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FTC Issues Warnings to Synthetics Sellers

Apr 3, 2019 6:20 AM   By Rapaport News
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 The US Federal Trade Commission (FTC) has sent letters to eight companies selling lab-grown or simulated diamonds, warning that their marketing violates the government’s recently issued guidelines.

Some of the companies’ advertising may be deceptive to consumers, the FTC noted in the letters. In some cases their marketing implied that a simulated diamond, such as cubic zirconia or lab-grown moissanite, was in fact synthetic or mined diamond, the commission said. In other cases, the companies implied that a lab-grown diamond was natural, it added.

The FTC cautioned the companies — whose details were not released — not to use the name of any precious stone, including diamonds, to describe a simulated or lab-grown stone, unless the name is immediately preceded by a “clear and conspicuous disclosure that the product is not a mined stone.”

It also advises companies selling diamond simulants to avoid describing their products in a way that may falsely imply they have the same optical, physical and chemical properties of mined diamonds. In July, the FTC revised its guidelines, including its definition of a diamond, from which it dropped the word natural, noting that lab-grown stones have the same properties as a mined diamond. However, the chemical makeup of simulants is completely different.

In addition, the consumer watchdog has issued warnings against using claims such as “eco-friendly,” “eco-conscious” or “sustainable” without qualification, noting that these terms can be misinterpreted to imply certain specific environmental benefits. Sellers need to have a reasonable basis for making these statements, the FTC said, explaining that such claims are difficult to substantiate.

Within 10 days of receiving the letter, all companies are required to advise the FTC how they plan to revise their marketing so that it falls in line with the current guidelines. Failure to respond or meet the regulations could result in enforcement actions or civil penalties from the FTC.

The warning emphasizes the FTC’s intention to enforce its guidelines, the Diamond Producers Association (DPA) noted.

“The DPA welcomes the FTC’s warning to synthetic diamond manufacturers against misleading consumers with their marketing tactics,” it said in a statement to Rapaport News Wednesday. “This warning is an important step toward transparency and consumer protection.”

Image: A woman wearing a simulated-diamond necklace. (Shutterstock)
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Tags: federal trade commission, ftc, FTC guidelines, lab-grown, Rapaport News, sustainable
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