
Thousands of Women Say LuLaRoe’s Legging Empire Is a Scam - prostoalex
https://www.bloomberg.com/news/features/2018-04-27/thousands-of-women-say-lularoe-s-legging-empire-is-a-scam
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JohnJamesRambo
"In March 2016 she paid $9,000 to become a LuLaRoe consultant."

Uh, your first clue is that you don't usually PAY companies for the privilege
of becoming an employee.

~~~
trcollinson
I'm not defending multilevel marketing pyramid schemes but if you are signing
up for one, you are not an employee. You do pay to run certain types of
companies (franchises). But if the franchise isn't supporting you then you are
being scammed.

~~~
JohnJamesRambo
I'm not convinced franchises aren't far off from pyramid schemes and MLM as
well.

[https://en.wikipedia.org/wiki/Franchise_fraud](https://en.wikipedia.org/wiki/Franchise_fraud)

Math on a McDonald's franchise is here-

[https://www.mymoneyblog.com/mcdonalds-franchise-cost-vs-
prof...](https://www.mymoneyblog.com/mcdonalds-franchise-cost-vs-profit.html)

"But if you spend 40 hours a week and only keep tabs on one location, it might
really feel like you bought a job."

It's looking like 5-6% net return is what you get which is worse than an index
fund and you are working your ass off keeping the business running.

~~~
astura
Franchises are nowhere near MLMs.

Franchisees don't make the majority of their income from recruiting other
people to become franchisees.

Franchisees don't have "parties" where they utilize social pressure to get
people to make sympathy purchases of things they don't want or need.

~~~
astura
I have to add here, the FTC found that 99% of people lose money in MLMs. This
is obviously untrue with franchises.

[https://www.ftc.gov/sites/default/files/documents/public_com...](https://www.ftc.gov/sites/default/files/documents/public_comments/trade-
regulation-rule-disclosure-requirements-and-prohibitions-concerning-business-
opportunities-ftc.r511993-00008%25C2%25A0/00008-57281.pdf) [PDF]

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kondro
Not specifically about LuLaRoe, but The Dream[1] is an excellent podcast
series about MLM’s, why people get sucked into them and why they’re not
illegal (even though they probably should be).

1\. [https://www.stitcher.com/podcast/stitcher/the-
dream](https://www.stitcher.com/podcast/stitcher/the-dream)

~~~
elektor
Another great resource to learn about MLMs is Reddit's r/antiMLM. Judging from
its activity, it looks like people are getting really fed up with these
companies.

[https://www.reddit.com/r/antiMLM/](https://www.reddit.com/r/antiMLM/)

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nathanaldensr
Defining LuLaRoe as a "legging empire" is simply wrong. They are a weak-
minded-person manipulation empire. Their competitors aren't clothing
retailers, they're other MLMs, all targeting the same weak-minded people.
That's what they sell. The prey on the weak-minded--those who would have their
own dreams sold to them--and then wrap it up in fancy English to make the FTC
happy.

~~~
xnyan
"\--and then wrap it up in fancy English to make the FTC happy."

The wool is being pulled over 0 peoples (in power) eyes. Everyone (again,
everyone with power) knows what is going on, including the FTC.

MLMs target those particularly vulnerable to their pitch. They leverage their
information asymmetry (almost everyone will lose money in a MLM to the benefit
of those above) and as you say, hide what the reality of what the "business"
really is with lifestyle fantasy and rhetoric marketing.

I consider myself maybe a little smart in a few very specific areas - that has
not stopped me from being outsmarted or taken advantage of at times I and
think this is true for most people at some point. Labeling victims as weak
minded is a simple way of dismissing the wrongdoing done by MLM actors with
far more resources and power than their victims.

What they do should be illegal, and the simple reason it's not is MLMs donate
lots of money to lawmakers.

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moate
A pyramid scheme...sorry..."Multi-level marketing" company is accused of
scammy practices? Color me shocked!

There are whole blogs, podcasts, message boards, etc that are all about
showing how multi-level marketing is just a flimsy set of guidelines to be
able to legally dodge being busted for pyramid scheming.

~~~
smacktoward
The article makes it pretty clear that LuLaRoe went above and beyond even the
normal MLM scuzziness:

 _> [A]t the national level the job of spotting [pyramid schemes] falls to the
U.S. Federal Trade Commission. It primarily does this by checking to see if a
company abides by a standard established in the wake of a 1972 lawsuit against
a now defunct beauty products company called Koscot. The Koscot standard, as
it’s known, says that while a company can compensate people for recruiting new
sellers, it can’t base that compensation on how much inventory the recruits
buy. Most state laws, including California’s, also require compensation plans
to be based on sales._

 _It’s a simple rule. The DSA requires it of all its members. LuLaRoe didn’t
follow it for the first four years of its existence, instead basing its
bonuses on wholesale orders. For a while it apparently neglected to track what
types of clothing actually sold._

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skunkworker
When your business is built on buying product in large quantities with unknown
SKUs. And most of the product you buy is unsellable. It’s laughable to compare
to a normal company which buys what they sell, and the specific patterns,
sizes etc.

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chewyland
The Dream is a wonderful podcast describing a lot of these scams. I highly
recommend it.

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jchallis
Google Autocomplete is very instructive here.

Lularoe is a ....

Lularoe is a cult

Lularoe is a pyramid scheme

Lularoe is a ripoff.

That’s enough information for me.

~~~
Rebelgecko
I would be wary of trying to use Google autocomplete for making any important
decisions. Until they blacklisted showing autocomplete results for queries
that look like "Why are <ethnicity>..." or "<ethnicity> are ...", you could
get some interesting but certainly not trustworthy results.

~~~
Someone1234
They said it was informative, they didn't say anything about making important
decisions.

It shows you what is often searched for which is informative, even if in that
case it shows that racism is common (which arguably is informative within
itself, albeit depressing).

Personally I like doing "[Something] Vs " to see what people consider are
competitors. For example: "hacker news vs " returns:

\- "hacker news vs reddit"

\- "hacker news vs slashdot"

\- "hacker news vs code"

etc.

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smn1234
this should have a (2018) ?

