alleges that they’ve been waiting for months to receive refunds on returned products after giving up their positions as consultants.
To further support their argument, Providence says that the defendant has a history of not paying their bills and that the organization is likely insolvent. LuLaRoe has not commented on these allegations, but Providence asserts that the company’s founders are hiding financial assets in a series of shell companies. Based on comments made by the founders, Providence believes that they may try to leave the country with the funds.
While LuLaRoe makes no comment on the pending litigation, they do appear to acknowledge that things haven’t gone well in the past. Recent social media videos posted by the founders show them talking about a history of flawed products and how they are entering an era of “LuLaRoe 2.0.” They insist that if consultants stay with them, they will see tremendous financial gains.
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