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Each and every one of you
are a part of the American dream
because you are entrepreneurs and you own your own business.
And I will tell you, some days are not so good.
But guess what?
So many days are so amazing.
You're important to us.
It is the sisterhood, it is the camaraderie, it is,
it is LuLaRoe.
The law of attraction rules the universe.
I'm so blessed to be a part of LuLaRoe.
You are planting seeds.
In the last 30 days,
I sold over $13,000 worth of LuLaRoe clothing.
That is insane.
We love you, we value you
in everything that you do.
Together, we're home!
It's given me my purpose back.
I knew that not only was this special,
but this was something
that was gonna change people's lives.
You do solemnly state under penalty of perjury
that the evidence you shall give in this matter
will be the truth, the whole truth
and nothing but the truth.
Yes.
Can you please state your full name?
DeAnne Stidham Brady.
Women are filing a class-action lawsuit
accusing LuLaRoe of being a pyramid scheme.
Can you please state your full legal name?
Mark Allen Stidham.
The lawsuit seeks a billion dollars for a plaintiff
unknowingly recruited into LuLaRoe's pyramid scheme.
I hate that I joined LuLaRoe, I am embarrassed
that I sold LuLaRoe.
They got my money.
LuLaRoe won.
I actually,
literally despise them, and it makes me angry.
According to Washington Attorney General, Bob Ferguson,
"LuLaRoe tricked consumers into buying
into its pyramid scheme."
I wasn't alone in... in receiving merchandise
that I just was not able to sell
to anyone because it was crap.
I am stuck with thousands of dollars
of inventory.
Even at my peak month,
I don't think I ever made any money.
I was in a lot of debt that...
I was unable to pay back.
Disrupting that status quo,
we... we created enemies.
We were attacked viciously on social media.
Why doesn't LuLaRoe sell directly to consumers?
I don't know.
How many retailers does LuLaRoe currently have?
I do not know.
Do you know a ballpark? - Nope.
How are you currently compensated?
I don't know.
When did you start asking others to sell
LuLaRoe clothing for you?
I never asked anyone.
Be happy.
Give yourself kudos of the good things
that you are doing and say to yourself,
"You know what?
I'm able to buy better groceries.
I am able to make the car payment."
Those are the reasons why you got started at LuLaRoe.
If the pitch was real
and I said to you, "With no experience,
little money down,
you can run your own business,
set your own hours,
spend more time with your friends and family
and possibly be a millionaire,"
and that is possible,
wouldn't you do it?
I'm super excited because I just got
my initial inventory today.
It's a welcome card here from DeAnne and Mark.
This is the planner.
This is so cute.
These are really pretty.
Hello, birds.
Purple birds.
- We have some busy bees. - Do you like wearing underpants?
'Cause this is what it'll feel like.
Also, little extra tuck, tuck for people like me,
like moms, who need it.
- Stickers. Stickers - Stickers. Oh, my gosh.
LuLaRoe is a multi-level marketing company.
They sell shirts, dresses,
all kinds of clothes,
but they're most known for their leggings.
The leggings cost around $25.
They have like a slightly higher price point.
And I think they were considered a little more high quality
and a little more designer than, you know,
just a random pair of leggings.
People really loved their really colorful ones
or they loved the weird patterns.
They loved how soft they were.
And I remember the first time
I heard about LuLaRoe,
that's what people were talking about,
was these leggings are so comfortable
and they're so soft.
Buttery soft leggings.
LuLaRoe leggings,
if you haven't tried them,
are one of the most softest,
buttery things you'll ever put on your legs.
- That buttery soft hand feel that you all absolutely love. - Buttery soft.
Like, what does buttery even mean?
And I thought that was really ridiculous, too,
until I felt them.
Now, let's go to a little town
in New Jersey where things are really popping.
Yes, there's a party going on at Mrs. Betty Martin's house.
It's a Tupperware party,
and it's really fun.
The girls get together and meet their old friends
and make some new ones.
Then there's a demonstration
by one of the Tupperware dealers
who lives in your community.
♪ It's time to take time out for beauty ♪
Avon calling
Growing up, I remember my mom
going to a lot of Tupperware parties.
My great grandma sold Avon.
My aunt sold Mary Kay.
Dishes in my grandma's house
were from like door-to-door salesmen.
And you would see a lot of products
in people's houses.
I thought it was just a fun...
...get together?
As a kid, I did not understand
about the recruitment.
Like, I really thought these women were just, like,
running a business out of their house.
The American dream is that we all have
the chance to be rich,
and make it, you know, we all have the chance.
We all grow up thinking,
"I'm gonna get famous or I'm gonna get rich."
And we aren't discouraged from thinking that.
Maybe you'd like to look at this more closely.
I'll pass it around.
Yeah.
If you work hard enough,
you will achieve success.
And these companies,
they're just exploiting
that hopefulness that we've all been raised with.
LuLaRoe was founded in 2013
and grew extremely fast.
So, in 2015,
they only had around 1,000 consultants.
By April 2017,
they had over 80,000 consultants
and were making a billion dollars in revenue.
So, that's 0 to 80,000 in five years.
You know, having come from business,
I understand most companies would kill
to have that kind of growth year over year.
And so, uh, business processes have been a challenge.
You know, when it was just a small family business,
we all just, kind of, rolled up our sleeves
and did what needed to be done.
I first got interested
in reporting on multi-level marketing
because I had noticed
that a lot of people that I knew from growing up
on social media had been joining MLMs.
Hey, girl, hey!
Hey, hey, hey, ladies!
Hey, girl, hey, happy Friday!
The simplest way to explain an MLM
or a multi-level marketing company
is that they recruit individual retailers
to sell a product.
And then those retailers
recruit other retailers.
The products can be anything.
It can be essential oils,
it can be herbal supplements,
it can be make-up
or it can be leggings.
LuLaRoe is the kind of MLM,
they have a product,
banana leggings,
and they're superior to other banana leggings.
They're so superior that you must sell them
door-to-door or to your friends and family
or on a Facebook Live.
And that's how exclusive this opportunity is.
And the way
the companies describe how that works
is you buy in,
you get a bunch of banana leggings,
you sell a bunch of banana leggings.
All of your friends at that party
that were buying the banana leggings are like,
"Wow, this is an amazing business opportunity."
And you're like, "I know.
Would you like to sign up underneath me?"
So, you sign people up underneath you,
and there's one rung of people below you.
That's your downline.
Now, you're an upline.
And you get a slice of every future purchase
that they make.
So, it behooves an upline
to encourage their downline to stock up.
The sales pitch from the MLM company
is that, that is supposed to continue on,
kind of like a chain letter,
where you've got your people under you.
Say you have ten, you know,
half of them are amazing recruiters, they each get ten.
Oh, my gosh, now you have, like, 60 people
that you're getting a slice of.
Then those people are also supposed to be
just as ambitious.
It's been a while since we've shopped,
so I want to show you guys what is new.
Do you have the daisies in the medium?
I don't.
Here's another extra small.
It has cute little, uh, typewriters
with little sweet notes on it.
I think that the Internet
helped people who pitch MLMs as an opportunity,
as a business opportunity.
I think it helped them over an early hurdle,
which is, who am I gonna recruit.
Social media has been
like gasoline on the fire of MLMs.
I am so beyond excited,
I'm about to spontaneously combust.
I don't know what you get,
I don't know what I'm gonna give away,
but it's gonna be something good.
Instead of just having a party at your house,
where you can invite people who could physically get there,
you can have an online party
where you can invite everyone you know,
plus invite them to invite everyone they know.
And, you know, you can get these Facebook groups
that have like 30,000 people in them.
So if you're thinking about doing it,
I would encourage you to do it
'cause it's been such a blessing.
So it just makes it even easier
to recruit people.
If you are interested in all of the opportunity,
please feel free to reach out with me.
"Let me ask you a question.
Have you ever thought about potentially working on a side hustle?
You're such a badass.
I think you would be amazing at this opportunity
I recently got involved with.
I know this sounds crazy,
but I've made a little bit of side cash.
Let me tell you more about it. Lol.
Here's my number, call me soon or text me, 'kay?"
Oh, my gosh, guys, I got rained on so bad.
I was delivering LuLaRoe, like all day.
I think LuLaRoe is kind of an example
of like the American work ethos on steroids.
Sometimes, you feel like, "I only have this much
and I'm strung out.
I cannot do it anymore."
Get out there, get busy,
enjoy, have fun and serve your customers.
Serve your community.
DeAnne and Mark Stidham
are the founders of LuLaRoe.
So DeAnne is Mormon
and she was raised in a Mormon family
that's basically Mormon royalty.
DeAnne's descended from the brother
of the man who founded the Mormon church.
Because of that relationship
to the founding of the church,
there would have been a sense of exceptionalism
within the family.
There is a huge amount of overlap
between Mormons and the MLM community.
Mormons are born and bred missionaries,
and that skillset
becomes really useful
when you're trying to get people to join
this once-in-a-lifetime opportunity.
I grew up in the same, uh, Mormon circles
as DeAnne.
Like, I remember her presence,
I remember how her perfume and makeup
and hairspray smelled.
She was incredibly outgoing.
There are some people that just always seem
like they're selling something.
And they're always trying
to convert you to something, right?
And as a child,
I sensed that about her.
And I will tell you, even if you're selling ten items a day,
you're making a difference.
You decided that you could
the minute you said, "I'm gonna do LuLaRoe."
I think the cult of personality around DeAnne
probably helped a lot in the beginning.
She is very flashy,
lots of jewelry, lots of makeup.
She cannot stay off of her phone
and posting pictures of herself
and doing live videos
and being on Instagram Live,
and it's mesmerizing.
Hey, everybody. I am so excited.
It is enthusiastic Thursday.
I am in love with this hat.
The origin story of DeAnne's business,
it's attractive to a lot of new recruits.
I had one kid on a hip and I was pregnant,
and a couple of kids in the stroller.
DeAnne has this very
humble and inspiring origin story
that she is sure to repeat all the time.
How she started as this single mother
who was selling maxi skirts out of the trunk of her car.
And I said, "I'm coming.
Invite all your friends
and we're gonna have a maxi skirt party,"
and they go, "Okay, count me in, DeAnne."
And no matter how many I did,
uh, I just kept booking more and more.
And we started a conversation about,
"Don't you think there's probably other women
that would want the same opportunity you've had
to earn extra money while still having the freedom
around their schedule, to be a stay-at-home mom
or take care of their kids?"
The house parties were making a lot of money
and the skirts were very popular.
And soon other women, like Brittany Hunter,
who was the first retailer for LuLaRoe,
um, wanted in.
They wanted to know how they could sell the skirts.
I'm the first retailer of LuLaRoe,
but technically it wasn't called LuLaRoe
in the beginning, so it's been nine years.
And it was, um,
August of 2012, I'm pretty sure,
when I had my very first maxi skirt party with DeAnne
and loved it.
Absolutely fell in love with people coming to my house
and the camaraderie and the excitement.
I called her the next day, I'm like, "I wanna do this.
I need more skirts. How do I get more skirts?"
It was her and I just selling maxi skirts,
and she was still doing her parties
and I would do some around southern Utah.
And, yeah, that's kind of where it began.
So, it works very well
that as a part of DeAnne's origin story,
this business to recruit other people
or get other women involved wasn't even her idea.
It just fell upon her.
It's this American dream saga.
She was just like you. She wasn't special.
She wasn't rich. She wasn't #blessed.
She just worked really hard.
She was your, you know, your average suburban wife and mother,
and look at everything she accomplished.
But the story of Mark and DeAnne and LuLaRoe,
it's not really about them.
It's really about the thousands
upon thousands of women
who fell prey to the promises of feeling worthy
and being a part of something bigger
and having impact and the sisterhood
and are now telling their story.
Before I started LuLaRoe in 2016,
I just felt kind of lost,
and I feel like when I found LuLaRoe,
I'm like, "This is clicking, like, finally,
this is something that I can do."
I actually went down to a convention
in Corona, California,
and there were so many retailers from across the country coming.
I was like, "Wow, this is awesome.
I'm part of this big movement."
DeAnne spoke at that convention,
and I was eating up every word she was saying.
I think I even got teary-eyed, like, listening to her story.
You know, when she was explaining
her struggles before starting,
I kind of related to that.
And, like, that's how I got emotional too,
because I felt like I wasn't where I was supposed to be,
until I found LuLaRoe.
And I just... that really spoke to me.
This is LuLaRoe.
I have so much stuff. Sorry.
Oh, here we go.
This one has the LuLaRoe logo in it.
Oh, and I have matching leggings to this,
so you literally have a... it's called a Lula outfit.
I knew it cost a lot to join,
so I went to my mom and I asked her,
"Is there any way that I could borrow $10,000?"
She was very skeptical at first,
but when I was explaining it to her,
I like, kind of broke down in tears
because I just felt so passionate about it.
And she agreed
and she agreed to take money from her 401to help me.
Hi, guys, Jill here.
Um, I'm kind of testingsomething a little bit different today.
I'm going to be doing $5 off each Julia
and free shipping.
I had been hyping it up on Facebook, social media,
and so I had friends from high school and college come and shop,
and that helped push that first month
to $10,000 in sales.
So, up next, you guys, I have
an extra-large green Carly.
This is legging soft material. It's a green heather.
I felt like LuLaRoe's message was "Everybody is beautiful."
Our size ranges would go up to a size 18-20,
so I feel like it was really size-inclusive.
And I felt like that drew a lot of women in.
Carlies do run two to three sizes big.
So, this looks really cute with it knotted up, you know?
It was really cool. It was so exciting.
My customers loved the outfits I put together.
My second month, I went to $15,000,
and I was just blown away
about, like, how much money I could get by doing this.
So, these are medium
and it is dipped with striped, stripes.
Super, super cute.
It was a whirlwind,
and our first month, we sold $21,000.
And then it just grew so fast.
Take my challenge.
Get out there and find five people a day.
Go out and talk to them.
I listen to DeAnne every day, you know, on Instagram,
and it really gave me a huge boost in confidence.
And your goal is to develop a relationship
with those people that you come in contact with, okay?
That was another aspect of what was recruiting.
I had girls who signed up under me.
I was able to build a team of ten
to become the rank of trainer.
When you became a trainer,
that's when you got the gold watch.
I couldn't wait to get that gold watch.
It was a goal I strived for,
like, "I have to earn that watch."
Like, "I will do anything to earn this watch."
I hit trainer. I mean, that's where the money was at.
And then you didn't have to stress on your sales.
And then we have this beauty.
So you start out just as a retailer,
which means that you're just selling for yourself
and you're getting your own sales.
Then you can move on to sponsor,
which means you have people under you.
And then after that, it goes trainer,
coach, mentor, ambassador.
And so basically, all that really means is
you just have more and more people under you.
Since the early MLMs,
one of the exercises you do at the beginning
is writing down 10 or 50...
I think LuLaRoe does 50 names,
um, that you're supposed to write down of people
you could possibly recruit.
In church communities, Mormonism
especially, those networks,
it doesn't take any time at all
to think of those 50 names.
And so DeAnne was able to tap
into this preexisting Mormon network
so that she could not sell leggings
but sell um... like, hope.
LuLaRoe's marketing strategy
was very family-oriented,
like so we could help mothers support their children.
We have people starting right now,
who are doing incredible things for their family.
She wanted to be a stay-at-home mom,
but has the freedom to come and go
and do what she wanted to do.
How many women would like an opportunity
to earn income while staying at home?
I had title after title, mom, sister, daughter, girlfriend,
but I hadn't figured out
what my individual purpose was.
The idea of, um,
you know, making money from home
with two small children was ideal.
I was used to making money.
I was used to contributing
to the household bills and everything,
um, and I wanted that answer to staying at home
and still being able to raise my daughter.
So, um, you know, I heard the term "Moms Losing Money".
That's what MLM stands for, is Moms Losing Money.
Um, and so it's not something that appealed to me
because it... it didn't make sense to me.
It didn't make sense or cents.
We started this business on the premise
that you could make full-time income on a part-time...
part-time work.
Yes, full-time pay for part-time work.
It's... that's...
If that doesn't define an MLM, I don't know what does,
because as a "real" entrepreneur,
full-time pay, full-time work,
24/7, 365, losing sleep, losing money.
That is the entrepreneur life.
I always say that besides being an entrepreneur,
being a mother is one of the loneliest things you can do.
It costs more to keep your kids in daycare
than it is for you to work
and then, you know, pay for that.
So, it makes sense for a lot of women
to stay home and take care of their kids
and they... but they want to feel productive, right?
They miss their nine-to-five life.
They miss... you know, once you become a mom,
it's a different group of friends.
So, you miss that community, a sense of community.
And so when you see other moms being boss babes,
that's something that you want.
Whatever I do in life,
I want to be the very best I can be.
So, if I'm a LuLaRoe retailer,
I wanna be the best one I can be.
If I have kids, I'm gonna have 11.
Girls, bring him down.
I'm bringing him down, see, he's pulling me.
Whoa. Slow down, baby.
It's pure craziness.
So, we're Christians,
we're members of the Church of Christ.
We had four kids,
but then we went on a mission trip
and we stayed in an orphanage.
I'm a stay-at-home mom
and Kenny had a really good job,
so why not adopt?
That's how 11 happens.
So...
I would say that our generation
is just a bunch of strong
stay-at-home moms
and a lot of us joined LuLaRoe
and that's what grew LuLaRoe.
It was who signed up, saw the business opportunity
and ran with it.
It's like a cool mom club.
When I started, we didn't go live,
we just did in home pop-ups.
It was just girls shopping. Just like a big party.
A lot of fun.
This is nice. Is this the back or the front?
It's reversible.
I like options.
Wendi, Wendi.
I have some of the best friends
from that because
I feel like, even though LuLaRoe pushed community,
we had then to create true community
to make it work.
I know, Tracy, the Shirleys are on point
and I have a new box coming tomorrow.
It's going to be good.
Your desire to succeed.
Your commitment to your, to your goals
and your commitment to not letting yourself down
will make all of the difference.
Remember, your business
is not going to grow without you.
Now, we also want you
to strive for getting on the cruise.
It was a goal to cruise qualify.
There was three different tiers,
and so of course, I wanted
the highest ranking tier.
That meant you got a better room in the cruise.
The cruise was actually something you qualified for
if you sold $12,000 for six months in a row.
You are that person that gets
and deserves anything that you choose for it to be.
Go, go, go. Prizes, cruises.
I just really, really enjoy working for that.
For something.
Because then it doesn't seem like a job, then it was fun.
LuLaRoe cruise ship, all LuLaRoe people.
And if you've been to any LuLaRoe event,
you know at LuLaRoe everything's a party
- and super fun. - Yes, it's not the same.
You never wanna miss a cruise.
And we can't wait to see you on the next cruise.
We are so excited.
I'm always trying to find things on the Internet
that will resonate with people.
So I cover influencers,
things going viral on the Internet.
So, LuLaRoe in their heyday,
they had these cruises
that were like candy for social media,
like, if you follow all of the top sellers
of LuLaRoe on Instagram
and they're all on this cruise at the same time,
and they're posting #BecauseOfLuLaRoe,
"I'm having a pina colada on the beach,
and I'm in the Caribbean
and I'm doing this and I'm doing that."
And it's like, "Duh, of course I want to do this."
And it's all part of just like feeding into this notion
that if you work hard enough,
you will get all of these amazing things,
like, you will get this free trip,
you'll get to meet Mark and DeAnne,
who are like superstars.
And there's this one clip of LuLaRoe's cruise
and there's this scene where, like,
they're all out on the deck
and they're all dancing and partying,
and DeAnne and Mark jump into the pool
that's in the middle of this deck on this ship.
They're in the pool in their clothes,
and it's just this like... The Great Gatsby-esque shot.
They're just in the center of this universe.
MLM conferences
are like a cross between an evangelical tent revival.
You shall not die, but you shall live.
A Tony Robbins conference,
a nightclub discotheque extravaganza
and a Katy Perry concert.
In fact, Katy Perry did perform at a LuLaRoe event.
So they're really just there to inspire,
to create that sense of transcendence,
to burn all of the messages
that have been delivered virtually
into the recruits' brains.
When you participate in a group language ritual
with other people doing the same thing,
it has a physiological de-stressing effect on you.
Your cortisol levels go down,
your serotonin and dopamine spike.
This is why so many people
have profound conversion events when they go to church
and listen to religious music or speak in tongues.
These are bonding events.
It's about that person up at the top,
speaking to their flock,
and in order for that person at the top
to be rich and to give blessings down below,
the people from the bottom must give, they must tithe.
So you need recruitment.
It's not really about the product.
They're selling a dream, right?
They're just, they're not selling the reality,
they're selling the dream.
Ready.
I do think LuLaRoe was trying to sell
the American dream.
That was horrible.
I remember their mission statement.
It was...
...bless... blessing, uh,
blessing lives and strengthening families.
It was... nothing but positivity and joy
and... and this could be you, this could be you.
It really just seemed like a wonderland.
Argh!
Let's go!
So the first time I ever encountered LuLaRoe,
I was on a family cruise
and we were just out on the beach
and enjoying, enjoying our time.
And there was this guy playing Michael Jackson.
And so I just go and I start dancing.
This guy came and approached me
and said, "Hey, if I give you $100,
will you wear some female leggings
and come and do the same thing you just did
tomorrow morning at this business meeting?"
And I was just like, $100?
Making money on vaca...
Yeah, yeah.
You best believe I'm... I'm there.
So I showed up
and I just sat in the back as a surprise.
Elijah! Elijah! Elijah!
He, you know, hyped up the crowd and everything.
Give it up for Elijah!
And then I come in there and I do my thing,
you know, I just, I just put it down, you know?
Full, like, pop and lock dance,
the ladies went crazy. It was so fun.
Oh, I loved it.
The whole atmosphere was just
full of joy and excitement, like
overwhelming joy and excitement.
Oh, not to mention, it was a wholesome party.
There was no alcohol.
So, I'm just like,
"This is my place."
Like, you see how I am, I'm a naturally just crazy and
full of energy, I don't need
anything to help me party.
Oh, my gosh.
Wow. Good morning. Oh, we're just getting started.
You have no idea how many amazing things we have planned for you today
and tomorrow. Oh, my gosh.
And that's where I met DeAnne and Mark.
So they flew me out to one of the conventions.
LuLaRoe! LuLaRoe! LuLaRoe!
And DeAnne
called me on stage to tell my "why",
uh, and my mom was in the crowd.
So, the "why"...
How can I describe "the why", it was...
Everyone has a "why",
like a sob story to...
...make you relate.
I, uh, told this crowd
my "why", I definitely got emotional.
'Cause all these people only knew me as this hype man, this...
crazy, rambunctious kid that just
thrives on positive energy.
I got emotional because my mom was out there
and I was just like, "Yeah, I'm grateful for her.
I want to become successful enough to... for her
so that she doesn't have to work
ever again in her life."
And...
that's when DeAnne onboarded her.
She pulled my mom on stage
and then she onboarded my mom to become a consultant.
And I was shocked.
I didn't know, I was like, "Me, a consultant?"
I don't even know what LuLaRoe is.
I didn't know anything, you know,
so I just went with it.
So, when they were coming up happy,
I said, "Okay," you know, so...
What am I wearing? The Amelia.
- Hey. - How could you forget?
How could I forget? I'm learning inventory.
This is my newfound business.
So my mom became a consultant
and my sister
became a consultant under my mom.
She saw me making money and she was like, "Okay,
I want to do it.
I think I'm gonna do it, Mom.
I think I'm gonna sign on and everything."
I said, "Okay, well, make sure you sign under me because
I'll gain a percentage of your sales.
I'll make money off the percentage of your sales."
And so, she said okay and sure enough, she did.
Black and white cardigan.
You can match with a lot of things,
like a mustard colored Carly.
What? You have to be fly.
You have to have that mindset.
You know, let's do this
and fight and work real hard at it.
Yeah. We are so blessed.
You just don't know, this company is the one.
For me,
that was when I felt, "Wow,
they really are blessing
and strengthening families."
I am a widowed single mom
and I am a former LuLaRoe consultant,
and now I own Decades Rock 'N' Pop.
Before that, it was
a LuLaRoe branded Airstream.
This is my new boutique for LuLaRoe.
Everything on social media was perfect with LuLaRoe.
She is about to push.
She is adorable.
A person would post a picture of their new car.
♪BecauseOfLuLaRoe.
Their vacation, #BecauseOfLuLaRoe.
Homes, events, parties, galas,
Always #BecauseOfLuLaRoe.
Of course me with the Airstream,
because of LuLaRoe.
My entire lifestyle, really,
it all became everything LuLaRoe.
There was definitely a culture of toxic positivity
because of what you were allowed to share
and what you weren't allowed to share.
So you were allowed to share everything positive,
but if anything negative showed up on your pages,
under your comments, under your sold comments,
you were supposed to delete it.
It never happened, it was never on there.
So when I get those messages from my team that I go,
"Oh, my gosh.
Why has LuLaRoe done this to me?"
Be an editor.
Use that delete button.
It's really powerful.
I could not
count the number of times I was reprimanded
for being "negative"
because I was trying to address
legitimate business concerns.
You know, if you complained,
then you should, you should just be grateful.
If your business has taken any kind of a dip,
it's because you took a slow thought process
and got rubbernecking.
Got yourself thinking about the negativity.
When I say, you had to be sunshine and rainbows,
you did, no real talk.
Everything was boss girl, boss babe.
Stay at home and work in your pajamas.
Just... just like everything,
everything, everything was fake.
It was very, very common to see the higher ranks
sitting on a top of maybe
100 boxes of LuLaRoe
stacked up in front of their house.
So the way LuLaRoe's structure worked
was that it was a surprise box.
You didn't know what you were getting.
You could choose your styles, but you never knew the print.
Today, I actually have four boxes here.
Look how nice.
You would say, "Hey, Tuesday night,"
I'm going to open this box live, Facebook Live,"
and you'd be excited.
These are gorgeous, these might,
might, might be my favorite.
And people would start claiming the second
you opened it up and they wanted it.
That's how big the LuLaRoe craze was.
Favorite ever, you guys, favorite ever.
But it also started draining money right
from the beginning.
It was kind of like playing a scratch off lottery ticket
every time you placed an order.
It was very, very addicting.
And then, once you start getting good boxes,
you're like, "Oh, I'm gonna order another one,
because I sold half my box."
Well, you sold half your box,
you're really not making anything.
Oh, my leg.
- Got it? - Yeah, yeah, yeah, yeah.
Mama, what's this one?
- Okay, so that is the perfect tee. - Yes.
That's actually what I have on, but I tied it. Yes.
Ma, do you have any unicorn leggings?
- These... I had... - Unicorn.
What do you think about that, Zip?
Oh, I... - These kiwis.
Hang on, let's see where.
So, what a unicorn is,
it would be like a very unique print,
a hot commodity that everyone had to have,
almost like you can flaunt with it
and be like, "Yeah,
I got something that you don't have."
This one is a...
Ooh. Those are kind of cool.
That's an owl with the headphones on.
- These are huge unicorns. - LuLaRoe.
Because it's the shades with
LuLaRoe emblem on these things.
Come on now.
I know one for a fact was
all black leggings like,
if you got all black leggings, then,
oh, you got it like, it
sold instantly.
- Oh, those are fly. - I know these are fire,
but I don't know if they would be unicorns.
- No, maybe not. - They're unicorn to me. Mmm-hmm
I mean, people would tell they had like
hundreds of pairs of LuLaRoe,
like more leggings than you could ever wear.
It was like a collecting kind of craze.
They created their own,
um, hysteria around these leggings.
You know, as a business person, I'm like, I was like, smart.
- Do you wanna follow us? - Yeah.
Do you wanna follow us through the warehouse a little bit?
You have to see the amazing pieces that are here.
Look at these.
DeAnne just scored two
Tie Dye Carlys.
Yeah. Because you know what?
I am the owner, and I never get Tie Dyes
'cause you guys all buy them up so fast.
It has been the best day of my life.
Well, look at them. Look at everybody's busy, busy, busy,
pulling your orders. So get out there and order, order, order, order
more fresh stuff, yo.
Before LuLaRoe,
by all accounts, Mark and DeAnne were
a semi-normal family.
They had a pretty modest house for California.
After LuLaRoe,
they have balled out for sure.
They bought this extremely
lavish Wyoming ranch
that they host their family on a lot,
and it's very glamorous looking.
Mark has also used his wealth
to buy a lot of luxury cars.
One of them broke the land speed record.
The Stidhams flaunted that they were becoming wealthy
because that is kind of
part of the company model, right?
Like, you want to show how successful
you're being because
that will inspire other people to try it as well.
We are in... Gucci, shopping.
Look at these girls and look how cute.
This is what we do.
DeAnne was what these women thought
they could become if they just had enough money.
The millionaire mindset or a thought of
how can I become
and strive with the opportunities
that are right in front of me.
Family is very important to the Stidhams,
so DeAnne hired basically all of her children
in one capacity or another.
We want to introduce you to our family,
which also happens to be
a core part of the home office team.
Mark and I thought about
the people that we wanted most
to be involved were our kids.
We knew they could help us.
I remember my parents just saying,
"We want to present the opportunity
to our kids first."
They wanted us to be a part of something that
they were seeing success
and they didn't want it for themselves.
LuLaRoe really became a very incestuous
when it came to how they promoted people
and who was running the company.
And I mean, the Stidhams
decided that they were going to employ as,
I guess, as many family members as they could.
And in my opinion,
it was also a way of them controlling everything.
Because their family would be totally loyal to them
and would do what was necessary,
in order to keep the business going,
according to the dictates of its founders.
So as the business was very small in the beginning,
my wife said, "I'd like to have our kids involved."
They all had different skill sets
and they were the first executive team.
I think the values of MLMs align
perfectly with
the way we think about money in America
or the way we preach about money in America.
Big things are happening.
They will continue to happen
by those that are part of this company.
MLMs probably wouldn't exist without
the prosperity gospel, and what it
espouses is that Mormonism
in particular, being blessed
with money is like literally being blessed by God,
like God favors you
if you are wealthy.
You want to know, if you're good to your fellow man,
then... then look around and see...
check your bank account.
If you have spent your entire life
hearing the prosperity gospel
and hearing that you can pull yourself
up by your bootstraps,
then when someone comes along and says,
"Here, actually, you can do it,
and you don't have to go have any student debt."
You know, and you can be the boss.
Then we're all kind of primed for it
from birth here in the United States.
Where there's a will, there's a way.
And when you are ready and you are determined,
you're gonna do whatever it takes.
Remember that I will persist until I succeed.
I wasn't even a year in and I was attending almost
every training that I could either fly or drive to.
By getting here, you prove to yourself
that this was where you needed to be
at the most important time of your business.
They convinced me
to... to buy more,
buy more, sell more.
The bigger your business is, the more you're gonna sell
because more people will come to you
because you have more stuff in your pictures,
and, you know, they encourage that.
What they, LuLaRoe, would tell you to do,
and especially the leaders,
is to put the money back in
to buy more inventory
and to grow your inventory.
So that's exactly what I did.
As much as I could,
um, use to buy more clothing and add more styles,
and sizes and colors,
I would, I would put it all back in.
I had somebody underneath of me who, um...
sold $12,000 in one month.
And then she said to me,
"But I spent $12,000."
And I said to her,
"Well, you had to spend money to make money."
"Order more inventory and you'll do better."
It was just kind of always a blanket.
What can I do to make my business better?
Like, if you stood in line to talk to DeAnne
and she would... like, her first question,
probably back to you probably would have been,
"Well, how much inventory have you ordered this month?"
Remember, you ought to be placing orders
every single day, do not wait
for things to be restocked.
You order what is available to you every day.
Every dollar that we made,
they would tell us to reinvest it back into more clothes.
Order consistently to replenish
the sales that you're having.
Always felt more pressure to buy more merchandise.
They always told us,
"The more you have, the more you sell."
The more you buy, the more you sell.
Like, it's not ethical.
Look at your inventory,
analyze what you're selling,
analyze what season is coming, what you intend to sell
and order consistently
to sell consistently
so that your business
will consistently grow.
They're making money off every single box you order.
That's why they're telling you to order more boxes.
And you know what?
Maybe that was part of their plan for sending you,
you know, a box full of half of it is unsellable crap
because they know they're gonna just tell you,
"Oh, you couldn't sell half of it, order more."
So size medium Julia.
You can layer it, you can put a Lindsay over it,
you can put a Shirley over it,
you can put a Joy over it.
I was just consumed and obsessed with selling,
that was for sure. I just got the endorphins as soon as I had a sale.
Heart pink and a gold and it's kind of like an Aztec look to it.
So you have these pretty triangles.
Here's my sales for the day. I got to beat it tomorrow,
and I was just competing, I guess, with myself and just,
"Hey, you know, I sold 1,000 today. Let's do 1,500 tomorrow."
You have black, would be super cute wearing it with black leggings
and wearing this as a tunic.
I wanted to hit those top rankings, you know,
to show that I was a success.
Super pretty.
Someone can just rock this dress.
They train you to think this way.
They're so good at it.
Every single week.
You know, with the webinar and all of the trainings,
and they're encouraging, you know, go to the trainings.
This is where it's at.
This is where the excitement is created,
all of us coming together
and creating bigger, better businesses together.
It just went from like,
nice and calm
to very much high-paced job
that I had to keep up in.
'Cause if you don't keep up, you fail.
263, large royal blue.
1483, small black lace. Polka dots.
Like 16-hour days.
I would wake up and I had all these orders
that I saw immediately, as soon as I got up,
before I went to the bathroom, I would go pull orders.
We were like 24/7, all the time.
What's the next thing we can do?
I never felt like I could take a break.
I just had to keep going.
Day one, working for LuLaRoe was...
I would say, hit the ground running.
As a professional designer,
I understand that I'm not designing for myself,
I'm designing for the company,
and what they wanted was...
loud, busy, eye-catching.
Our main direction was just make it pop.
When you're working in production, there's always this balance
of quality and quantity,
and with LuLaRoe, it was like...
So we were given the task
by, Patrick, the head of design and production,
to design
a thousand prints,
in one day between
me and three other designers.
It would be open and existing print,
change of color, save it.
Put stripes over it, save it.
Put the stripes in the background, save it.
Open another pattern,
put it over the existing pattern
to make this unholy mash up of two patterns.
You know, does it look good?
No. Save it.
It was a stressful environment.
By the end of the day, Patrick would have a thousand patterns
to choose from, and how many actually made it to production,
I have no idea.
The evidence.
Oh, boy.
They stopped producing
the inventory that I joined for.
I don't want print overlay over print overlay.
The yuck colors,
the oranges, the weird shades of mustard, stripes,
ugly flowers.
A jaguar, a bear.
None of them appearing from the crotch.
So, that's good.
Uh, lot of shapes.
A pattern layered on top of a pattern.
God! There's just so many of them.
Here she is.
We're like, "Okay."
There were some questionable prints.
You know, they put the... the designer, Patrick.
They put DeAnne, Mark on a pair of leggings,
like we had actual clothes with their faces on it.
Uh, it was just strange.
This one, I designed the ghost.
Owl eyes, peacock feathers,
tribal, ethnic.
I don't know.
We get the boxes. We open it up.
And it was like,
"What the hell is this?"
All of the color vomit
you could put on fabric
encapsulated in these brown boxes.
We were horrified.
No one in the fucking world
wants to wear leggings
that feature a bee
crawling up your cooch.
Oh, my God! That bee is gonna sting your big pink pearl.
No.
Blake is my 22-year-old son.
And he signed up
to sell LuLaRoe under me and...
I wish I could have talked him out of it.
His onboarding package
was horrendous.
The worst I'd ever seen.
Okay, any other... anything else we can show?
We have just so much,
- so much. - Here's your number... number 17.
And so this is number 30 right here.
It's pretty green one.
I just remember trying to pattern mix
and put this with like a striped shirt
and just thinking, "This is the ugliest thing I've ever seen,
but I've gotta sell it."
I think it's,
I think it's gorgeous.
And this one, which is going to be the gray sleeves
with a really pretty dark blue background
with pinks, purples, corals.
When I saw that box, I actually called home office
and said,
"Do you understand what you just sent my recruit"?
I wasn't trying to make it my son. I'm like,
"Do you understand his onboarding package?
Like, I've been in here for three years. I couldn't sell that."
Gray with... tigers.
Like, with black tigers on them.
Number 1404. This is an extra small.
I always remember her saying,
"This isn't good stuff. We've gotta get it returned."
I have this one which is so gorgeous black background,
there's really gorgeous flowers
on there, golden flowers.
And I just remember thinking, "I've got to do it.
I've gotta push it. I can do this."
And then, I remember my first live,
I sold a pair,
and I've sold my very first shirt,
and I remember just looking to her
and being like, "Yes, I did it, I can do this."
And then I'm pretty sure I sold one other piece that live.
And then from there, I would do lives
and not sell anything.
And then from there, about six or eight months later,
I just kind of tapered off and they went into a box
and I never sold them again.
You can't go overnight,
you know, making
clothing for a few thousand people,
to making boxes
full of clothing for 80,000 people.
You have to cut corners somewhere.
It was madness over here.
They ship, receive everything here.
That's where they would park right there, all the Mercedes,
all their flashy cars.
I was working at LuLaRoe
from March of 2016
to January of 2017.
For what amount we were gonna do on a day, I was like
15 million, 12 million in a day.
Okay, walking, walking, walking.
This is what it looks like.
Leggings, leggings and leggings.
More leggings.
It's like, get busy.
Everybody, start selling.
We can go see where they have their moldy clothes at.
The warehouse was full.
It was packed to the brim.
And somebody decided to put... start putting clothes outside.
One night, like it started to drizzle,
and the next day, sunny.
And then as time went on,
nobody really noticed like the molding yet.
And yeah, starting to get into the... to get shipped out.
Thousands.
Yeah, it's a lot of clothes.
I'm sorry. Y'all just taking on the tour of the LuLaRoe, uh...
All right, we're taking off, man.
Why is he so angry?
When people describe
MLMs to you, they'll draw you a pyramid,
and at the bottom of the pyramid,
like the visible base,
um, you see just more retailers, right?
Like that's a line of retailers.
But I think there's an invisible face
that gets left out of all of those graphics,
and that's made up of all the people
who are making the products
that all the retailers are selling.
The people at the very bottom of the LuLaRoe
pyramid are not white Christian stay-at-home moms.
Um, they're the people making the leggings.
And let me show you what I got,
because it's a piece of crap.
She's fighting mad.
She is just one of thousands of women complaining
about the super soft leggings they purchased,
only to discover they have holes.
They're ripping, um, they're
wearing them for a few hours,
they're wearing them for a few minutes and finding holes
and large, substantial tears.
Christina Hinks used to sell the leggings.
She showed me a pair that an angry customer returned to her.
I remember like my third,
third or fourth order,
getting the ever-coveted black.
Solid black leggings.
And I was like, "Well, shit,
I'm gonna keep one of these for me," you know.
The day that I wore them,
I fell asleep on my couch.
I was woken up a few hours later by the baby crying,
and I got up and my husband's cackling.
Cackling.
"What's funny?"
He's like, "Christina, your ass looks like Swiss cheese."
Went into the bathroom, took my pants off,
and you could put your whole hand
through the holes in my left butt cheek.
And I said, "Okay, it must be a fluke."
So, I pulled the second pair out
and I put them on. Same thing.
I was pissed.
That's when I started digging.
That's when I started reaching out to people.
MommyGyver was a blog
that I created to sort of empower women
to do their own things,
like MacGyver,
who could turn anything into anything.
So I had started
writing MommyGyver around, um,
May and June
of the... of 2016-ish.
And I really started writing about LuLaRoe.
I think the first post I made was in December.
When I first started writing,
nobody wanted to cover it.
It wasn't a big enough dumpster fire
for them to see the fire
from way high up.
And I felt obligated.
I felt like I had to say something
because if I didn't, who would?
All of these, these women were sending me messages.
This particular consultant
was baited to onboard with the understanding
that it would only take her 20 hours a week to make full-time pay.
She states that, um,
she learned very quickly it's not a part-time job,
and even exceeded full-time hours,
as was my experience.
As I started digging through
and as I started going higher up and higher up
and into their close circles,
I was finding leaders telling people
how to get other women to buy in.
Know most people don't have $5,000, $10,000 at their disposal,
but that's okay.
They can take that credit card with $5,000 or $10,000 maximum
and they can max it out.
My sponsor initially had suggested to me maybe
that I try, um, crowd funding.
In the end, to come up with a last little bit, um,
we ended up not paying some bills.
At one point, there was a document given to me
where it was created by a top consultant,
and it was how to come up with the money.
Um, ask you friends and family for a loan.
Borrow from your children's college fund.
You can get a loan. You can get...
Um, use credit cards, you can use, um, money from family.
You can sell stuff that you already own.
Um, so there's lots of ways that you can raise that money.
I started hearing that women were... were, following me
and they were waiting for the next article to come out.
As I started getting more popular in my blog,
I was getting death threats.
People were showing up on my doorstep.
I was getting hate mail.
I was not expecting
MommyGyver to become as famous/infamous as it was.
So are you guys blocking the trolls?
That would be awesome.
Um, so make sure
that you do because it would make me so happy.
There were retailers on every corner, you know.
I mean, it was really highly doubtful that we would all succeed.
My next door neighbor was a retailer
in our apartment.
I was here. She was here.
And it was crazy, we all both had our LuLaRoe rooms.
Everywhere you turn,
there was somebody, I mean, you go to the mall,
you run into somebody selling LuLaRoe,
wearing it or something like that.
I made about 60 grand
in that first, within that first year.
And I just took that money
and just threw it back in there.
This dress right here cost me.
I paid $30 for this, $30.
I'm lucky to get probably $10 for it now.
And at certain point,
I was spending more than I was bringing in.
I have boxes in that corner right there,
and I have these pink bags full of LuLaRoe.
This is all left. This is all what I have left.
I really had enough inventory.
I really did,
but I bought more things.
That's what gets you more in trouble.
I was telling somebody recently.
If you wanna... what I paid,
we're talking at least 20 grand.
Wow! -$20,000 right here.
Wow. - 20,000, 25,000 right here.
Sales just started to drop like almost
half each month.
So, let's say June, I did 16,000.
The next month would have been,
you know, 12,000,
then 10,000, then 8,000, then 4,000.
And by January 2018
I only sold a thousand dollars.
And I just felt I needed to have new inventory.
What I had was not selling.
I can only create so many outfits with what I had.
So I actually took out loans
to buy more inventory.
My house was
more LuLaRoe than it was honestly house.
Inventory all over the front room
and the sitting room and the dining room.
Everywhere.
There's stuff that goes on in our brains
that is totally natural.
They are defense mechanisms. They keep us alive.
We all have this, um,
cognitive bias called loss aversion,
which basically means
that we feel losses
a lot more deeply and more strongly
than we feel gains.
There's a lot of tricks we play on ourselves
to like, not feel like a loser.
There's another thing called honoring sunk costs,
and that is throwing good money after bad.
So, the more money you put into your MLM,
the more you're losing, the more you're thinking,
"It's an investment."
"I know I'm already $10,000 in debt
and my husband doesn't know,
and our garage is full of leggings,
and I can't quit now.
You know, I can't just walk away with that kind of debt.
I have to keep trying."
With LuLaRoe, there's no safety net.
There's nothing to save you when your,
when your business goes wrong,
because you aren't a business.
You're...
you're a retailer
for another company.
And if they fail, they'll get protected.
But you are ass out.
Oh, my gosh, there's so many large.
1446, white with the black.
I was in a jam. I couldn't pay any of my bills.
We were behind on the house payment,
plus we had 11 kids.
So, it... it was just had become desperation.
I pretty much hit rock bottom and said I can't.
I went live with my closet
because I had so much,
so much,
and I still hadn't told my customers yet.
And I just held up this dress
and I was like, "All right, this is a sweater Carly,
it's super rare, it's a unicorn."
Um, and then I just start crying.
Once the tears started, I couldn't get them to stop.
And I just told them, you know, "This is it."
I already knew I was gonna have to file
for bankruptcy. There is no way.
I knew I owed so much in taxes.
This is where I go to make my monthly
bankruptcy payment,
715 basically.
I'm in a five-year bankruptcy,
so overall I'll be paying
a little over $40,000
with all the fees and everything.
The lawyer fees and all.
I'll be honest with you, I thought about suicide
when all this was happening,
and just... just to get out of that
after hitting rock bottom, so.
I, um,
have crazy anxiety now
that I didn't have before.
I felt like a failure.
I put myself in debt,
and I had no way to pay it off.
Still tens of thousands in debt
to this day that I still haven't managed to pay off.
So you know the story of Red Riding Hood,
how she went through the forest
to visit her grandmother
and the wolf had eaten her grandmother.
And the whole time she's like, "Wow.
Grandma, you're acting kind of weird.
Grandma, your nose is a little different.
Holy crap, grandma, you're eating me.
You're not really grandma, you're a wolf."
That's what LuLaRoe was.
It was innocuous,
genuine, real,
love, emotion, comfort.
"Just kidding. We're gonna eat you alive."
What happens to people in MLMs,
and I've done interventions to get people out
of multi-level marketing schemes
is they get hurt,
and they could be bankrupted,
their marriage could end, they become estranged
from family and old friends.
People can be devastated.
I mean, how do you get people to buy into something
that is not in their own best interest?
And the answer is you manipulate them
in a kind of cult-like manner.
When I decided it was no longer for me,
everyone that was above me
stopped talking to me.
I didn't want my upline to be mad that I was leaving
because I know it would affect their bonus checks.
It was hard for me to let go.
Um, it was hard for me to admit failure.
I've talked to ex-MLM sources
who described the process of leaving
as psychological warfare,
who found that the moment that they expressed
that they didn't wanna be involved
with this group anymore,
they were dropped like trash.
That's the thing that lets you know
this is a destructive, cultish group,
when leaving comes
with these major consequences.
I was never making any money.
I stuck it out as long as I could, and fall of 18,
that was it.
I just kind of dropped off the LuLaRoe world.
Said, "I don't want to do this anymore."
And it's lonely
when that happens to you,
because you don't have anything else in your life
except for LuLaRoe, and now you have
to rebuild it all over again.
LuLaRoe convinced us that we were in something,
you know, super popular and we were super important,
and you just kind of
fell into acting like it
and believing it.
And that's why I look back on it feeling so cultish.
You are not selling clothes.
You are giving people freedom, you are giving people life,
you are giving people hope,
you are giving people confidence.
Is LuLaRoe a cult?
I would have to say,
I just can't think of anything else
that makes people quite that dedicated.
Think about all the great things.
Think about the positive things,
not the negative things.
I would be up until four o'clock in the morning,
almost every night.
My kids saw way less of me after I started.
I don't think I ever slept.
There's no work-life balance.
You know, you're putting all of your finances into it.
You've alienated your friends and family.
I just can't think of anything else
to call it.
When I left, I was a mess. I was a hot mess.
I was in hook, line and sinker.
I believed all of it, and I don't think
that they went into it
to create it to be a cult.
But from my experience, it was.
Especially when I went to leave.
That was a struggle.
You quickly learned who your friends were
and who they weren't.
They had no need for me anymore.
Looking back on it now, I'm...
I'm shocked that I
drank that much Kool-Aid.
You're basically, like, marked as a suppressive person
and you're hurting their business by leaving
and by telling your truth.
So I just shut up and I left
and I refused to talk about it until now.
I literally didn't know what to do with myself,
because it was my identity.
The mentality in there is always positive,
nothing negative,
and you're in a LuLaRoe family.
So you have your LuLa mom,
your LuLa grandma, your LuLa babies.
Everything is Lula In LuLaRoe.
MLMs are scammy,
but they are not just your average scam.
They have so much in common
psychologically with the groups
that we would traditionally think of as cults.
You know, they encourage you to recruit others.
They shut down questioning and dissent.
They gaslight you into thinking
that if you don't succeed in this organization,
it is your fault.
If you don't make your quota for the month,
well, girl, it's because you didn't think positive enough.
You didn't envision the Cadillac.
Therefore,
there is something wrong with you.
You need to stick it out another month
to really prove yourself
as the boss babe we thought you were.
I just felt like a failure and I didn't wanna
go to my mom and after she gave me
that money from her retirement fund,
like I didn't want to go to her
and be like, "Mom, I failed."
So, I just, I was in denial a long time,
and I just
really just had to face the truth.
It's really hard to see yourself as a victim.
To say you were victimized
is to admit a weakness,
and a weakness feels painful.
Plus, if you admit that you were victimized,
then you also have to, in an MLM,
admit that you victimized others,
which is even harder.
I just felt extremely guilty
for the people that I,
you know, had join.
So, I just, I always think about that, I always wonder like, how do they
think of me, like I had such highs
and then I had such lows.
And I think about that now, like, what do they think of me now
or did they think I was being deceitful at the time.
So, while a LuLaRoe recruit
might be a suburban mom
with highlights wearing bulldog leggings
rather than a new religious member
in a white robe with a shaved head on a commune,
the methods of manipulation that they're under are quite similar.
We were supposed to dress a certain way all the time.
If it was too big, we would tie a knot in it,
mix our patterns,
then we all wore it,
and we all wore the same thing,
acted the same way.
So like being on stage and looking out
into the audience.
Um, everybody was twins.
I'm not going to lie, like everybody had that Joy on.
How am I remembering all these names?
It's like the cardigan, the long.
And then everyone was rocking leggings.
Oh, my gosh. Wow! What a morning.
I can't imagine what that must
have been like for DeAnne,
to look out and see everybody that you've convinced
to be a certain way.
What that would feel like?
I've always just kind of always wondered
what did she really think.
They need that culture of conformity
where you're only hearing the MLM rhetoric,
where you're only hearing
that toxic positivity from your upline,
where you're only hearing the mantras
and the faux inspiration from the people at the top,
it creates the sense that
you're a part of something bigger than yourself.
And I want to tell you there is a sense of belonging.
I think there is a specific group of people that they're targeting
and it's middle-aged white women in Middle America.
But they probably do have sprinklings of,
you know, a Latina, a black woman,
uh, you know, an Asian
just to, you know, bring some diversity, some seasoning.
But, um, they use a lot of black vernacular
in order to, um, to look relatable.
Hey, girls. Hey!
Hey, girl, hey. Hello, hello, everyone, welcome.
- Hey! - Which is fine.
That's fine if you wanna use black vernacular.
I'm not the vernacular police,
but it's not reflected in their downline.
It's not reflected on their stages
when they hold these major events.
I have a problem with it because
they're using the Black vernacular to profit,
but we're not profiting off of it because
we're only there for seasoning
so that they can tell,
the world, "Yes, we're diverse."
Okay.
- Is that it? Yes.
That really struck me when I would sell my product,
um, Black people would never...
I would... that would shut, they would shut the door in my face, yeah.
I promise you, I promise you.
And I have neighbors, people, church, family, friends.
My daughter said the clothing wasn't their style.
I guess they didn't like the clothing.
I would say
95% of these women were white.
I have only seen a few people of color ever
who were a part of LuLaRoe,
and all the main figures who are very popular
and high up in LuLaRoe were always very homogeneous.
Mark and DeAnne were projecting a certain image,
an image of a white couple.
When you have a group
than has that kind of leadership
that represents a... a kind of prototype,
they encourage you to want to be just like the leaders.
What's up, y'all? We're here.
This is 2016, New York convention.
It's getting live, it's getting lit. There's a bunch of ladies
in leggings and dresses and leggings and dresses.
Did I mention that they're in leggings?
Being Black at LuLaRoe
was great.
I was the unicorn Of LuLaRoe,
you best believe.
I rode that train,
I mean, I tooted my horn and everything because
I mean, yeah, they...
It wasn't diverse at all.
I mean, in a serious,
on a serious side, like...
I don't know if I could say like...
I may have could have gotten taken advantage of...
...a few times,
like I definitely endured some...
some racism I'm not, I'm not going to lie.
But again, for me...
I'll put up with it.
I'm where I wanted to be...
I'm living my dream, you know,
and I've dealt with it in my life.
You know, this is, it's nothing new.
It's going to be everywhere you go.
Like, there's always somebody that hates you.
I was so grateful for the opportunity just to be there.
They incorporated me in their family.
They let me come to the cookouts.
I was in.
And I'm just like,
"I'm this nobody from Concord, like, I mean..."
I was thinking, "Yeah, I want to do this for the rest of my life."
♪ Know yourself Find your groove ♪
♪ Nothing is impossible ♪
♪ You are unstoppable ♪
♪ Happy days they come and go ♪
Sing it. ♪ Always gonna have that LuLaRoe♪
There was always a lot of hype,
fun activities,
ran by Sam Schultz.
Sam Schultz is DeAnne's direct nephew.
Sam was right at the top of LuLaRoe
and was really the LuLaRoe hype man.
It was actually Sam Schultz who came and approached me
at that beach.
He was the reason why I was there.
Elijah! Elijah! Elijah!
I related to Sam, like he was kind of my idol.
He was my big brother.
Ha-ha!
- Yo, what up, y'all? - Look, it's a Monday.
- Back to work. - Hey!
I would do anything for Sam.
I felt in debt to him.
The first time I met Sam Shultz was at a LuLaRoe training,
and they will ask you what your "why" is.
Can you guys see me okay?
Let's see, I felt like this is like an interrogation light.
He's very, very good at getting close to you
and listening to your story.
What's up, everyone?
It feels nice to have somebody
kind of ask you those.
Why do you... Why do you do what you do?
I told my why.
My husband had passed in December of 2012.
There were times shortly after Scott passed
that I really probably didn't deserve to have my son.
Which might not be the best thing for any mom to ever say.
Just self-medicated, slept a lot.
It was bad.
And I told him that story,
and I think right then and there, right then,
I was the target.
Because he knew the guilt that I carried from the years
immediately after my husband passed.
He chose close people and groomed them for a while,
so he would get away with it.
So we wouldn't turn on him.
I called him my best friend
'cause I did think he was my best friend.
And so did my son.
He loved him.
When you are brought up in a household that literally worships
the church of MLM,
all you know is how to worship the church of MLM.
Sam kind of encouraged us to,
"All right, come on, let's do our own thing.
It's... we're going to start our own thing."
I trusted him, you know.
And I quit, I quit LuLaRoe.
I did.
I was naive.
I learned that Sam
was in and out of various schemes,
plots, get rich quick ideas, whatever you want to call them.
The Utah County musician, who makes a living
organizing concerts and once owned the popular Sammy's Cafe,
is now facing 26 felonies tonight.
In all charging documents say Schultz recruited
at least 13 investors,
who collectively gave Schultz $323,000.
There was a medicinal marijuana farm.
You know, he wanted more money from me
for these fake investment opportunities.
In total,
Sam managed to get from me almost $100,000,
and the majority of that money was money left by my late husband,
allocated to Peirson.
People will say to me with the current business,
"Oh, my gosh, you worked so hard.
You worked, I can't believe you do all this by yourself."
They don't know the real reason
why I do all of it by myself is because in my head,
every time the Airstream door opens,
I'm constantly trying to make up for what I lost.
Me, like so many others
of his victims, were plucked right out of that company.
But you know what? The company won't
take any responsibility for it.
2017 was the big year
where they got a ton of lawsuits filed against them
and the backlash against them really started.
I think there was really power in numbers,
and once people all started getting together and talking about this stuff,
you know, I think more lawsuits were filed.
I think people started reaching out to the media.
And I think ultimately,
it started giving the case attention.
Three Sacramento women are suing
a popular clothing company called LuLaRoe for $1 billion.
The attorney claims the company
has cheated thousands of women.
I'm a fourth generation steamfitter of Local UA342.
I'm known in the LuLaRoe Defective
Defectors' Support Group as Heather Blithely.
My legal name, however, is Heather Blevins.
I try to keep my online social media presence
and my real life self kind of separate.
I don't know why I wanted to help so bad.
I really don't.
It just wasn't fair, and no one was listening.
And everyone was telling us we were wrong
for trying to help and we were wrong for caring
and we just knew... that it was real.
I think that the Facebook group is one of the reasons
why I have always known this is a story that's worth reporting
because people were
so incredibly passionate about it.
I wasn't really sure
how to go about telling you guys.
And just really want to see
justice in some form or another.
When I first joined LuLaRoe Defective,
it was pretty small
and I volunteered.
As consultants started mass leaving LuLaRoe,
there wasn't any place for us to say,
"Here's what really happened behind the scenes."
So, it's like a domino effect, right?
You get one person who just is not happy
and they decide to say something and then it's like, boom.
The... the door gets kicked down.
It's like, me too, me too.
This happened to me too.
The membership grew pretty steadily,
um, from a few hundred to a couple of thousand,
and at the height of the group,
there were 75,000 members.
Heather is one of my good friends now,
and she's a damn good detective as well.
I can say that.
It was brought to our attention by some of the members
how a lot of their onboarding packages had ads that advertised
full-time pay for part-time work.
$60,000 to $75,000 a year,
working 20 hours a week.
There was a trend of burning your onboarding package.
When people would cancel, they were just so excited to get out
that they would burn their onboarding package,
and I realized that evidence is being lost.
And so I went and got a post office box
and asked the group for their onboarding packages.
We encouraged everyone,
"File a complaint with your state's attorney general,"
and all we could do is hope that
someone was going to pay attention and someone was going to take interest.
Finally, I got a message
from the investigators of the Washington State Attorney General's Office,
and she was asking if I had any information about
which consultants in Washington were impacted.
One thing I sent to them was the brochure
that came in the onboarding package
that said you could make full-time work for part-time pay.
Oh, and the video of Jordan and Lindsay Wheeler, who's a top consultant.
We need to get away from being a pyramid scheme, okay?
What it is is if you sign up Sally,
you have, you have no reason to help Sally
sell the product in her room.
Right? You can just keep promoting her to buy, to buy, to buy, to buy.
- You could even... And they were explaining
a pretty big policy change.
I'm not panicked at all, right?
If you're doing the right things,
there's no issue.
When the LuLaRoe first started,
if you had people under you,
you weren't making a percentage of the clothing they sold.
You're making a percentage of the clothing they bought.
So for example, I'm in LuLaRoe.
I have a girl under me, let's say.
If she buys ten shirts and she can only sell two,
it doesn't really matter to me.
I'm making commission off all ten shirts.
And then eventually LuLaRoe changed
their structure for bonuses,
where instead I was gonna make only money of the shirts she sold.
So instead of making money for ten shirts, I was looking at making money for two.
All of the sudden, people's, um,
income was dropping precipitously.
I mean, we've been talking about it forever.
If you've come to a leadership.
Yeah, this is not new.
This is something that we've been talking about.
Lindsay, what do you say to people when
they say we are a pyramid scheme?
Quick answer.
We're not a pyramid scheme.
My husband thought we were at first.
He told me I was gonna share a cell with Bernie Madoff
'cause he was convinced that there was no way
that I could make this kind of money doing something legally.
That's my favorite piece of evidence that I've ever seen.
And again, that was sent to me by a consultant.
You've probably seen their brightly colored tops and leggings
on your social media feed.
But tonight, the company LuLaRoe facing another lawsuit.
The Washington State Attorney General says LuLaRoe
made claims of high profits and tricked people
into joining a pyramid scheme.
So, what makes LuLaRoe a pyramid scheme,
according to the Attorney General's office?
Well, the monthly bonuses, which were reportedly seven to 12 times higher
than the actual merchandise sales.
Do you ever encourage retailers to share how much they made,
um, in a particular bonus check?
No. 121.
So, exhibit 121.
So I'm gonna start playing at...
at the beginning and play for a little bit.
I am from Maryland.
My... my last check was $250,000,
and I do about 12,000 to 13,000 in sales every month.
I'm in Salt Lake City... Riverton, Utah,
and our last check was 307,000.
I... I can't even say it. It, like, blows my mind.
So, uh, correct me if I'm wrong,
but everyone in that video is making more
in bonus checks than they are in sales, correct?
At that time, yes.
Why were they making more on bonus checks than sales?
I don't know. Maybe they...
maybe they helped a lot of people
to help them make money.
When we heard about the outcome of the Washington State case,
we were all definitely elated.
We were super excited
that the consultants got money back.
It really, I think, gave us hope
that, um, what we were doing was counting for something.
We weren't just screaming into the void.
People were listening. It was actually
creating change, um, and some positive outcomes,
and we really hope that it'll continue
through the rest of the states.
The FTC needs to strengthen its regulations
against, uh, multi-level marketing companies.
Pyramid schemes are already illegal,
um, the FTC, um, website has all that information.
Uh, I think the FTC really needs to step up
and expand that to all MLMs.
In the beginning of doing a research around MLMs,
I didn't understand that 99% of people
made nothing or lost money.
And that's a lot, that's like kind of a low figure.
They think maybe it's 99.9.
One, two, three. Whoo!
In a successful multi-level marketing scheme,
you need a lot of failure because you're making money off of the recruits
and you're making money off of their, um, desperation,
which often manifests as more investment in the company.
LuLaRoe isn't built for you to have your own freedom
and to have your own empowerment.
It is meant to build the people at the top.
It's meant to make the people at the top richer.
Capitalism is the root of all evil.
It does surprise me
that LuLaRoe is still in existence
because I didn't really think
that they would be able to fight off
all of the litigation against them
without having to file for bankruptcy.
I think that LuLaRoe still exists
because Mark and DeAnne Stidham
want to continue making money from this business,
and what their business is all about is selling dreams
as opposed to selling a product.
And... and there are people that still want to believe
in the American dream and the dream of LuLaRoe.
We just got here to Cancun.
This is so worth the hard work.
I can't wait to get together with you
when you get here to Cancun.
And those of you that are not here, get busy,
and know that we love giving.
I can't believe it, I can't believe
like this is still going on.
It's like none of this had ever happened,
and the cognitive dissonance there
is just like, it's crazy.
This is the one where I had my son with me.
It's like... I took Brooks. it was so awesome.
- What, he's like a baby? - Yeah, I was nursing.
And I was able to bring him.
- Yeah. - Do you know what I wonder? I would love to know,
and there's no way to actually prove this,
but I would love to know, like how many babies were born
- because of LuLaRoe. - How many times have you seen
fund-raisers for like IVF treatments?
And all of us are like, oh...
I ended up in Cancun this weekend
because LuLaRoe is doing a incentive trip,
is what we call it a Dream Trip
and, um, leaders, high sellers are here,
they would come together once a year,
just coming together to be with my people.
But Brianna, you started six years ago.
- Yeah, almost. - Yeah.
So, I worked full-time at the hospital.
I was in nursing school, and I was doing LuLaRoe, like all at once.
And so online just worked really well for me.
And then when I graduated nursing school,
I was like full-time LuLaRoe, full-time at the hospital.
And then eventually LuLaRoe took over
and I quit at the hospital and haven't looked back.
Did you buy before you sold?
I did. I bought, I bought a lot before I sold.
Like a lot, a lot, a lot. I loved it.
I mean, it was just...
It made me feel good,
and then the community that I've built
since then has been amazing.
Everybody's looking for this bad story,
but it's not the bad story that's really there.
It's the empowerment that we are bringing.
It's the joy that we're creating in people's lives
and this opportunity that people have had to grow.
And the people that are here
are because of choices that they've made in their business.
And some people have left.
And they can find reasons as to why.
And there could be reasons that they want to use
that maybe are against LuLaRoe.
It could be reasons on media and things that they followed.
But no matter what, it all boils down to a personal choice
and how you choose to run your business.
I am here because of the choices that I've made.
Your... your customers become your friends, like it's not just...
- Oh, she's like my bestie now, it's wild. - It's not,
it's not like going into Target.
Like, my customers would be like, "Hey, will this fit me?"
Because I know their size.
- She really does. - You build that friendship.
People would come up, "Is that LuLa?"
And I'm like, "Yeah, it is."
- Well, and then you bond with that person. - Yeah.
'Cause they know what LuLa is,
- it's like this amazing bond. - Absolutely.
It gave me the confidence and then I started getting
into working out and then I started...
I actually managed to lose like 60 pounds
That's awesome.
We are around and thriving.
And it's... again it's a people's perception and choice.
If they chose to stop following LuLaRoe,
then in their life, we don't exist anymore,
but we are still here.
I really, really hate when MLM participants are portrayed as suckers.
There's nothing unusual about someone
who would like to run their own business
and have more time with their families.
That is what the American dream is,
and we've all been pitched that since birth.
People tend to think that folks wind up in groups
like LuLaRoe because of "brainwashing."
They were brainwashed. They were mind-controlled.
That would never happen to me.
We all are susceptible to these methods of manipulation.
LuLaRoe used the tools of psychological
and emotional manipulation to make money.
As long as there are people in this country
who are locked out of the dignified labor market
and made a promise that the American dream is still available to them,
the MLM industry will thrive.
I did join a couple of other MLMs after leaving LuLaRoe
just because I was still trying to bring
a little bit of income into my family life,
and none of those panned out either.
After LuLaRoe, I really finally got the idea
that this was not in any way going to help me,
and that these types of companies
were just predatory.
Yeah, that's starting to look like a good...
It's ready to go, cookie dough.
- See. - Ooh.
You are my mother. You hear the rhyme you just did.
It's ready to go, cookie dough.
- Aw! - Mmm-hmm.
We could start us a jingle.
Well, the American dream is for me
was, I promise you, just to be financially stable
and own my own business.
And LuLaRoe could have worked,
could have been that for me.
However, I... maybe I'll... I'll take all blame, though.
I just didn't have that fight to... to, um...
to make it happen.
There you go. Voila!
But I... I would like to give it one more shot,
and it can be lucrative.
If LuLaRoe came to me tomorrow and asked me,
"Hey, you wanna perform on a cruise like you did?"
Heck yes, please. Like, let's go, win.
Like, yeah, no, I...
in a heartbeat.
- You never stop. - No.
- Never stops, never. - I can't.
Never, never stops. It's okay.
- I can't.
- Oh. - Check who that is.
That is just in time.
I get asked all the time, after my experience with LuLaRoe,
"Why in the world would you do another direct sales company?"
And the answer is,
I honestly feel it's apples and oranges.
Here's my nail collection.
I have like the entire collection almost.
I'm missing two.
If you look at the Better Bureau Business, the BBB rating,
I think LuLaRoe had an F.
And my new companies Plunder, Red Aspen, they have an A.
I think that says something.
So this is my old LuLaRoe group.
I struggle with this MLM
because I do like MLMs.
I love a lot of different MLMs,
and I like to support other women
and their businesses, of course.
So, I would like to say that I'm not for them,
but my nails come from them.
My candles come from them.
You know what I mean? Like, I feel like there's a purpose for it.
Um...
And I feel like they've been around for decades and decades.
My advice to anybody going
into an MLM or even considering it.
I don't care if it's nail strips,
protein shakes, vitamins, what else is out there,
make-up, um, hair products.
I don't care what it is.
Say no. Run as far as you can, as fast as you can.
I don't think the takeaway
from the LulaRoe's story is that it's wrong to have hope.
It's good to have hope.
The American dream preys on hope.
And so until we make the American dream
less all-consuming,
that hope will lead people to harm.
So, it's the American dream that has to change,
not our capacity to hope that has to change.
I'm not surprised at all
that LuLaRoe still exists.
This is just what the people who start MLMs do.
And if it wasn't LuLaRoe that was sticking around,
Mark and DeAnne would go start another MLM.
We're aware of the negativity, but guess what?
It is a minute amount compared to all
of the amazing positive things that are happening.
Forget about using the truth as your defense.
Use kindness as your defense.
That is the culture of LuLaRoe.
This is just the way we do business here
to make people think
that they're pursuing their own success
while they're actually making someone else rich.
It's just greed, pure American greed.
Each and every one of you are a part of the American dream
because you are entrepreneurs and you own your own business,
and I will tell you, some days are not so good.
Guess what?
So many days are so amazing.
LuLaRoe.