This happens mainly when the fabric is not set to the embroidery frame correctly or the upper thread is too tight.

• Improper backing material (stabilizer) is put on the fabric. 
  Thick stabilizer has to be used for elastic or thin fabric.

One Point Advice   Fabrics and stabilizer material for embroidery 

• The fabric has to be set to the frame tight enough.

One Point Advice   Embroidery 

• Decrease the upper thread tension manually to the basic thread tension setting or less.