LuLaRoe controlling entire transaction process

Archived From: Finance
  • Page :
  • 1
  • Text Only
Voting History
rated:
My wife has been a LuLaRoe consultant for about a year. Recently I started to look over the letters she has been receiving from them to see why there has been an influx in mail from LuLaRoe.

One conversation I had with her recently was around them controlling and dictating total transaction. What I mean is that she takes someone's credit card and puts it online so that it can be processed through their payment system. They also charge a transaction fee which is higher than square or other POS readers. It seems weird to me that you pay this company for her inventory upfront then they control transactions and then send you the payment all from their accounts. it seems like they would be able to capitalize on the cash they are processing and leverage it for their gain.

Two weeks ago they then sent out communication saying they would be providing consultants with credit card readers. It turns out that these readers are basically a square knock off controlled by LuLaRoe. On top of that it's only able to be used on iOS systems and not Android so they informed my wife she could get an iPad or iPhone....

Today we received a letter stating that she had been signed up to receive her payments that they transact to a new LuLaRoe debit card which they partnered with metabank in order to provide consultants an easier way to manage their finances..... We already had our money going to an independent bank account which we were utilizing for only the business. The letter denoted if you want your funds transferred to your chosen account it is a 1$ fee. presently reviewing the transactions they process them on a daily basis. The logical thing to do if they are charged transaction fees to transfer cash to consultants would be to pay out once a week. the weird thing to me is that now they get your money when you buy inventory and hold it until you spend somewhere else... It seems beyond shady to me.

Member Summary
Most Recent Posts
I will never understand people that buy from "friends" on facebook and such. Or anyone that thinks this is a good job. I... (more)

justignoredem (Apr. 03, 2017 @ 4:21p) |

if any of you ever started you own company this is exactly the same thing and same set upyou would have or you are simpl... (more)

glassman97 (Apr. 03, 2017 @ 5:48p) |

I'm certainly no fashion maverick, but their stuff looks hideous in my completely unprofessional opinion.

SaulHudson (Apr. 03, 2017 @ 8:49p) |

Staff Summary
  • Also categorized in:
Thanks for visiting FatWallet.com. Join for free to remove this ad.

Wait, you're saying an MLM might be sketchy? I'm shocked, shocked!

No idea what lularoe is.

walletsr said:    It seems beyond shady to me.
  I'm just going to leave this here... https://www.youtube.com/watch?v=s6MwGeOm8iI



I've never heard of this company but yes I would be worried. Every single item you listed is classic for a multilevel marketing scheme or piramid scheme. I'm having a hard time remembering the product names but it's almost always the same patterns. Force people to buy inventory, control payments, push recruiting more than sales... They all the same. Fad product, few top folks make tons or get arrested. Everyone in the middle gets burned. That's the pattern.

Is there a question? Or is this just a MLM's are shady PSA?

It's a little bit of both I suppose a PSA and my question is, is it legal for them to control the entire process of funds in such a manner?

My wife made all of her money back but now it seems beyond crazy...

walletsr said:   It's a little bit of both I suppose a PSA and my question is, is it legal for them to control the entire process of funds in such a manner?

 

  

I can't see why it wouldn't be legal.


of course, IANAL
 

Found their website http://www.lularoe.com but how is this a successful business model for selling clothes? There must be 50 independent women's clothing stores at the mall 2 miles from me and I rarely see more than 2 or 3 shoppers in any of them, while Macy's and Target has many.

It seems weird that the company selling goods also owns the transaction service as well as the payment processing system. Typically one of those are outsourced. I guess when you have an MLM they try to nickel and dime you anywhere. I guess my biggest question is can they force you to create a bank account with a bank they use in order to pay the money they owe us after each transaction.

I looked at MN labor laws for payment and direct deposite it says that they have to offer you a different paymenterhod if there is a few involved. I didn't know if it was different since at the end of the year we get an 1099 and not a w2

What is the process if a customer wants to pay cash?

EDIT: Where I am going with this is couldn't you just claim you make only cash sales and run the payment through your own Square? I am assuming you have all the inventory on hand and their payment transaction service isn't needed for them to ship the products to the end customer.

If a customer pays cash then we have cash on hand. The ideal scenario is someone has a "party" at their home and people impulse buy with cash.

atikovi said:   Found their website http://www.lularoe.com but how is this a successful business model for selling clothes? There must be 50 independent women's clothing stores at the mall 2 miles from me and I rarely see more than 2 or 3 shoppers in any of them, while Macy's and Target has many.


People have parties at their homes and are given free clothes as well as my wife sells to a wider audience via Facebook live where people purchase clothes in real time.

walletsr said:   If a customer pays cash then we have cash on hand. The ideal scenario is someone has a "party" at their home and people impulse buy with cash.
  See my edit above.

string3599 said:   walletsr said:   If a customer pays cash then we have cash on hand. The ideal scenario is someone has a "party" at their home and people impulse buy with cash.
  See my edit above.



That actually makes a lot of sense and is something that we will look into thanks for that idea. The other issue is that there are sales that take place online and PayPal transaction fees are pretty high

Which Mintz brother owns this one?

walletsr said:   My wife has been a LuLaRoe consultant for about a year. Recently I started to look over the letters she has been receiving from them to see why there has been an influx in mail from LuLaRoe.

One conversation I had with her recently was around them controlling and dictating total transaction. What I mean is that she takes someone's credit card and puts it online so that it can be processed through their payment system. They also charge a transaction fee which is higher than square or other POS readers. It seems weird to me that you pay this company for her inventory upfront then they control transactions and then send you the payment all from their accounts. it seems like they would be able to capitalize on the cash they are processing and leverage it for their gain.

Two weeks ago they then sent out communication saying they would be providing consultants with credit card readers. It turns out that these readers are basically a square knock off controlled by LuLaRoe. On top of that it's only able to be used on iOS systems and not Android so they informed my wife she could get an iPad or iPhone....

Today we received a letter stating that she had been signed up to receive her payments that they transact to a new LuLaRoe debit card which they partnered with metabank in order to provide consultants an easier way to manage their finances..... We already had our money going to an independent bank account which we were utilizing for only the business. The letter denoted if you want your funds transferred to your chosen account it is a 1$ fee. presently reviewing the transactions they process them on a daily basis. The logical thing to do if they are charged transaction fees to transfer cash to consultants would be to pay out once a week. the weird thing to me is that now they get your money when you buy inventory and hold it until you spend somewhere else... It seems beyond shady to me.

Is this a division of Amway??
 

  

I can't for the life of me figure out why women get involved with this stuff...and I'm a woman.

I live in a community where everyone is involved in some sort of MLM sales scheme. My opinion of Lularoe is similar to that of Mary Kay and Pampered Chef... great product and style, but overpriced and wrapped up in a crummy distribution scheme. There is a focus on actually selling the product to try to distance it from a classic pyramid scheme, but the "independent sales" aspect encourages (requires) "consultants" to pester their friends to the point of alienation.

My family has Lularoe clothes, they really like the style and quality, but I dread every time our friend who sells it has an "event" that we have to come up with an excuse to skip.

...wait unto you have to sell Girl Scout cookies...

atikovi said:   Found their website http://www.lularoe.com but how is this a successful business model for selling clothes? There must be 50 independent women's clothing stores at the mall 2 miles from me and I rarely see more than 2 or 3 shoppers in any of them, while Macy's and Target has many.
  b*ches be crazy.

There are some women that LOOOOOOOVE lularoe junk. I know some people that buy soon to be discontinued items with the goal of selling them on eBay after discontinuance for a markup - people are loyal and want a particular thing and will pay more for it if it's not available.

BeardedThunder said:   ...wait unto you have to sell Girl Scout cookies...
  
GS Cookies are an MS copper mine. 

You're lucky your wife has made your money back. Tell her that this "transaction control" is just the tip of the iceberg and convince her to walk away from this as fast as possible. You will be doing yourself a huge favor. Don't say we didn't warn you.

I hate this company.
My wife buys their stuff and it irks me because its a shady run business.
They did replace a pair of pants at that ripped on the firstwear and so far the other stuff has held up, but bugs me that there is no store and no real brand to depend on.

The way they sell is through these stupid facebook sales.
A seller sets up a time to go live on facebook, claiming they "ONLY HAVE 1" of an email, and you comment you want it.  I bet if 3 comment, suddenly all 3 get one.
Inf act, once my wife thought she didn't get an item because someone commented ahead of her.  Next thing I knew $30 bucks hit the CC, and she said, oh yea, after the sale so in so emailed me and said she had a second one so I bought it.

They create a sense of urgency like this, so you log on and watch the sale live, comment you want the ONLY ONE THEY HAVE, and thenlater they cahrge your cc and ship it.

I CAN'T stand this company and this crap.  What a shady setup

In reviewing all the financials and transaction fees they have been charging my wife with we realized that square would be the best option. It has lower costs and better invoice management. In reviewing the transaction I saw that LuLaRoe collects a 7 cent fee for every transaction they process. They have around 30,000 consultants and on average they sell about 10 pieces a day meaning they get 21k a day for forcing people to use their transaction system.

Just 7 cents?

That's really not bad relative to what I understand is often charged.


ETA : 
Just one reference about fees:  https://www.cardfellow.com/average-fees-for-credit-card-processi...
card present businesses : "Pay lower interchange fees - roughly 1.60% plus a $0.10 transaction fee."
card not present : "Pay higher interchange fees - roughly 1.90% plus a $0.10 transaction fee."

https://squareup.com/help/us/en/article/5068-what-are-square-s-f...
square fees are 2.75% for swiped transactions and 3.5% plus 15 cents for manually entered

The % fee is the bigger deal generally.    7 cents seems small.

do you have a hookup for tupperware too?  some of my cups from the '70s are breaking and I want replacements that don't appear to be available online.

With the gaining popularity of this, particularly using Facebook Live and Albums as an outlet to sell, it wouldn't surprise me if FB jumped in and blocked this sort of thing, or charge LuLaRoe money somehow.

At least your wife makes money on the product, my wife spends money. She swears by their leggings, says most comfortable things to wear. I just hate contributing to MLM's, particularly shady ones like this.

walletsr said:   
string3599 said:   
walletsr said:   If a customer pays cash then we have cash on hand. The ideal scenario is someone has a "party" at their home and people impulse buy with cash.
  See my edit above.

That actually makes a lot of sense and is something that we will look into thanks for that idea. The other issue is that there are sales that take place online and PayPal transaction fees are pretty high

  OP, if you had to get that idea off an internet board, you might wanna rethink your position as an entrepreneur and get a job at the Post Office....

TuxFL said:   With the gaining popularity of this, particularly using Facebook Live and Albums as an outlet to sell, it wouldn't surprise me if FB jumped in and blocked this sort of thing, or charge LuLaRoe money somehow.

At least your wife makes money on the product, my wife spends money. She swears by their leggings, says most comfortable things to wear. I just hate contributing to MLM's, particularly shady ones like this.

  
FB is passively making money on these schemes via ads on their platform.  I'm sure they'd be happy if everyone on FB had live show "parties" every hour of every day.

What I REALLY don't get, is who's tuning in to these things?  You couldn't pay me enough.

Wait til another consultant sees or hears about her Square. She'll report it to higher ups and your wife will get penalized or booted out of the MLM, which might be a good thing for you. Also, read the wage laws carefully because many of them don't apply to contractors. She is likely not considered an employee.

DOES ANYONE WHO SIGNED THE NEW MERCHANT AGREEMENT WITH LLR HAVE A COPY OF IT or a LINK? If so, please post.
 

RhizzleBop said:   I hate this company.
My wife buys their stuff and it irks me because its a shady run business.
They did replace a pair of pants at that ripped on the firstwear and so far the other stuff has held up, but bugs me that there is no store and no real brand to depend on.

The way they sell is through these stupid facebook sales.
A seller sets up a time to go live on facebook, claiming they "ONLY HAVE 1" of an email, and you comment you want it.  I bet if 3 comment, suddenly all 3 get one.
Inf act, once my wife thought she didn't get an item because someone commented ahead of her.  Next thing I knew $30 bucks hit the CC, and she said, oh yea, after the sale so in so emailed me and said she had a second one so I bought it.

They create a sense of urgency like this, so you log on and watch the sale live, comment you want the ONLY ONE THEY HAVE, and thenlater they cahrge your cc and ship it.

I CAN'T stand this company and this crap.  What a shady setup

  The people who sell this don't get to choose what patterns they get.  I think they just pick an item (leggings, for example), and get to order by size.  Then they are at the mercy of LuLaRoe in regards to what colors/patterns show up.  I believe they truly do often only have 1 or 2 of any given pattern.  I think because there is that sense of urgency, a lot of people who are buying comment on a lot of things they only maybe want, and then go back and rescind their "dibs" once the dust settles. It's also pretty obvious that a lot of the stuff is hard to unload, because 75%ish of their inventory seems to stay pretty static for the one seller whose page I still follow (and she has a ton of inventory, probably thousands of pieces).  I paid attention to LLR for about a month to get some leggings.  People are nuts for that stuff, I don't get it.

walletsr said:   It seems weird that the company selling goods also owns the transaction service as well as the payment processing system. Typically one of those are outsourced. I guess when you have an MLM they try to nickel and dime you anywhere. I guess my biggest question is can they force you to create a bank account with a bank they use in order to pay the money they owe us after each transaction.

I looked at MN labor laws for payment and direct deposite it says that they have to offer you a different paymenterhod if there is a few involved. I didn't know if it was different since at the end of the year we get an 1099 and not a w2

  The people "working" for an MLM are contractors and not employees so many of the state laws that would force the employer to offer direct deposit for free are not applicable. It is a warning sign that the company makes money on the payment processing and sets the prices of the goods and charges a fee to distribute funds.

I will never understand people that buy from "friends" on facebook and such. Or anyone that thinks this is a good job. I guess it's the stay at home moms that think "Hey, I'm on facebook all the time already! I can sell these easily!". But what do I know, they might make some fat checks for all I know. Maybe the typical person we all see is making six figures with little or no effort.

But what I find is that it's no different than an insurance salesman trying to be your friend... Of course he is going to act like you're his best buddy, give you a pat on the back and say "How is your 4 year old girl doing? Did you see the <insert college/pro team that you like> basketball game list night?!" It's all bullshit and they would sell you a rock for $20,000 if you were stupid enough to buy it.

Same goes for a brokerage that tries to give you a buddy buddy connection. They will sign you up for the most fee heavy investments without a problem.

The same holds true for this. Prices are bloated and inflated.

if any of you ever started you own company this is exactly the same thing and same set upyou would have or you are simply dumb and losing money. also devaluing your private company. the reason they control everything is that is what their contract says, simple.. if you don't like their conditions of use don't sell their product. their system is designed in levels like a pyramid in that the people above you get bonuses on your sales as long as they maintain their own sales quotas. it is not a company where the people at the top do nothing and just collect their bonus from those under them. they have to meet monthly sales goals on their own to receive bonuses and those bonuses don't come off your pay.

as for the payment system, they created their own so that everyone could simply use it no matter education level. one system is simpler than having your clients use 20 different ones. and their system tracks sales so they know what bonuses to give. now where you think they should improve is by offering mulitple payment platforms like square and paypal but why do that when you can partner with one company and take a small % of every transaction. if you owned a company, and a processor had to be used to accept payments, isn't smarter for you personally to say you must use this system that we've set up for you? and again, if you don't like it, don't join.

so to the OP, to me just common since they work this way. the debit card with metabank allows the consultants to instantly have access to their money whereas paypal takes two days and square takes a day or longer over the weekend. but with the debit card the funds are available to you as soon as payment has been accepted. i don't think that's possible anywhere else so if you look at it that way it's better for the consultant. now lularoe could hold the money and make cash payments once a week and invest that money into 24 certificates of deposit for the extra interest but they don't and that's good. plus that would screw the consultants, most of whom are women trying to find something fun to do while also trying to make a living.  it works for some people, it takes a certain personality to do these things, and for some people it jsut doesn't work

as for the people asking about cash, how often do you buy something online and use cash? facebook pop up parties are a big thing where you don't have to go to someone's home or turn them down. you go online during a 24 period usually to buy. cash is for the in home parties and group parties.

concerning their products, the hook with lularoe is they limit production runs of each print. i think each is limited to 2500 but it may be 3500 so their ends up being patterns that people chase, looking for their "unicorn" pattern. that's many many customers join many different consultant groups hoping to find that pair of leggins or dress pattern that is special. animal prints go super quick and many times you have to buy it with another item to get it. they are not sold in stores but you can create a store in your home.

as for lularoe pricing they only make suggestions but you can lower the prices but they don't want you dropping them for cheap. but you can offer sales, vip discounts, free shipping etc so what seems like a bloated price can easily come down. and for people with money price is usually not the issue and for those short on cash the prices and be adjusted to help.

finally to give you real life example of why you should control everything about your company,Jgumbos is national now but they started in louisville, ky. when he started to expand he franchised out several locations in town. and if you ate at these different locations you would find variations in the flavor. turns out the owner didn't force their franchisers to buy their ingredients specifically from him, they shopped wherever they pleased and the flavors varied. lost potential added income by not getting some percentage off those ingredients and his brand suffered some in the beginning.

now luckily, they realized their error in not controlling everything and now they are nationwide. but in essence control everything, don't give your consultants room to think. just creates problems.

I'm certainly no fashion maverick, but their stuff looks hideous in my completely unprofessional opinion.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2017