Lumber Liquidators Gets Another Black Eye

Do you know where your hardwood floors come from? There’s a chance some of your household wood products were sold to you at the expense of the habitats of endangered species -- and possibly your health.

In a February 25 SEC filing, Lumber Liquidators – the largest retailer of hardwood flooring in America – admitted that the U.S. Department of Justice (DOJ) may seek criminal charges against the company for violations of the Lacey Act, a landmark conservation law that prohibits the importation of illegally sourced wood products. The DOJ investigation stems from a 2013 report published by the Environmental Investigation Agency (EIA) documenting Lumber Liquidators’ importation of “millions of square feet of oak flooring from a [Chinese] manufacturer that freely describes its own illegal logging practices” in the Russian Far East. The forests of the Russian Far East are home to the last remaining wild Siberian tigers.

Now, Lumber Liquidators’ troubles are set to increase after a recent 60 Minutes exposé revealed high levels of toxic formaldehyde, a known cancer-causing chemical, in the retailer’s Chinese laminate flooring. Hidden-camera footage, taken by investigators posing as buyers for Lumber Liquidators’ Chinese suppliers, shows the suppliers falsely certifying their product as meeting California Air Resources Board’s strict standards for formaldehyde emissions in wood flooring, the standards adopted by Congress in 2010. The footage shows Chinese management openly admitting that their product does not meet U.S. standards. According to sources profiled in the report, “hundreds of thousands” of homes across the country may have installed Lumber Liquidators laminate with illegally high levels of formaldehyde. Now do you care where your hardwood floors came from?

Following the 60 Minutes report on Sunday, Lumber Liquidators’ stock dropped on March 2 by around 25 percent, following a 26 percent plunge on February 25. Between the illegal logging and formaldehyde controversies, the company’s stock has fallen from a price of around $110 per share a year ago to just under $40 per share today. In a segment that aired on March 3, Mad Money’s Jim Cramer commented on the “drubbing” of Lumber Liquidators’ stock, adding, “I bet these guys wish they’d never heard of China.” Whitney Tilson, a hedge fund manager interviewed for the 60 Minutes story, noted that Lumber Liquidators’ unusually high profit margins between 2011 and 2013 had for a long time suggested a business engaged in illegal cost cutting.

Lumber Liquidators’ violations show how important it is that companies use legally sourced and certified wood products, both for environmental protection and for human health and safety. Thankfully, the United States, through the Lacey Act, is helping lead the fight against illegal logging. Lumber Liquidators’ legal troubles are just the most recent example of why the administration must continue to fully enforce the Lacey Act, and you can help by asking the administration to do so.