DotDotSmile, a company run by DeAnne Brady Stidham’s daughter, has filed for bankruptcy.
According to the statement, the corporation owes more than $5,600,000 in debts.
DotDotSmile announced earlier this year that it would abandon the MLM business model in favor of direct sales.
Something is being loaded.
This week, DotDotSmile, a LulaRoe subsidiary that manufactures children’s clothes, filed for Chapter 11 bankruptcy.
DotDotSmile has more than $4.4 million in assets but owes more than $5.6 million in total debts, according to the statement.
A staffing business was owing $123,689 and Mercedes-Benz was owed more than $191,915 for the purchase of a 2021 Mercedes-Benz luxury SUV, according to the bankruptcy petition.
Nicole Thompson, the daughter of Mark and DeAnne Brady Stidham, founded DotDotSmile. The children’s apparel line was also sold alongside the usual LuLaRoe assortment for adults.
LulaRoe was regarded as one of the most successful multi-level marketing organizations for years. It generated other subsidiary firms, including DotDotSmile and another clothing brand, Honey & Lace.
In 2017, however, a class-action complaint alleged that LulaRoe, which was generating $2.3 billion in yearly sales at the time, was essentially a pyramid scheme. Ultimately, the business agreed to pay a $4.75 million settlement.
However, after the issue was resolved, LulaRoe faced a slew of new difficulties. Numerous sellers began to protest about the poor quality of the leggings and dresses they were sent to sell, stating that the quality of the company’s products had significantly dropped.
A tweet from DotDotSmile (@dotdotsmile).
Combined with a modification in the company’s returns policy that made it nearly impossible for sellers to return or exchange damaged goods, these complaints severely tarnished the company’s reputation. More than 100 LulaRoe vendors included the company in its bankruptcy filings.
Fewer DotDotSmile salespeople mentioned the company in their own bankruptcy filings.
In 2021, the Better Business Bureau’s Direct Selling Self-Regulatory Council (DSSRC) cited DotDotSmile for making false earnings statements. According to the BBB, the DSSRC “found that a number of aggressive profits claims are being disseminated by a member of the Company’s salesforce” that “appear to be unsupported.”
Due to issues with its parent company LulaRoe, the children’s apparel firm notified its MLM distributors via email in May of this year that it would cease operating as an MLM as of June 30 and cease paying commissions. According to the email, the company would instead focus on wholesale and direct sales.
DotDotSmile did not react promptly to an inquiry from Insider.