PORTLAND, Maine (NEWS CENTER) – It seems the fight between former consultants and the company LuLaRoe has just started.
The company is known for its bright leggings, sold by more than 80,000 people out of their own homes.
Back in September, hundreds of women were upset when the company changed its buy back policy, leaving many of them in deep debt.
Now, a California lawyer is taking it a step further, claiming not only that the buyback policy was wrong, but that the company has been operating illegally for four years. He's suing for 1 billion dollars, but the company says this lawsuit has no ground to stand on.
“The company was never allowed to take anybody's money,” Attorney Joshua Watson said. “Because you can't run an illegal business and take people’s money. So you've got to give it all back.” Giving it all back, he says, would equal around $1 billion.
The attorney says LuLaRoe has been operating an endless chain scheme - also known as a pyramid scheme - for four years.
“They pay the people within their distribution network based on how much inventory the people below them purchase,” Watson claims.
Right now - the lawsuit has only three consultants’ names on it - but Watson has started a website where former LuLaRoe consultants share their experiences to help him build his case. “It's one thing for the people who are my named plaintiffs, the people who retained me, to go forward and say their story,” he explained. “But it's an entirely different thing for the judge to know that there are 700, 800, 900, 1000 people saying the same thing. And…that’s what we’re finding on our website.”
Lisa Record - a woman from Lewiston who recently went out of business and is thousands of dollars in debt - heard about the class action lawsuit online.
“I first thought, ‘good for them,’” she said. “I think Lularoe should be held accountable for what they have done to people.”
She says it's too much of a hassle to take LuLaRoe to court herself. “I just want to get rid of my inventory and get LuLaRoe out of my life,” she said.
But if this class action lawsuit were to get approved - and if Watson wins - he says all LuLaRoe consultants would get their money back.
The company on the other hand, says the pyramid scheme claim is baseless, calling it "factually inaccurate and misinformed.” The company said, “ we will vigorously defend against them and are confident we will prevail."
“Here's what I would say to that,” said Watson. “If the complaint were predatory, if completely misinformed, I would not have hundreds of people contacting my office.”
NEWSCENTERnow had Portland lawyer Ron Schneider into the studio for a LIVE interview about the LuLaRoe situation. He specializes in employment. He says the process for this class action lawsuit could take a very long time – a lot longer than the 120 days Watson claims it will take to proceed.