LuLaRoe can’t seem to catch a break.
The multilevel marketing company known for its wild-patterned leggings is being criticized again.
This time it’s not by the angry customers who bought the leggings that they said ripped as easily as “wet toilet paper” in a recent class-action lawsuit. It’s the people selling them who have the problem.
LuLaRoe sellers, known as independent fashion retailers, who want to quit the business are angry over a policy change they say came without warning and will cost some of them thousands of dollars.
LuLaRoe offered help to smooth the transition for retailers who wanted to close down their shops back in April. The company offered to buy back any unsold inventory for the full cost retailers paid for it. LuLaRoe even offered to pay for the return shipping.
But last month, LuLaRoe sent out an email notifying retailers of a policy shift that would immediately cut the buyback percentage and change the shipping terms.
The Story Behind LuLaRoe’s Buyback Offer
When LuLaRoe made its 100% buyback offer, retailers were regularly hosting going-out-of-business sales and drastically marking down prices of leggings, dresses, shirts and skirts to sell their inventories as quickly as possible and recoup as much of their money as they could.
To curb the number of retailers selling their items below the suggested retail price, LuLaRoe offered retailers the special waiver between April and September 2017 that guaranteed them 100% refunds for the cost of all unsold merchandise and free return shipping if they wanted to close up shop.
The only stipulation of the 100% buyback offer from April was that the items had to have been purchased directly from LuLaRoe, Racked reported.
Retailers eager to leave jumped at the buyback offer, seeing it as a chance to exit the company and repay any debt they took on to open their stores.
LuLaRoe says it “decided to end the waiver when it became evident that a good number of Retailers were abusing the program by returning product in extremely poor condition and providing inaccurate claims, as well as a Retailers using it as temporary solution to struggles in their business.”
The latest buyback policy is not new, LuLaRoe officials said.
The company said this has been the written policy for retailers leaving the company since 2015 and that the waiver was always meant to be temporary, despite the initial announcement that said it had no expiration date.
The full policy is not on the company website.
Want to Leave LuLaRoe? Here’s What to Expect
Because the waiver has ended, retailers must now rely on the written policy that LuLaRoe provided them. That “generous” policy only guarantees departing retailers 90% of what they paid for the inventory. The policy also states the retailer is on the hook for shipping the merchandise back to LuLaRoe.
LuLaRoe said anyone whose buyback had already been approved under the waiver will still get their full refunds. But Racked reports that some retailers who got this email while waiting weeks for return shipping labels to arrive say the company has ignored their repeated emails and phone calls.
Additionally, the buyback only applies to products that are still in perfect condition and were purchased within the past year.
Some retailers even told Inc. that they must have the original packaging, which had long since been discarded.
For retailers who spent $10,000 or more on unsold inventory, this dip of 10 percentage points in the buyback policy means losing out on thousands of dollars, plus the cost of shipping the clothing back.
From here, it will still be up to LuLaRoe to decide if the items are in pristine enough condition to warrant repayment at all. Even if the company decides a retailer shouldn’t receive a refund, LuLaRoe will keep the clothing.
Many retailers say they’re turning to going-out-of-business sales to recoup their losses and pay off their debt.
According to LuLaRoe, these sales are against the policy agreement the retailers signed.
The company did notably file a lawsuit against the blogger behind Mommygyver after she quit LuLaRoe and started sharing stories from other retailers who had negative experiences with the company. But we aren’t aware of any lawsuits the company has filed against anyone for hosting a going-out-of-business sale.
Desiree Stennett (@desi_stennett) is a staff writer at The Penny Hoarder.
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