Fallout From Formaldehyde Scandal Continues For Lumber Liquidators

A lawmaker is calling for an investigation while the company's stocks have tumbled and they've bowed out of several public appearances.

Mnet 120026 Lumberpic

Sen. Bill Nelson (D-Florida) is urging a federal investigation of Lumber Liquidators after a news report last Sunday showed how the company has been selling Chinese-manufactured flooring with higher-than-acceptable levels of formaldehyde.

The senator sent a letter to several federal agencies asking for the flooring to be independently tested. He also wants an investigation into whether or not Lumber Liquidators made false marketing claims.

“Because this could affect millions of homeowners, it’s imperative that we get some answers quickly,” Nelson wrote.

Meanwhile, the company’s shares had tumbled 12.6 percent by Wednesday afternoon. And at least one attorney’s office announced it’s investigating a possible class action law suit into the company.

The company has also pulled out of scheduled appearances at conferences scheduled for later this month.   

The firestorm started when the “60 Minutes” report claimed it had tested hundreds of pieces of Lumber Liquidators’ laminate flooring and found it to be above California’s regulated “safe” level for formaldehyde. When inhaled, the toxic chemical can cause respiratory problems, aggravate asthma symptoms, and is a known human carcinogen.

Not only that, the secretly filmed videos showed how one of Lumber Liquidators’ Chinese manufacturers was labeling their flooring as “CARB Phase-2” compliant with chemical regulations — even though the factory manager admitted he knew they weren’t compliant. The factory manager said the flooring could be made with a lower level of chemicals, but that it would cost more. The admission has raised questions about whether or not Lumber Liquidators knew the flooring it’s been selling was not compliant.

Formaldehyde is present in the glues used to bind the wood particles together in flooring.

In the “60 Minutes” segment, the CEO of Lumber Liquidators promised a swift investigation into the Chinese mills producing their flooring. But it’s clear the damage has already been done.

According to one report, laminates account for 19 percent of the company’s business and 55 percent of that comes from China. Because of the safety concerns now associated with Chinese manufacturing flooring, some are expecting the laminate flooring market to take a hit.

One analyst predicted that the decline in Chinese-sourced laminate in the next quarter could be in the double digits. But she says that decline could be offset somewhat by increased demand for flooring sourced in North America. 

More in Operations