AG Ferguson sues LuLaRoe clothing company for running pyramid scheme

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BONNEY LAKE, Wash. - - Washington State Attorney General Bob Ferguson is suing a California-based clothing company for running an alleged pyramid scheme. Ferguson released a statement today saying thousands of people here in Washington State lost money selling clothes for LuLaRoe.

Full-time pay for part-time work. That’s the dream job Jaclyn Reifsnyder says LuLaRoe sold her, so she jumped at the chance to sell clothing after buying a lot of the items herself from a friend in Texas.

“I really liked it. Comfortable, soft, stylish, and then that all changed but in the beginning it was great,” Reifsnyder said.

But soon after joining the company, Reifsnyder realized some things weren’t adding up.

“I saw a change in the quality. I saw a change in the type of clothing. It just got wilder, crazier," Reifsnyder said.

Ferguson is suing LuLaRoe after receiving thousands of complaints from Washingtonians about the company and its business practices. Ferguson alleges LuLaRoe’s pay structure constitutes as multi-level marketing or a pyramid scheme and the company refused to issue refunds as promised.

In a statement he says:

“LuLaRoe tricked consumers into buying into its pyramid scheme with deceptive claims of high profits and refunds for unsold merchandise. Instead many Washingtonians lost money and were left with piles of unsold merchandise and broken promises from LuLaRoe.”

Ferguson believes consultant fees were between $2,000 and $9,000, used mainly to pay for merchandise. Reifsnyder says she’s lost about $5,000, money she borrowed from her parents. She’s since paid them back, but wants other people to look out for companies like LuLaRoe.

“Just really think about what you’re investing your money in. Don’t take one person’s perspective. Find people that don’t know each other. Be very wary of a company that is telling you all these dreams. Full-time income for part-time work is what they would say,” Reifsnyder said.

In 2014, there were more than 3,500 LuLaRoe consultants in Washington and now less than 2,000 are still active with the company.

The Attorney General says he will ask for restitution for consultants but he hasn’t determined just how much money his office will seek.

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