Last week, Washington state Attorney General Robert Ferguson filed an injunction against LuLaRoe, Inc., which the Attorney General described as an unlawful pyramid scheme.
The complaint alleged that the LuLaRoe plan violated the Washington state Anti-Pyramid Promotional Scheme statute, made false and misleading earnings claims to potential and existing participants, and otherwise violated the state’s consumer protection laws.
Direct Selling Association President Joseph N. Mariano said, “DSA members, through their membership, are committed to the highest level of consumer and salesperson protection. In addition to our DSA Code of Ethics, DSA and its members have vocally supported the enactment of strong anti-pyramid laws consistent with the provisions of DSA’s Code, including Washington state’s anti-pyramid law now cited by Attorney General Ferguson.
“Sadly, not all companies in the direct selling channel are DSA members,” Mariano continued, “and non-members like LuLaRoe do not accept, as members are obliged to, the requirements of DSA membership and our Code. That’s why we have just announced the establishment of our new Direct Selling Self-Regulatory Council (DSSRC) in partnership with the Council of Better Business Bureaus.
“The DSSRC will monitor the marketplace, accept competitor challenges, and otherwise consider patterns of consumer salesperson complaints for DSA members and non-members alike,” said Mariano.
“The DSSRC, working in tandem with the DSA Code, is intended to help ensure the marketplace is free of the types of consumer harms, particularly deceptive income and earnings claims, that Attorney General Ferguson’s complaint alleges in this case,” Mariano said. “We wholeheartedly support prosecution of operations that flout the law and disregard the legal and marketplace standards reflected in the DSA Code.”
Direct Selling News has reached out to LuLaRoe to see if they would like to comment on these allegations, and will update this story if they choose to do so.
