Lumber Liquidators And Fraud: Why Quality Matters

In the recent weeks, there has been a bit of controversy surrounding Lumber Liquidators and the quality of their materials. The name of the company sounds familiar. They have been supplying materials to many hardwood floor specialists in the area for years. Recently, "60 Minutes"  called some of Lumber Liquidators' suppliers into question. We here at Plus Hardwood Flooring take our ethics very seriously. We make sure to to vet our supply chain in order to make sure that the materials we use are up to par with our standards. Read on to hear our take on the recent controversy surrounding Lumber Liquidators.

Bloomberg's Matt Townsend writes,

Xuhua Zhou, who had dropped out of UCLA’s doctoral program in finance and became an individual investor, took an interest in Lumber Liquidators about two years ago. After seeing a surge in the company’s gross profit margin, Zhou learned that it sourced some products from China. That raised his suspicions that safety might have been skirted in pursuit of lower costs, he said in an interview.

A massive spike in profits over the course of two years is what caused all of the attention Lumber Liquidators is getting. The flooring business has notoriously tight margins, and if these allegations are true, it's immediately apparent why this happened - greed. Lumber Liquidators was apparently saving upwards of 10% by using laminate flooring that had unacceptable levels of formaldehyde in them which would have led to the incredible profit increase. This, in turn, led to a stock price that many on Wall Street called overvalued for a long time.

It turned out that Lumber Liquidators' laminate flooring contained traces of formaldehyde which is known cancer causing material. A "60 Minutes" piece aired on March 1, 2015 and showed that some of the linoleum tested from Lumber Liquidators contained up to 20 times the legal amount of formaldehyde allowed in California. It is believed that the glue used on the laminate wood flooring is what is leading to the increased amounts of formaldehyde.

This is deeply troubling on various levels. A homeowner should not have to worry about whether or not the supplies they are using are hurting them physically over the long term. If the allegations are true, then it's a disgusting business practice. It's no wonder that Lumber Liquidators' pricing has always been extremely cut throat throughout the industry. They've always argued that it was simply because of lack of overhead and immense volume, but these allegations speak to the contrary.

This story was deeply troubling because of how ubiquitous Lumber Liquidators is. Many people have heard the name and seen the ads. They operate in 46 states and thousands of American homes use their products every year. The fact that a company many people trusted for so long would allow for something this egregious to happen right under they nose is worrisome. Whether these oversights were greed fueled or not is no excuse for the amount of cancer-causing agents found in Lumber Liquidators' materials.

The age old saying remains true, "You get what you pay for". If it's cheap, you have to ask yourself why.