In a troubling development for the vibrant leggings retailer, LulaRoe finds itself embroiled in a federal class action lawsuit concerning alleged improper sales tax charges. According to the lawsuit, some customers have been charged sales tax in states where clothing sales are exempt.
While most states impose some form of sales tax, several states—including Massachusetts, New Jersey, and New York—offer exemptions on clothing purchases. When shopping online, sales tax is only applicable if the consumer resides in a state that enforces such a tax. However, the lawsuit claims that LulaRoe’s independent consultants utilize a proprietary point-of-sale system named Audrey. This system automatically calculates sales tax based on the consultant’s location rather than the customer’s shipping address.
The legal complaint asserts that LulaRoe’s method of charging sales tax amounts to an unjust and potentially fraudulent surcharge, which is hidden as a non-existent “sales tax.” As a result, customers often discover these overcharges only after receiving an invoice from Audrey. The plaintiff, a Pennsylvania resident, reported being charged $35.16 in sales tax for a dozen LulaRoe items, despite Pennsylvania’s exemption on clothing sales.
One of the attorneys representing the plaintiff indicated that many consumers purchase from out-of-state consultants, which could lead to significant damages. In response, a representative from LulaRoe stated, “We are fully aware of this issue and have invested significant resources to address it.” The company claims that refunds have been issued to affected customers who identified their correct locations.
The lawsuit also points out shortcomings in the “Audrey” system, noting that consultants lack the ability to adjust the sales tax applied to transactions. Instead, the system is designed to charge tax based on the consultant’s location. This practice contradicts CEO Mark Stidham’s earlier comments about aligning with tax compliance.
Adding to the company’s challenges, the Better Business Bureau has assigned LulaRoe an F rating, citing numerous customer complaints regarding product quality and customer service responsiveness. The BBB has previously reached out to the company, seeking cooperation to address these ongoing issues, but has received no response.
In a world where consumers are becoming increasingly aware of their rights, it’s essential to stay informed. For those considering home insemination, resources like this home insemination kit and this excellent guide on IVF can provide valuable insights. Furthermore, if you’re looking for unique recipes, check out this dessert pizza for a fun cooking adventure!
In summary, LulaRoe faces a serious lawsuit over questionable sales tax practices, which could have far-reaching implications for its independent consultants and customers alike. With an F rating from the Better Business Bureau and numerous complaints about quality and service, the company finds itself in a precarious position.