LuLaRoe Class Action Says Sales Tax Illegally Charged to N.Y. Customers

A New York customer’s class action lawsuit says that LuLaRoe unlawfully charges sales tax on clothing sold for under $110 in violation of state law.

Plaintiff Lauren Porsch says she made purchases from LuLaRoe, and had them shipped to her New York City home.

The LuLaRoe class action lawsuit claims that Porsch was unlawfully charged sales tax on 13 remote purchases she made, which totaled $50.63, or seven percent more than the law allows retailers to collect.

Porsch says that the company knew or should have known that it was violating New York law by charging consumers sales tax on item priced under $110, but did it nonetheless.

The LuLaRoe class action lawsuit aims to represent a Class of consumers in New York who were charged sales tax in jurisdiction in which they should not have been charged sales tax.

Porsch claims that she was financially injured by LuLaRoe’s policy of charging sales tax unlawfully, because had the company complied with the laws, she would not have had to pay as much for her clothing.

Allegedly, consumers were not warned that they would be charged sales tax in states that do not require consumers to pay sales tax.

The LuLaRoe taxation class action lawsuit claims that if a customer questioned the company’s tax policy, LuLaRoe “perpetuated its deceptive practice by either falsely advising the customer that the tax was proper and lawful or directing the injury to the retailers for them to perpetuate LuLaRoe’s deceptive practice.”

The New York LuLaRoe clothing tax class action lawsuit says that LuLaRoe charged consumers taxes inappropriately between April 2016 and June 2017.

Reportedly, these practices started occurring after the company changed its point of sale system to the Audrey system in 2015.

Porsch says that the system was implemented because it supposedly could help the company better track its taxes.

However, Audrey allegedly calculated sales tax in each purchase even if a customer did not pay the sales tax on a transaction, a calculation that caused the company to overpay on sales tax.

To offset this loss, the company reportedly charged sales tax based on retailer location and not based on consumer location, though this was not legal.

The LuLaRoe sales tax class action lawsuit claims that the company later sent out a memo falsely saying that this was legal, in an attempt to fight back against pushback it was receiving over the policy.

This LuLaRoe class action lawsuit follows a similar one filed by an Alaskan customer in September which alleges the clothing retailer also charges sales tax in tax-free jurisdictions of Alaska.

Porsch is represented by E. David Hoskins of The Law Office of E. David Hoskins LLC and by R. Bruce Carlson, Kelly K. Iverson, and Kevin W. Tucker of Carlson Lynch Sweet Kilpela & Carpenter LLP.

The New York LuLaRoe Clothing Sales Tax Class Action Lawsuit is Lauren Porsch v. LLR Inc., et al., Case No. 1:18-cv-09312, in the U.S. District Court for the Southern District of New York.