The California-based multi-level marketing business LuLaRoe is paying $4.75 million to settle allegations from the Washington state Attorney General’s Office that it operated as a pyramid scheme.
LuLaRoe sells leggings and other clothing to a network of independent retailers, who can recruit other retailers to sell the company’s products.
Attorney General Bob Ferguson sued the company and its executives two years ago, saying they deceived people about how profitable it was to be a LuLaRoe retailer.
While two people at the top made millions from 2016 to 2019, thousands of others were left with debt and unsold product, which they couldn’t return due to the company’s complex and misleading refund policy, he said.
Among other things, it must publish an income disclosure statement that accurately details how much retailers might earn.