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August 1999

Professional Jeweler:In the Industry

FTC: If Treatments Affect Price, Should You Disclose?

Arguing that treatments lower diamond prices, the FTC proposes changes to the Guides for the Jewelry Industry

The Federal Trade Commission in June published a proposed change to the Guides for the Jewelry Industrystating the failure to disclosure diamond laser drilling is an unfair and deceptive trade practice. The industry was given until July 9 to comment on the proposal.

The issue has been debated since the FTC published a revision to the Guides in 1996 and listed lasering among the trade practices exempt from disclosure. At that time, the FTC reasoned that lasering is a permanent process that doesn't require special care and would cause no harm to consumers.

Now a pricing issue has prompted the FTC to take another look at lasering. Because a lasered diamond is less expensive than an untreated one, a consumer could pay more than fair market value for an undisclosed laser-drilled diamond.

Question on Permanent Treatments
The FTC also asked for comment on whether it should change its policy on disclosure of other gemstones with permanent treatments that cause a decrease in the market price of the gem. Heat-treated rubies, for example, don't have to be disclosed because the treatment is permanent and has no special care requirements.

However, if a heat-treated ruby costs less than a non-treated ruby, the FTC wonders whether it should require disclosure of that treatment to consumers. Additionally, the FTC asked the industry and public to name other permanent gemstone treatments that create price disparity and whether consumers can detect such treatments reasonably.

JVC Petition
This latest FTC action was spurred by a petition from the Jewelers Vigilance Committee, filed in December 1998, that cites consensus among 17 industry groups that lasering should be disclosed. The industry has adopted policies requiring disclosure at all levels of sale, including to consumers, the petition says. JVC also notes that improved technology has made it increasingly difficult for consumers to detect the process, especially when diamonds are mounted in jewelry. Because laser drilling is performed commonly on smaller diamonds that normally lack grading reports, it often goes undetected.

Copyright © 1999 by Bond Communications.


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