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A Defining Moment for Lab-Grown Diamonds

The FTC’s new definition of diamond has little practical significance, but huge symbolism.

Jul 31, 2018 5:24 AM   By Joshua Freedman
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RAPAPORT... When is a diamond a diamond, and does it matter? Those were two key questions that emerged from the wide-ranging changes the Federal Trade Commission (FTC) made to its jewelry guidelines last week. In that update, the US consumer agency amended its definition of a diamond, removing the word “natural,” thereby giving synthetics suppliers ammunition when arguing that their products are the real deal.

That change, on a basic level, is largely academic. It remains prohibited to sell synthetics just as “diamonds,” Sara Yood, senior counsel at the Jewelers Vigilance Committee (JVC), explained.

“The use of the unqualified term ‘diamond’ still refers to a natural diamond,” Yood said in a statement Thursday. As before, marketers must still use a word or phrase such as “laboratory-grown” to clarify that their products are not from a mine, though the FTC advises against the term “cultured” without an additional qualifying word. Furthermore, the rules only permit the use of words such as “real” and “genuine” for mined diamonds. (See the JVC’s full interpretation of the guidelines here.)

“In a practical sense, not much changes for the trade,” said Reuven Kaufman, president of the Diamond Dealers Club of New York. “If a product is sold as a ‘diamond,’ without other qualifying language, it still must be a natural diamond.”

Even so, the new definition has much symbolic significance. Lab-grown diamond manufacturers will almost certainly use the amendments for marketing purposes, now that they can tell consumers that their stones are diamonds even if they’re not from the ground.

The new guidelines “have created confusion and misunderstanding as they redefine the word ‘diamond’ to include synthetic, man-made, non-natural, artificial, imitation diamonds,” Martin Rapaport, Chairman of the Rapaport Group, said in a trade alert Monday.

Those stones might have “essentially the same optical, physical and chemical properties as mined diamonds.” But the FTC’s decision is based merely on diamonds’ physical properties, rather than on “scarcity and value differentiation,” Rapaport added.

Standard deviation

The move could force the trade to rethink its current positions. The FTC is now at odds with the International Organization for Standardization (ISO), which in 2015 defined the mineral as being “created by nature,” stating that “the denomination ‘diamond’ without further specification always implies ‘natural diamond.’” The new delineation also conflicts with that of the Blue Book, the set of industry standards the World Jewelry Confederation (CIBJO) publishes, and with the “Diamond Terminology Guideline” that nine natural-diamond organizations published in January.

None of the members of the technical committee responsible for the ISO’s treatment of jewelry and precious metals has asked for a review of its standards yet, a spokesperson for the organization said Saturday. However, CIBJO may need to amend its Blue Book — which acted as the basis for the ISO’s standard — in light of the FTC’s decision, according to Gaetano Cavalieri, president of CIBJO. The confederation’s diamond commission will discuss whether its characterization of the mineral is still valid at its October congress in Bogota, Colombia, Cavalieri added.

“Clearly [the congress] session will be among the most important conducted in recent memory,” he said.

Growing confidence

Lab-grown diamond companies, on the other hand, welcomed the FTC’s changes. They also had other wins, such as new permission to use a wider range of terms to describe lab-grown diamonds than before, as well as the commission removing “synthetic” from its list of recommended adjectives.

Members of that sector have long criticized the ISO’s definition of diamond, claiming it only served the natural industry.

“Removing the word ‘natural’ [from the FTC definition]…legally clarified what we produce: diamond, identical to a naturally occurring diamond,” said Tom Chatham, CEO of Chatham Created Gems & Diamonds.

The FTC’s previous guidelines, which it wrote in 1956, didn’t make sense anymore, lab-grown diamond manufacturer Diamond Foundry argued in comments during the FTC’s review process. The commission agreed, explaining that mining was no longer the only way of producing diamonds. Martin Roscheisen, CEO of Diamond Foundry, hopes the change will be a “call to action” for the ISO.

“We are presently reviewing how to champion change in regard to the ISO,” he added.

Emotional battle

Synthetics makers are mainly acting on principle, as full disclosure is still obligatory by all standards. However, their endeavors show the emotional importance of the FTC’s decision, even if the practical implications remain the same.

“To equate a natural diamond with a synthetic stone, irrespective of how they were sourced, is akin to saying that an original Rembrandt is the same as a forgery, simply because they both physically are paintings,” said Cavalieri. “Just as that would clearly be unacceptable, so should be likening diamonds sourced in nature to those mass-produced in a factory.”

The dispute over what defines a diamond, while theoretical on the surface, goes to the heart of the debate, as it represents a turf war between the two sides.

Image: Diamond Foundry
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