Rapaport Magazine

Know the rules

The US guidelines for jewelry disclosure can be complex and confusing. Here are some of the basics to help you present your products properly and protect your business from legal action.

By Tiffany Stevens

Transparent disclosure of goods should remain a top priority for the global trade and be an active part of your day-to-day jewelry business, no matter where you are in the supply chain. As technology and business realities continue to shift and change in these accelerated times, the rules regarding the words and phrases we use to describe our goods remain clear and constant. The risk of enforcement is higher than ever if a business chooses to ignore this reality.

For more than 100 years, the Jewelers Vigilance Committee (JVC) has been unwavering in its commitment to safeguard and advocate for the integrity and vitality of the US jewelry industry, as well as engage in ethics and compliance issues around the globe. As the industry’s only independent advocate, we represent the entire jewelry sector without bias. From education and guidance on such critically important subjects as anti-money laundering and intellectual property rights, to low-cost mediation that’s available to all members, to our team’s in-depth knowledge of the industry’s complex legal and regulatory landscape, the JVC’s existence is an invaluable asset to the jewelry industry at large. On matters of disclosure in the trade, we work directly with the Federal Trade Commission (FTC) and the trade itself.

The FTC’s job

The FTC, an agency of the US government, was created to protect consumers in the US market. To do this, it has formulated multiple barriers to consumer harm and confusion. There are general regulations such as its Made in USA labeling standards and its Green Guides for marketing environmentally friendly products — both of which apply to all industries in the US, including jewelry.

For a select few sectors, the FTC also issues industry-specific sets of rules that must be followed in advertising and disclosure, and jewelry is one of these special, more complicated and confusing industries. For a full explanation of the FTC Jewelry Guides with step-by-step guidance for every type of product, download our free publication at jvclegal.org/understanding-the-ftc-guidelines.

The primary goal of the Jewelry Guides is to ensure that jewelry manufacturers and sellers do not deceive or confuse the buyers of their goods. The guides cover everyone who works in the jewelry industry — including people who operate in partnerships or as corporations — at every level, such as manufacturers, suppliers, retailers and grading laboratories.

You might be wondering which products the Jewelry Guides cover. They apply to pearls and natural, laboratory-created and simulated gemstones, as well as other jewelry products. They also cover pens and pencils, flatware and hollowware, and other products made from precious metals, alloys and imitations. Articles made of pewter fall under these guidelines as well.

Among the commercial activities subject to the guides are sales, manufacturing and marketing — including advertising at all levels of the trade. The guides cover deceptive marketing and misrepresentations of product quality.

Be clear and obvious

So once the rules are established, how do they work in the real world? The FTC keeps a close watch on traditional and online advertising in the US market. When evaluating a disclosure on a piece of marketing, the FTC looks at the totality of the advertisement itself. If the disclosure is made but is very small, the FTC might not count the disclosure as done, as it is too hard to discern. There is a common-sense standard here, so trying to follow the rules in a purely technical sense without making the disclosure obvious can get your business in trouble.

Likewise, in online advertising, disclosures via hashtags must be made right up front at the beginning of the ad, not buried at the bottom of the post. The litmus test the FTC uses is: If an average American of ordinary intelligence (i.e., not someone well versed in the diamond or jewelry trade) were to see it, is it easy to understand quickly? Another criterion the FTC has cited is whether the advertisement is likely to confuse 11% or more of the average population; if so, it could be considered deceptive.

This is an extremely broad standard aimed at protecting the largest number of consumers. Jewelers would be wise to heed these guidelines and continue ensuring that all required disclosures are clear and obvious. Please remember, the standards above apply to the Jewelry Guides as well as to the Made in USA standards and the Green Guides.

Risks and revisions

The consequences for not heeding the Jewelry Guides are many: You may be sued by a competitor, you may be subject to a class-action lawsuit, you may be contacted by the JVC as part of a mediation. If the FTC decides to target you, you may be subject to hefty fines and legal action, as well as a loss of reputation if the legal action is well publicized. As the FTC has just received increased funding and staffing, and has heightened its attention to our industry after the diamond sanctions relating to Ukraine, the likelihood of FTC action is higher than ever. It’s not a risk worth taking.

Looking ahead to disclosure issues in 2023 and beyond, the Green Guides will be updated starting later this year from their last iteration in 2012. We anticipate that this revision will finally bring an actual definition of sustainability and that the JVC will be an active voice in the conversation. As these new rules will apply to all industries, we must ensure that jewelry’s priorities are heard. All things green, eco-friendly and sustainable will be the next really hot topic of disclosure for our trade.

We at the JVC spend an extraordinary amount of time, effort and strategy consistently advocating to the US government on issues of disclosure and advertising, in addition to the many other areas we cover. It is crucial that the industry and our membership actively communicate with us about business realities on the ground so we can better advocate for you. Please let us know what you see out in the marketplace that looks like a violation of existing rules, and also your thoughts on how we should continue to shape policy that applies to our trade.

Tiffany Stevens is president, CEO and general counsel of the Jewelers Vigilance Committee (JVC).

Image: Shutterstock

Article from the Rapaport Magazine - November 2022. To subscribe click here.

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