Lumber Liquidators’ Offer To Do Indoor Air Quality Testing Appears To Be A Sham by Whitney Tilson, Seeking Alpha.

Since the 60 Minutes story aired on March 1st, Lumber Liquidators hasn’t taken many basic, obvious steps that I think any honest and reputable company would, including:

a) Stop selling the Chinese-made laminate flooring in question (even if it doubted the validity of the testing 60 Minutes did, why take any chances with customers’ health and the company’s reputation, not to mention future liabilities?);

b) Offer a full refund to any customers who wanted to return unopened product;

c) Set up a Special Committee of the board, made up of independent directors, to oversee a full investigation, likely led by an experienced law firm; and

d) Hire an independent firm to do a wide range of testing, not just of Chinese-made laminate, but all of the company’s products.

This isn’t rocket science – it’s Crisis Management 101. Yet Lumber Liquidators hasn’t done a single one of these things.

However, at least at first glance, Lumber Liquidators does appear to have done one thing that an honest and reputable company would: offer a free formaldehyde test to concerned customers. Here’s what the company says on its web site:

Air Quality Test KitTo reassure our customers, we are providing indoor air quality testing at no cost to qualifying customers as the fastest, most effective way to measure the total level of formaldehyde in the home. The testing is being administered and the results produced by an independent, accredited lab. The customer is in control of the process, with clear instructions on the test and its results. We will conduct an in-depth evaluation of air quality and potential formaldehyde sources for any customer whose results are inconclusive or above established thresholds. Our customer care team will work with our valued customers throughout the process.

The home test kits are being provided as a step for customers with our laminate floors to help reassure them that their floor as installed is safe. Please fill out the form found at the link below to determine if your floor qualifies for the free test kit. If your floor does qualify, you will be walked through the process of ordering the test via an independent lab.

Lumber Liquidators’ customers are taking the company up on this offer in droves: on April 2nd, it reported that about 10,000 customers had requested air quality test kits. (Click here to see what customers receive and here to see the typo-ridden web page the lab set up to answer frequently asked questions.)

This all sounds great so, at least in this way, Lumber Liquidators is doing the right thing, right? Not so fast… Two recent lawsuits (click here and here) filed by Hagens Berman and Robertson & Associates charge that the indoor air quality testing program that Lumber Liquidators’ is offering anyone who bought its Chinese-made laminate is a total sham.

This came as little surprise to me, as I’ve spoken with numerous people in the industry and, without exception, they tell me that Lumber Liquidators is a notorious bad actor: cutting corners at every opportunity, selling very low-quality products and then not standing behind them, treating customers, installers and employees badly, and, most damningly, not being serious about compliance.

While I wasn’t surprised to learn that Lumber Liquidators’ testing program is a sham, the details were nevertheless shocking. This company’s brazenness and depravity appear to know no bounds.

The primary charges of the Robertson lawsuit are:

  1. To conduct the testing, Lumber Liquidators hired Pure Air Control Services (PACS) and two of its subsidiaries, Building Health Check, which sends out the test kits, and Environmental Diagnostics Laboratory (EDLab), which analyzes them. But EDLab is only certified to test for mold, not formaldehyde, and there is no evidence for Lumber Liquidators’ claim that EDLab is using other, unidentified “properly accredited laboratories”;
  2. The materials sent to customers make two false and misleading statements;
  3. PACS cannot be considered independent;
  4. PACS is doing both the sampling and the testing, which creates a conflict of interest and is contrary to industry best practices;
  5. PACS shares homeowners’ test results with Lumber Liquidators, a gross breach of confidentiality;
  6. The methodology used to collect the air samples is highly unreliable and unscientific and is likely to significantly understate the true level of formaldehyde in the air;
  7. Test results for four customers (plaintiffs in the two lawsuits) show troubling levels of formaldehyde, yet PACS told Lumber Liquidators’ customers not to worry, citing a guideline that only assumes “30-minute average concentration.”; and
  8. Even when customers, at their own expense, hired independent, qualified technicians to measure the formaldehyde in their homes, Lumber Liquidators was dismissive of the findings.

Let’s examine each of these, with a particular focus on 1), 6) and 7), which are the most damning.

1)EDLab is only certified to test for mold, not formaldehyde, and there is no evidence for Lumber Liquidators’ claim that EDLab is using other, unidentified “properly accredited laboratories.”

On its web site, Lumber Liquidators claims that its “testing is being administered and the results produced by an independent, accredited lab,” and in the materials sent to customers, EDLab claims that it is providing “AIHA Accredited Lab Analysis.” However, according to Robertson’s lawsuit:

EDLab is only accredited by AIHA LAP, LLC as an Environmental Microbiology lab. In other words, EDLab’s accreditation is limited to proficiency in testing microbiological (e.g., mold) samples and not chemicals such as formaldehyde. The proper AIHA laboratory accreditation program which qualifies a lab’s proficiency in performing chemical analysis, such as formaldehyde gas, is the Industrial Hygiene Laboratory Accreditation Program (IHLAP). EDLab does not have an IHLAP accreditation.

This is important, Alexander Robertson told me, because “it’s like going to a dermatologist to do brain surgery.”

The New York Times ran a story on Saturday about the Robertson lawsuit and, when the reporter asked EDLab and Lumber Liquidators for comment about the accreditation issue, here was the reply:

Alan Wozniak, the president of Pure Air Control Services, the parent company of the labs named in the lawsuit, declined to comment. A spokesman for Lumber Liquidators, Lou Colasuonno, said that Environmental Diagnostics Laboratory (EDLab), a subsidiary of Pure Air Control Services named in the suit, used properly accredited laboratories to conduct its testing.

In others words, EDLab’s parent company had no comment, but Lumber Liquidators, while not disputing that EDLab isn’t accredited, is saying not to worry because EDLab is farming out the testing to other, unidentified “properly accredited laboratories.”

Ha! I have trouble believing that this is anything other than yet another case of Lumber Liquidators blatantly lying to cover up its misdeeds, since every piece of evidence points to EDLab doing the testing, and there is no evidence whatsoever of other labs. Consider the following evidence:

  1. a) The lab reports say EDLab on the letterhead, and there is no mention of another lab (click here to see two lab reports EDLab sent to Lumber Liquidators’ customers, including one to a named plaintiff in the Robertson case, Patty Cottington).
  2. b) Both the packaging and the instructions sent with the “Bio-Badge” device state, “World Class Analysis Provided by EDLab.” Click here to see what Ms. Cottington received.
  3. c) Go to indoorairtest.com to see all of the test kits EDLab
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