VANITY FAIR: LuLaRoe Exposed: Inside an Alleged Billion-Dollar “Pyramid Scheme”
By Kate Arthur
August 30, 2021
DeAnne Stidham is a Mormon mother of 14 with Barbie-blonde hair, studded designer stilettos, and a cozy Kris Jenner charm who, with her husband Mark, founded the billion-dollar company LuLaRoe. (You’ve probably seen their leggings, available in loud cat and pizza prints, peddled in your Facebook feed.)
According to a 2019 suit filed by the Washington state attorney general, their multilevel-marketing company is also a pyramid scheme that bilked thousands of people out of millions of dollars. According to the attorney general’s office, LuLaRoe made some of their retailers believe that if they invested between $500 and $5,000 in startup costs, they could “rescu[e] their families during financial crisis.” (The suit was settled in 2021.)
When Oscar-nominated filmmaker Cori Shepherd Stern first started hearing these stories, after falling down the LuLaRoe rabbit hole on her own social media accounts, she felt a familiar pang of heartbreak. While growing up in Panama City, Florida, her mother had also fallen prey to a multilevel-marketing company she believed could save her family’s finances. That background inspired her to produce LuLaRich, an Amazon docuseries about LuLaRoe’s rise and fall, premiering September 10.
“I grew up with a single mom who borrowed money to buy a giant makeup kit,” says Stern. “And she’s not a saleswoman. She didn’t have a background in business. She thought she was going to make thousands of dollars a month to keep giving us cereal and haircuts…and that it was going to let her stay at home with us so she did not have to pay for child care. That’s how this is often sold—‘You’re going to get to stay home with your family. You’re going to get to participate in the American dream.’”
“It was devastating to her when she didn’t sell what she thought,” says Stern. “It was a huge blow to her self-esteem. She saw women succeeding and was like, ‘Why am I failing at this? Why can’t I do this?’ It’s because the system—the whole multilevel marketing system—is flawed. I saw it firsthand.”
After the Stidhams founded LuLaRoe in 2013, they boosted their company by encouraging retailers to barrage social media with posts that rippled envy and intrigue across exponential contacts. Their early retailers boasted of outsize bonus earnings. The phenomenon felt reminiscent of the cultural cocktail that fueled the doomed luxury music festival Fyre Festival—the topic of dueling 2019 documentaries, one of which was made by codirectors Jenner Furst and Julia Willoughby Nason. So with her filmmaking partner, Oscar-winning Spotlight producer Blye Faust, Stern asked Furst and Nason if they would be interested in making a LuLaRoe doc.
Like Fyre Fraud, the four-part LuLaRich is a fantasia of seemingly deceptive social media marketing, colorful characters, and stranger-than-fiction details. “We like to go underneath the hood of the zeitgeist of American culture,” says Nason. “This story in particular had such a bubblegum feel that it was fun to highlight the corrosion of systems in general.”
The filmmakers spoke to former LuLaRoe employees and independent retailers who claim they were duped out of money and gaslighted by the company when they started asking questions. Incredulously, in spite of the lawsuits against and controversy surrounding their business, the Stidhams also agreed to sit down for a five-hour interview with the filmmakers.
“I think they were incentivized to get ahead of the story and be able to promote what they were doing,” says Furst—noting that LuLaRoe is, nominally at least, still in business after agreeing to pay $4.75 million to resolve the Washington state attorney general lawsuit. (In a statement, LuLaRoe’s founders maintained that they thought they would have eventually won the case, but “the expense would be enormous and the amount of time senior management would have had to devote to the litigation during the trial would have been a distraction from our business.”)
“They were involved in a lot of lawsuits when we spoke with them, but they were still in business,” says Furst. In one such suit, seeking $63 million in damages, LuLaRoe’s manufacturer Providence Industries alleges that the company “created a web of shell companies in order to protect their high-value assets, including a Wyoming ranch worth more than $7 million, luxury Koenigsegg cars, and a Gulfstream jet,” according to Business Insider. LuLaRoe denied the claims in the lawsuit and filed a $1 billion countersuit against Providence Industries alleging fraud, breach of contract, and unfair business practices. (A Providence spokesperson called the countersuit “outrageous.”) According to Business Insider, multiple lawsuits did not stop DeAnne from celebrating her 60th birthday with a masquerade-themed party, acrobatic performances, an altar gilded with 18-karat gold leaf, and a seven-minute dance performance to Ace of Base, among other artists.
“You still have to go and get out there and promote the message of LuLaRoe no matter how much egg is on your face,” adds Furst. “We said, we’re giving you guys a chance to go on the record and tell your side. And ultimately they presented this story that they felt was important to share.”
During the interview portions that made it into the series, the Stidhams can be seen skirting certain questions—and the pair eventually backed out of a second interview. So in the edit room, the filmmakers juxtaposed the story the LuLaRoe founders sold on camera with deposition footage in which they were forced to answer tough queries. “I think it was a wonderful interplay of two different realities—the interview with Julia and myself, and the depositions with the state of Washington,” says Furst. “We feel our role is to usher the truth—and sometimes the truth can be disguised by incredible charm and personalities.”
In between clips of LuLaRoe’s extravagant incentives—the Stidhams and their employees motivated their retailers by offering all-expenses-paid cruises, private concerts with Kelly Clarkson and Katy Perry, a photo-op with Mario Lopez, and oversized, game-show-style bonus checks—multilevel marketing (MLM) expert Robert Fitzpatrick regularly pops up onscreen to explain how pyramid schemes work.
LuLaRich also offers some truly bonkers, attention-grabbing details about the company and its founders. One example: in the documentary, DeAnne admits that she helped some retailers coordinate gastric-bypass surgeries in Tijuana, Mexico. One more: as previously reported, some retailers were encouraged to sell off breast milk to afford start-up costs.
Like Fyre Fraud, LuLaRich also touches on the impact paid celebrity associations can have on potentially problematic brands. For the 2017 LulaRoe convention, the company booked a stadium and paid an estimated $5 million for Katy Perry to perform and pose with retailers. The following year, as the company faced multiple lawsuits, it paid handsomely to book Kelly Clarkson. For one former LuLaRoe employee and longtime fan, Derryl Trujillo, the singer’s participation in the event was enough to inspire a full boycott. “[It’s] sad because I love Kelly Clarkson as a singer,” says Trujillo in the documentary—a character compelling enough to make this dilemma sound Shakespearean. “I love that duet she does with Jason Aldeen, ‘Don’t You Wanna Stay.’ That’s one of my all-time favorite songs. I can’t listen to it anymore.” (Reps for Clarkson and Perry did not respond to requests for comment.)
The filmmakers did not reach out to Perry or Clarkson. “This is not about bringing Katy Perry or Kelly Clarkson to justice,” says Furst. “But maybe they could step up now and use their influence for good. We always believe in a silver lining—and I think the silver lining for influencers like them is that this is an opportunity to make a statement and support the people who really support you, like Derryl.”
Furst, who told a similar story of celebrities like Kendall Jenner promoting the Fyre Festival in Fyre Fraud, does offer one word of advice to Clarkson and Perry’s cohorts: “If you’re a billion-dollar influencer, check out the company before they hire you—make sure the music festival is actually happening in the Bahamas. Or maybe, you know, don’t do the $3, $4, $20 million gig in a stadium for a multilevel marketing company.”
Asked about the future of LuLaRoe, Furst says, “This is truly in the hands of the public. This company is still in business and we all have to ask ourselves, do we support that? Or do we denounce that? And any attorney general, anywhere in the country, could do exactly what Washington state did [and hold the company accountable].” With LuLaRich, he adds, “we hope that other states are inspired to look at what Washington did and decide whether or not they believe that justice should be served for their constituents.”
Social media channels led LuLaRoe to grow rapidly. And LuLaRich’s filmmakers are hoping that the same platform can help spread the reverse message after their docuseries reaches audiences.
“Social media plays such a huge part in this,” says Stern. “LuLaRoe became what it did because it went viral. People—women especially—were drawn in because it was promoted as a safe community, and a place where women could support women…they constructed a message that was really appealing to women, with these good buzzwords and these messages. But then they realized what it was, and that they were being gaslit by people they trusted. It was really difficult for them to parse out the real versus what wasn’t true.”