Is LuLaRoe a Pyramid Scheme or MLM? [Review]

Are you looking for a LuLaRoe MLM review? Is LuLaRoe a pyramid scheme? If you want to make money online, you might have heard of this program. But you may wonder if it is a scam.

There is a good chance that you heard about LuLaRoe MLM through someone – a friend or family member.

Many people these days are looking for additional income, and you are most likely one of them. There was then an opportunity to work from home through LuLaRoe MLM.

I have a passion to help people explore the best money-making opportunities online, so over the years, I have reviewed hundreds of similar online programs like LuLaRoe MLM.

To help you make a more informed decision, I have thoroughly researched the LuLaRoe MLM so I can tell you more about it.

As a disclaimer, I’m not affiliated with LuLaRoe MLM. It means I’m not paid to write this review. So you can rest assured that you will get an honest and unbiased review from me.

At the end of this review, I’ll also tell you the best alternative to LuLaRoe MLM that has enabled me to make a full-time passive income online.

What is LuLaRoe MLM?

LuLaRoe is a multi-level marketing company. The company sells women’s clothing, particularly tights. The brand is known for its one-of-a-kind and stylish prints, which are only produced in limited quantities.

Once a design is created, it will never be duplicated. The company sells their products through their Independent Style Stores. The items can be purchased in person or online.

The main issue with this MLM is that many people believe LuLaRoe is a pyramid scheme scam.

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Who Founded LuLaRoe MLM?

LuLaRoe was founded by Deanne Stidman and her partner, Mark, at the end of 2012. Mark is currently in charge of running the company. Deanne had previously worked in multi-level marketing.

According to a company expert, LuLaRoe’s growth has recently skyrocketed. In September 2016, they had 38,277 specialists and 77,491 consultants. According to Forbes, LuLaRoe will likely make $1 billion in sales in 2016.

What Products Does LulaRoe Sell?

Simply put, LuLaRoe is a clothing company. Although the company is best known for its leggings, it also sells skirts, knits, dresses, and other items.

They have a variety of bright patterns, but only a few of each are made. This ensures that the clothes they sell are one-of-a-kind.

The garments are made in a variety of countries, including China, Vietnam, and Guatemala. Because they are open about where their products are manufactured, the fact that they are sold all over the world does not bother them. The issue is that the goods are of poor quality.

Some people dislike the fact that there is no standard size. So, for one LuLaRoe product, you might need a small, but for another, you might need an extra-large.

There are also numerous issues with the product being used being extremely thin. As a result, the clothing easily splits or wears out.

The bright colors and unique boutique designs of LuLaRoe clothing are what make it appealing. However, the low quality of that clothing is also the source of many problems.

Because of LuLaRoe’s rapid growth, more low-quality items may have been produced. Only time will tell if they can improve the products further.

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What is MLM?

Before we get into LuLaRoe MLM, I’d like to explain what MLM is and how it differs from traditional business models.

Multilevel marketing companies are also known as direct sales companies or network marketing companies.

An MLM company does not pay you a salary.

You make money by recruiting others to join your business rather than selling products. If you hire someone and they start making money, you get paid a commission on the sales and recruits they bring in.

There are several levels to this (hence multi-level).

Think about a triangle. If the person at the top of the triangle recruits ten people, and each of these ten recruits ten more, and each of these ten recruits ten more, you will receive commissions from everyone in the triangle because they are all in your direct downline (in an MLM, the people beneath you are known as your ‘downline,’ and you are their ‘upline’).

You can earn $1100 by recruiting 10 people.

Even if your MLM company offers a wide range of products, most people prefer to recruit others because they can earn a lifetime passive income from them, whereas if they sold a product, they would only receive a one-time commission.

People at the top make a lot of money because money trickles up to the top of the triangle, while people at the bottom make the least.

The ultimate goal of someone who works for a company like LuLaRoe MLM is to have as many people in their ‘downline’ as possible, allowing them to earn large amounts of passive income.

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How Does LuLaRoe MLM Work?

LuLaRoe is an MLM (multi-level marketing) company based in Corona, California. If you join LuLaRoe, you will become a style consultant.

You can start your own clothing store from home with LuLaRoe. You gather your stock of clothes that you intend to sell.

Then you add them to your list at a higher cost. You can also hire others to sell on your behalf while you train them.

As a result, LuLaRoe experts are compensated for the sales of the people they have hired.

This is the primary reason why people refer to LuLaRoe as a pyramid scheme. 

Before you can receive the incentives and payments, you must have made a certain number of sales. The problem is that most experts are unable to obtain these sales degrees, and thus are unable to receive the bonuses and commissions that come with them.

Is LuLaRoe A Pyramid Scheme?

A pyramid scheme recruits members by promising them money or services in exchange for enrolling others.

A pyramid scheme is unsustainable and frequently a scam because members lose money as the number of recruits increases.

Those who want to join must pay a fee to an organization that runs a pyramid scheme. The organization will share a portion of the funds raised from each additional member they recruit as a reward.

The directors of the organization receive a portion of these payments (those at the top of the pyramid).

The scam is profitable for the directors whether or not they do any work. It is in the membership’s best interests to recruit and funnel money to the top of the pyramid.

Such organizations almost never sell valuable goods or services. The scam’s only source of revenue is from recruiting new members and soliciting more money from current members because it does not produce any goods or services.

Pyramid schemes are very similar to exponential growth mathematics. The size of a pyramid grows dramatically with each level. A pyramid scheme would have to grow indefinitely in order to make money for everyone who joins. This is impossible due to the planet’s finite population.

The scam will fail in the absence of new recruits and other income sources. Because the largest terms are at the bottom of this geometric sequence, the majority of people live in the pyramid’s bottom layer.

Workers in pyramid schemes typically promote the company rather than the product they are selling. At some point, no one at the bottom of the pyramid will make any money, while only those at the top will profit.

People at the top of the pyramid usually make money, while those at the bottom usually lose money. Because they are at the bottom of a pyramid scheme, the majority of participants lose money.

Members at the scheme’s bottom will have no chance of profiting if the scheme fails, but they will have already paid.

Is LuLaRoe, then, a pyramid scheme?

No. LuLaRoe does not operate as a pyramid scheme. It’s possible for members of the company to make money by selling their products.

They don’t have to make money solely through recruitment.

Watch the short video below to learn more:

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What is the LuLaRoe MLM’s Compensation Plan?

You can earn money as a LuLaRoe distributor in two ways:

  • If you sell LuLaRoe items, you can earn a commission.
  • Recruit people and earn bonuses from the sales your downline makes

I believe that the only way to make a consistent good income is to recruit a large number of people to your team. This is also why people say LuLaRoe is a pyramid scheme or a scam.

Independent professionals who sell LuLaRoe clothing and are also known as “LulaRoe Fashion Retailers” typically do so through Pop-Up Boutiques.

Depending on the company’s compensation plan, you could be paid between 35% and 50% of the company’s total sales. To get paid and stay in business as a specialist, you must sell 33 items per month.

However, there are six different ways to make money with LuLaRoe:

  • Retailer
  • Sponsor
  • Trainer
  • Coach
  • Mentor
  • Ambassador

MLMs such as LuLaRoe make it difficult for ordinary people to understand how these plans work.

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10 Reasons Why I Don’t Recommend LuLaRoe MLM

1. The Good Reviews are Written by LuLaRoe MLM’s Affiliates

You probably have found some other reviews of LuLaRoe MLM and all of them are saying good words.

But all of them are actually paid to write, meaning they will receive a commission if you join LuLaRoe MLM via their links. Therefore, their words are often biased and not trustworthy.

Those reviews are simply sales pages and do not tell you the hidden costs and the difficulties of really making money.

By common sense, should you trust someone who has a conflict of interest that receives huge compensation by “reviewing” the program? Probably not. They are not reviewing, but selling!

Therefore, I recommend reading the reviews of those written by the non-affiliates of LuLaRoe MLM.

2. Very Few People Can Make Money With LuLaRoe

Success is difficult to achieve with an MLM company like LuLaRoe.

You can look at the statistic that says 72.5 percent to 99.9 percent of MLM members lose money.

The reason for this is that MLMs have sales quotas that require members to continue selling products in order to remain active and eligible for commissions.

They will not be paid if they do not meet the quota.

As a result, many MLM members lose a significant amount of money before even recruiting one person into the company.

3. Losses From LuLaRoe MLM Are Reframed As Investments

LuLaRoe MLM uplines often reframe their financial losses as ‘investments’ in their business so as to keep their reps in an MLM scheme, dangling the carrot of future financial freedom. 

But the reality is that these are not investments. You are unlikely to get the money back. And the return on “investment” is negative in most cases. So saying that it’s an investment is cheating.

4. LuLaRoe MLM is a Cult

Why do people continue to work for LuLaRoe if it appears to be so bad? Our investigation of MLMs revealed that they all have cult-like company cultures.

Critical thinking is actively discouraged among MLM representatives. They are chastised and even isolated when they ask questions that deviate from the ‘this company is a-mazing’ mindset.

MLMs, like abusive partners, encourage you to isolate yourself from anyone who questions your involvement.

Those who leave an MLM are labeled as failures or bad people/influences, and reps are not allowed to contact them.

Rejection from people they once considered practically family is one of the most devastating losses experienced by former MLM representatives.

MLMs frequently expect their representatives to prioritize their events and business over their personal lives in order to further embed them in the business while separating them from their family and friends.

5. You May Need to Purchase LuLaRoe Products Yourself

If you don’t have a large network of friends, family, neighbors, and so on, you may have to buy products yourself each month. It’s a losing proposition all around.

I think it’s quite ridiculous when you have to buy the products you are trying to sell. But this is very common for people who join MLMs like LuLaRoe. That’s why in the long term, you are going to lose a lot of money, not to mention making money.

6. LuLaRoe Products are Overpriced

As with other MLMs, LuLaRoe offers overpriced products. There are many other brands that offer similar products but at lower prices.

Therefore, you may find it difficult to sell LuLaRoe products because your prospects can buy the same product elsewhere at a much cheaper price. This explains why most people who join MLMs only focus on recruitment instead of selling actual products.

7. LuLaRoe’s MLM Business Model Has a Bad Reputation

Some people have benefited financially by joining a network marketing/MLM company. Unfortunately, most people who join MLMs are left with nothing but regret and a lot of useless products that they were unable to sell.

MLM like LuLaRoe is fundamentally flawed. The distribution of commissions is skewed toward the top.

The majority of those in the top tier and pioneers make the most money, while those at the bottom will not even break even after a few months.

As a result, many people do not consider LuLaRoe to be a legitimate business opportunity.

8. Exaggerated Claims Of Income

LuLaRoe, like any other MLM company, makes exaggerated income claims, but in reality, very few people make a good living by promoting LuLaRoe.

LuLaRoe’s low retention rate can also be discouraging, as less than 41% of its distributors are active.

According to LuLaRoe’s payouts to distributors, over 99 percent of LuLaRoe distributors never make a profit.

9. LuLaRoe Is Like A Pyramid Scheme In Disguise

If you want to avoid losing money every month, the MLM will actually encourage you to recruit people.

Every system that requires you to recruit people in order to make money eventually looks like this.

LuLaRoe is not a pyramid scheme in the traditional sense because you can earn money by selling their products.

However, in order to make a living, you will need to hire others in reality.

10. Recruiting is Required to Succeed

I don’t recommend MLMs to people for this reason. MLMs like LuLaRoe put a lot of effort into recruiting. Eight out of ten ways to earn money with LuLaRoe require recruiting. If you don’t recruit, you are destined to lose money at the end of the day.

My #1 recommended platform is different. You can make a 4-figure, 5-figure or even 6-figure passive income by promoting and selling products you truly like. You don’t have to recruit people but recommend useful and great products. I will tell you more at the end of this LuLaRoe review.

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How Much Does It Cost To Join LuLaRoe MLM?

To become a professional LuLaRoe seller, you must first purchase the starter kit of items.

They use advance prices to demonstrate that they are a legitimate business. A real clothing store, for example, must purchase supplies in advance, so they must be real.

This is a significant upfront payment, and it gives the impression that people are purchasing a legitimate business. However, there is a problem that any real clothing store would encounter. You have to sell everything.

What happens to the garments that the specialist is unable to sell?

According to some, the LuLaRoe company offers a buy-back guarantee. However, there have been conflicting reports about how easy it is to get a refund from LuLaRoe on this stock. The majority of the reviews state that specialists are unable to recoup their losses.

The starter kit for LuLaRoe costs $499. It contains 65 pieces of LuLaRoe clothing at random. You will not be able to select which clothes to purchase.

I believe that if I pay $499 for a collection of pre-production items, I should be able to select which designs or pieces of clothing I want to purchase.

I don’t think it’s fair to pay $499 for random pieces when you have no idea what you’ll get.

Once you purchase the kit, you can begin selling the same clothes to other women and earn money as a representative.

LuLaRoe MLM Positive and Negative Feedbacks By Real Users

Positive Feedbacks

  • LulaRoe clothing is popular among women.
  • Getting Paid for Unsold Items

Negative Feedbacks

  • High startup costs
  • Product quality is deteriorating.
  • In disguise, LuLaRoe is a “Pyramid Scheme.”
  • LulaRoe clothing is inexpensive and unsightly.
  • LulaRoe MLM Has Several Lawsuits

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Is LuLaRoe MLM a Scam?

I cannot say LuLaRoe MLM is a scam for legal reasons. A scam is defined as “a dishonest scheme; a fraud” by the Oxford Living Dictionary. 

Can you make money selling LuLaRoe products? We already know that a majority of LuLaRoe reps did not earn any money. A few people do make money but only if you put in a lot of effort. And usually, the way they make a lot of money from LuLaRoe is by recruiting aggressively.

Also, LuLaRoe blatantly makes disingenuous and irresponsible marketing claims to recruit members. Therefore, some people do consider LuLaRoe MLM a scam.

My #1 recommended platform, however, has seen a lot of beginners earn four figures a month after joining it for a year.

I will tell more about my #1 recommended platform at the end of this review.

Final Verdict: LuLaRoe MLM Review

Here comes the conclusion of my LuLaRoe MLM review. Overall, I don’t recommend joining LuLaRoe MLM to make money.

You will have a tough time at the beginning when you are prospecting and trying to find recruiters to add to your LuLaRoe commission.

The worst part is that you practically have to ask your family and friends to join your LuLaRoe business opportunity. It’s not fun.

Your upline is constantly following up with you to encourage you to buy more Business Support Material even as you struggle to get people to join your downline.

The reality is that you’re likely to lose more money. Statistics confirm this as well. 99% of people who join an MLM break even or lose money, according to a case study on the FTC’s website.

People who join these MLM-type businesses often feel under pressure to succeed, and that is one of the main reasons they leave. 

Why not consider starting your own online business if you want to earn money and have a flexible schedule? 

Thus, you can choose what you want to promote rather than having someone tell you what you must promote.

Let me tell you how to build an online business in a legit way to make passive income online in the next section. This has allowed me to make a full-time income in a year. Most importantly, unlike MLM models, It’s 100% legit and sustainable.

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LuLaRoe MLM Review

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