According to Misters Merriam and Webster, multilevel marketing (or MLM) is “a business structure or practice in which an individual seller earns commissions both from direct sales and from the sales of the seller’s recruits, of those recruited by the seller’s recruits, and so on.” You’re no doubt familiar with some of the category’s biggest names: Amway, Tupperware, Avon.
The entry in the Merriam-Webster online dictionary continues with two quotes. From Canadian journalist Judy Waytiuk: “In multi-level marketing, like selling Amway cleaning products, you also earn commissions from products sold by others you bring into the organization.” And from FTC Consumer Education Specialist Aditi Jhaveri: “If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is mainly based on the number of people you recruit and your sales to them, it’s a pyramid scheme.”
And there’s the rub. MLMs are legal and legitimate. Pyramid schemes? Not so much.
At the height of its success, LuLaRoe was paying some of its “fashion consultants” hundreds of thousands of dollars a month despite sales of only $16,000 or $18,000. The difference was based on the number of recruits (or “retailers”) the consultant had enlisted, and that monthly check was based on the total inventory ordered by those downstream retailers, not actual product sold.
As in any pyramid scheme, the very few at the top were making money — a lot of money. The vast majority at the bottom were not. They were taking out loans, mortgaging their homes, even selling breast milk to buy inventory that they could not sell. In fact, as one scholar and pundit notes, the acronym MLM should really stand for “Moms Losing Money.”
LuLaRoe, the fashion brand that encourages its entrepreneurs (mainly stay-at-home moms) to “live your best life” and “achieve your dreams,” experienced meteoric growth from 2012 to 2017. At that point, the company faced dozens of lawsuits driven by disenchanted retailers and state investigators. After millions in settlements, LuLaRoe still exists, but has had to change many of its policies and back down on much of its promissory language. In fact, should you visit the company’s website today and express interest in becoming a retailer, you’ll be warned in bold type:
LuLaRoe does not guarantee or represent, directly or indirectly, that you will derive any income as a Retailer. To the extent any income, which could include sales, earnings, profits, commissions, bonuses, compensation, or any other similar item, is discussed by LuLaRoe or by Retailers recognized by LuLaRoe, such discussion represents exceptional results and does not represent, and should not be interpreted as, typical income of Retailers. You should not expect to achieve similar results.
As the fast-paced and fascinating new documentary The Rise and Fall of LuLaRoe points out — often through painful first-person narratives — this was not always the case.
The film, produced in partnership with BuzzFeed Studios, exposes LuLaRoe’s multi-level-marketing operation. Grounded in journalist Stephanie McNeal’s investigative reporting, The Rise and Fall of LuLaRoe is punctuated by informed and insightful commentary from Cultish author Amanda Montell; host of “The Dream” podcast Jane Marie; and cult expert Rick Ross. Also featured is Christina Hinks, a former LuLaRoe retailer who used her blog to blow the whistle on the company’s most questionable business practices. The film is rounded out with footage of LuLaRoe’s overseas manufacturing plant, interviews with past employees and consultants, videotaped depositions from founders DeAnne Brady and husband Mark Stidham, and glimpses into the organization’s frequent team-building events, such as cruises and conventions. What stays with you most is the stark contrast between the charmed life of LuLaRoe’s founders and the spare rooms filled with unsold merchandise in the debt-ridden households of thousands of consultants.
If you’re not familiar with LuLaRoe (I confess I was not), their clothing is positioned as colorful and comfortable. Although they started with maxi skirts, they are best known for their “buttery soft” leggings in wild and whimsical patterns. They encourage mixing and matching, which is strategic, since consultants don’t get to choose the patterns they receive. As the distribution channel grew and business increased, the quality of the clothing deteriorated. Actually, the clothing itself deteriorated, with holes spreading “like swiss cheese” across the backsides of leggings. Another issue was unfortunately placed graphics, drawing attention to the wearer’s privates. In 2019, Full Frontal television host Samantha Bee featured a pair of LuLaRoe’s leggings “that look like they were made by Lisa Frank’s blind sister” on her comedy/news program. “Some might be cute and easy to sell, but no one in the fucking world wants to wear leggings that feature a bee crawling up your cooch.” And yes, that’s exactly what she showed. And no, that was not the worst pattern mis-placement highlighted in the movie.
Quality issues and unintended obscene graphics aside, many consultants confess that they began their LuLaRoe experience buying the clothes before joining the company. More to the point, they bought into the lifestyle and promises LuLaRoe represented. They were also, as the documentary successfully convinces, victims of particularly insidious predatory recruitment.
DeAnne and Mark are charismatic leaders who don’t take no for an answer. Your future is in your hands, they preach. You can control your schedule. You can earn full-time pay with part-time work. Fashion can be creative and liberating; it can change lives and strengthen families. If your merchandise isn’t selling, you’re not working hard enough — oh, and you should place another order as soon as possible.
The greater LuLaRoe community — made up, almost entirely, of white, Christian housewives — soon developed its own slogans, hand signals, rallying cries. At the conventions and other events, DeAnne and Mark were treated like celebrities or evangelical preachers. DeAnne encouraged women to serve their husbands and get weight loss surgery. Mark often quoted The Book of Mormon (both he and his wife are members of the Church of Latter-Day Saints). At its height, LuLaRoe was more than a business and even more than a religion. It was a clearly and absolutely a cult.
The Rise and Fall of LuLaRoe is thorough journalism and a satisfying, if often disturbing, feature-length watch. If the film whets your appetite, you may want to add on the four-part docuseries LuLaRich, which at about three total hours stretches the story out a bit longer than it needs to. However, LuLaRich includes interviews with Deanne and Mark, which offer a glimpse into either their deceit, their denial, or their delusion — and gives you the opportunity to decide which for yourself.
The moral of the LuLaRoe story is this. If something sounds too good to be true . . . it probably is.
The documentary The Rise and Fall of LuLaRoe is available to stream on discovery+.
The docuseries LuLaRich is available to stream on Amazon Prime.
