LuLaRoe fined $95K for “unfair & deceptive” Buy Back Policy
An investigation by the Pennsylvania Attorney General has found LuLaRoe’s Buy Back Policy to be “unfair and deceptive”.
The AG alleges LuLaRoe’s business practices are in violation of Pennsylvania Consumer Protection Law.
After receiving nineteen consumer complaints, seventeen of which pertained to refund complaints, the Pennsylvania AG initiated an investigation into LuLaRoe’s business practices.
The investigation found that LuLaRoe “lured” consumers into its MLM opportunity, with assurances made through its Buy Back Policy.
LuLaRoe lures Consultants into agreeing to front the required $5,590 to purchase the requisite amount of LuLaRoe clothing to become a Consultant.
To remain “active” … Consultants … are continually encouraged to buy more LuLaRoe goods.
In at least some instances, Consultants brought into LuLaRoe’s business premised upon LuLaRoe’s misrepresentation that they would (be) able to get a full and/or partial refund on all products not sold.
As per figures obtained through the AG’s investigation, since initiating its Buy Back Policy LuLaRoe has received
at least 1725 refund requests … which generally ranged from $3000 to $5000, and in total exceeded $9,000,000.
The investigation found that LuLaRoe had
engaged in … unfair and deceptive business practices pertaining to the refund claim process.
In many instances there has been a significant and unreasonable delay of time from the date the Consultants requested a refund and the time their refund check was sent.
The AG claims that pertaining specifically to Pennsylvania, LuLaRoe owed fifty-two Consultants overdue refunds.
In light of LuLaRoe’s representation through the Buy Back Policy and “no risk” opportunity, it is unfair and deceptive for LuLaRoe … to timely process Consultant refund claims.
It is unfair and deceptive for a business to represent a refund policy to induce Consultants to extend significant capital and then have a slow pace buy-back process resulting in many Consultants being harmed by not having significant capital returned … within a reasonable amount of time.
In a filed Assurance of Voluntary Compliance, the Pennsylvania AG notes LuLaRoe “fully cooperated” with his investigation.
In response to the investigation, LuLaRoe has represented to the AG’s Office that
- it has already extended considerable resources to make sure that claims made under the Buy Back Policy were timely processed; and
- legitimate refund claims will continue to be fully processed within 90 days of the receipt of clothing returned by the Consultant, including the payment fo any money owed for the requested refund.
LuLaRoe disputes alleged violations of Pennsylvania Consumer Protection Law, going so far as to dispute the evidence put forth by the AG.
Nonetheless LuLaRoe has agreed to desist from violating Pennsylvania Consumer Law.
The agreement form part of a settlement reached between LuLaRoe and the AG’s Office.
In addition to the refund issue, there’s also this interesting affirmative relief clause;
LuLaRoe shall not, in the future, engage in conduct which violates the Consumer Protection Law, specifically including … representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have or that a person has sponsorship, approval, status, affiliation or connection that he does not have.
“Goods and services” refers to LuLaRoe’s clothing, suggesting claims were being made about LuLaRoe’s products that are not true. The AG’s settlement document doesn’t go into any specifics.
Monetary relief will be paid by way of a $95,950 civil penalty and $14,050 to cover the AG’s Office’s enforcement and legal costs.
Looking forward, Consultants in Pennsylvania who’ve put in a buy back policy refund request and haven’t been paid in 90 days, have the option of pursuing the matter through the AG’s Office.
As per an October 9th press-release, the Pennsylvania AG’s Office requests
consumers who believe they continue to be victimized by LuLaRoe should file a complaint at www.attorneygeneral.gov or email email@example.com.
The AG’s Office claims LuLaRoe has over 6700 Consultants in Pennsylvania.
I imagine if LuLaRoe are engaged in refund shenanigans in Pennsylvania, then they are happening across the US.
This is probably something the FTC should look into, considering we’re talking over $9 million in delayed Buy Back Policy refunds.