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Sellers are Responsible for Diamond Authentication
Rapaport Certification Conference Tackles Synthetics
Jun 25, 2014 9:00 AM
By Rapaport News
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RAPAPORT... The annual Rapaport Certification Conference that took place at the JCK Las Vegas show highlighted that jewelers are responsible for the authenticity of the diamonds they’re selling.
“Jewelers have the first line of responsibility for the product they sell,” explained Cecelia Gardner, the president and CEO of the Jeweler’s Vigilance Committee (JVC). “Everyone in the pipeline has a responsibility to the purchaser for their product, and they cannot pass along that responsibility just because they’re relying on a third party [grading report] presentation.”
Saville Stern, the chief operating officer of RapNet, Rapaport’s diamond trading network, who moderated the discussion, posed the question regarding who is responsible when a consumer claims that the diamond they bought was not disclosed as a synthetic stone.
Gardner stressed that according to the U.S. Federal Trade Commission (FTC), when a product is described as a diamond, it is assumed to be a natural diamond. Additional language is required to describe the stone as man-made, with acceptable terms including lab-grown, lab-created, lab-manufactured or synthetic diamond.
She reported that the majority of complaints that the JVC receives in this category are, in fact, not sellers passing off man-made diamonds as natural, but people selling glass or cubic zirconium as a lab-grown diamond, in an attempt to raise the price of the sale.
Still, Gardner stressed that a person who sells a synthetic diamond without disclosing that it’s man-made has engaged in a deceptive trade practice regardless of the size of the diamond. She added that the same applies to not disclosing if a diamond has been treated for color enhancements. James Shigley, a research fellow at the Gemological Institute of America (GIA), asserted that all synthetic diamonds can be detected but he noted that treatments to improve the color of a diamond present a greater challenge because they exist in greater frequency.
Sabyasachi Ray of India’s Gem & Jewellery Export Promotion Council (GJEPC) asserted that the industry may be overreacting to the synthetics issue since they represent a very small portion of the market. Even though panelists acknowledged the small size of the market, most agreed that it’s not an issue the industry can ignore.
A diamond appraiser in the audience noted that consumers are generally not concerned about synthetics when having their diamond appraised. Rather, she explained that they’re concerned with having the most accurate grading of the diamond. “Consumers want to make sure that the grading report matches the diamond they have,” she added.
Stern extended the question to clarify who is responsible if you falsely sell a diamond as a higher color or clarity grade.
Gardner explained that the law acknowledges that subjectivity is built into the process of grading a diamond since assessing color and clarity requires a human element. Therefore, a one grade variance is generally allowed before an argument is posed about the discrepancy being purposeful. “If you have a three-to-five grade variance, I would say there is a real case of intent,” she said.
Regardless, panelists stressed that it is the duty of the seller to know their product, particularly jewelers. “Saying ‘I don’t know’ is not sufficient,” Gardner said. “Given today’s reality, jewelry retailers have to exert a quality control program to protect them from engaging in a deceptive trade practice. The same applies to everyone else in the trade too.”
GIA Strengthens Dominance on RapNet
As the value of diamonds available on RapNet continues to rise, the GIA has increased its dominance on the trading platform, according to Stern.
He reported that of the over 1 million diamonds listed daily on RapNet in May 2014, 69 percent had GIA grading reports, while 8 percent had International Gemological Institute (IGI) reports, 7 percent were uncertified and the remainder was from other labs including EGL Israel, EGL USA and HRD Antwerp. He added that while the number of diamonds graded by IGI and HRD Antwerp has increased in the past three years, the GIA was the only lab to increase its share of the RapNet market.
Regarding the diverse prices that the various labs are achieving, Stern assessed the average asking price of diamonds in the D to M, IF to SI3, and VG-plus category listed on RapNet. Within the 1-carat size category, the data showed that diamonds graded by AGS were priced at a 7 percent average premium to GIA, while goods graded by HRD Antwerp were priced at a 9 percent discount. Diamonds graded by IGI were listed at a 13 percent discount to the GIA price for the equivalent stone. Uncertified goods in the same category were priced at a 20 percent discount to the GIA, while diamonds graded by EGL USA were priced at an average discount of 30 percent, EGL Israel at a 34 percent discount and EGL Hong Kong at a 42 percent discount to the GIA graded stone.
Written by Avi Krawitz
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Tags:
Avi Krawitz, certification panel discussion, diamonds, GIA, JVC, Rapaport, Rapaport News, Synthetic diamonds
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