Summary of Action

In 2019, the state of Washington filed a lawsuit against the California-based clothing MLM LuLaRoe for its alleged operation of an illegal pyramid scheme. That lawsuit resulted in a February 2021 Consent Decree that, among other things, permanently prohibits LuLaRoe from misrepresenting to Washington residents (or making misrepresentations in the state of Washington) that participants will or are likely to achieve substantial income or profit, including through discussion of lifestyle changes tied to compensation from the business opportunity.

An ongoing investigation of LuLaRoe’s marketing found evidence that the company is violating the Consent Decree by marketing the LuLaRoe business opportunity with atypical income claims, such as being able to earn substantial income, quit your full-time job, retire your spouse, financially support your family, and achieve financial freedom without including any income disclosures. Many of these deceptive income claims are published on company platforms, including its website and social media pages, and include statements made by LuLaRoe founder DeAnne Stidham.

The February 2021 Consent Decree also requires LuLaRoe to maintain “unmodified graphics” in its Washington income disclosure but found that the company modified the graphics in its income disclosure statement by changing certain colors used in a retail profit bar graph to deemphasize the fact that nearly 20 percent of LuLaRoe distributors either made no money or lost money last year.

As a result of these findings, sent a complaint letter on April 2, 2021 to the state of Washington Attorney General’s Office urging it to reopen its investigation of LuLaRoe and take appropriate enforcement action.

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