For Your Staff: Selling Treated Gemstones
Disclosing GE POL
You can do the job positively, whether you're selling a
GE POL diamond or simply informing all diamond customers about
this currently undetectable process
The announcement in March that a secret and as yet undetectable
process is being used to whiten a small number of diamonds presents
a new challenge to retailers. How can you disclose this process
to customers when the trade doesn't know what it entails?
In truth, you can protect your store and your customer by disclosing
positively even while details of the process remain unknown.
Pegasus Overseas Limited, a subsidiary of Lazare Kaplan International
Inc., both of New York City, distributes the color altered
diamonds under an exclusive agreement with General Electric,
which developed and owns the technology behind the process. The
whitening is being referred to as a process and not a treatment
because it differs from traditional treatments such as lasering
or irradiating, the company says. LKI also says the process is
irreversible and non detectable.
The Gemological Institute of America is studying the diamonds
for identifying features and can't confirm or deny LKI's assertions
at this time. However, GIA persuaded LKI that to discourage fraud,
it should send each processed diamond to the GIA Gem Trade Laboratory
for a laser inscription (GE POL) on the girdle. GIA also logs
into its database each GE POL diamond's identifying features.
However, reports have surfaced in the U.S. and abroad that
some of the GE POL diamonds have had the inscription partially
or completely polished off. As a result, it's possible a GE POL
diamond could make its way to your showcase and you wouldn't
be able to detect it by checking for the inscription.
If you sell a GE POL diamond without discussing the process
with a consumer and GIA eventually develops a way to detect the
process, the consumer could sue you. You have no way to be sure
your diamonds haven't been through the GE POL process, so it's
safest to discuss the process with all diamond customers. The
box on p. 201 explains one way to do this. The same caution applies
to retailers who choose to offer GE POL diamonds because so far
they're selling for about 15% less than similar unprocessed ones
(though LKI is trying to sell them at no reduction).
Introducing GE POL Processed Diamonds
LKI suggests that the whitening process could appeal to the
curiosity of customers with a high tech background. Here
is a product from the earth that scientists have been able to
fine tune by eliminating less desirable
brownish tones in a highly sophisticated way. You can emphasize
rarity because not only are diamonds rare themselves, the whitening
process works on only a small number of diamonds.
You also might consider showing your customer two natural
diamonds of like color: one GE POL, one not.
Show the diamond's girdle under magnification so the customer
can read the GE POL inscription. Then show the GIA report that
accompanies each GE POL diamond and describes the laser inscription.
Write the same information on the sales invoice and ask the customer
to sign it.
If the customer wants to know how GE whitens diamonds, simply
explain GE doesn't reveal this information to prevent other diamond
manufacturers from copying it. GE's stance angers gemologists,
appraisers and gem labs, but it's much less likely to offend
consumers. They understand many products are made using proprietary
LKI says GE POL diamonds require no special care or handling.
But if the diamond is being recut, be sure the inscription is
not removed. After recutting, send the diamond to GIA for a new
report, even if the inscription remains intact.
Other Legal Considerations
Even though GE and LKI say the GE POL process is permanent
and undetectable, it's still wise for you to disclose that such
a process exists to all diamond customers. Certain state consumer
laws allow customers to sue if they feel you did not disclose
material facts about a gemstone. If it became known later you
sold a color altered diamond without disclosing it, this
qualifies as a material fact.
Even more importantly, not knowing whether a diamond underwent
the GE POL process is not a legitimate defense. If you can't
prove a diamond was not subjected to the GE POL process
and you can't at this time you are obliged to explain
the process because you know it exists. This knowledge itself
is a material fact.
Here is what the FTC Guides say about disclosure relating
to gemstones: "It is unfair or deceptive to fail to disclose
that a gemstone has been treated in any manner that is not permanent
or that creates special care requirements, and to fail to disclose
that the treatment is not permanent, if such is the case. The
following are examples of treatments that should be disclosed
because they usually are not permanent or create special care
requirements: coating, impregnation, irradiating, heating, use
of nuclear bombardment, application of colored or colorless oil
or epoxy like resins, wax, plastic, or glass, surface diffusion,
or dyeing. This disclosure may be made at the point of sale,
except that disclosure should be made in any solicitation where
the product can be purchased without viewing (e.g., direct mail
catalogs, on line services), and in the case of televised
shopping programs, on the air. If special care requirements for
a gemstone arise because the gemstone has been treated, it is
recommended that the seller disclose the special care requirements
to the purchaser."
[Editor's Note: At press time, the FTC was reviewing this
paragraph and proposing that sellers be required to reveal any
enhancement that changes the value of a gem. If this goes into
effect, the FTC Guides would require disclosure of the GE POL
process because the few GE POL diamonds in the marketplace so
far sell at prices below those of similar ones that haven't undergone
the GE POL process.]
Disclosing GE POL to All Diamond Buyers
Until gemologists can detect the GE POL process by means other
than the inscribed girdle, retailers should protect themselves
with a general disclosure on all diamond sales. The disclosure
would state that gemologically undetectable diamond processes
such as GE POL exist.
This can protect your reputation from possible damage in case
a diamond you sold as unaltered is identified later as having
gone through the GE POL process or any process
that altered its appearance.
It also could help to avert a lawsuit in which a consumer
charges you failed to disclose material facts as required under
state consumer protection laws. Courts have defined "material"
as any fact that would reasonably affect a consumer's decision
to buy. An undetectable color enhancing process qualifies
as a material fact (see Professional Jeweler, September 1999,
p. 130 for a full discussion of material facts).
Here's a sample of how a disclosure might read:
Though extremely rare, there are a few diamonds that have
had their color whitened by a technologically sophisticated process
developed by General Electric. Our store pledges never to sell
a diamond that has undergone the GE POL process
or any other process that alters its color without
full disclosure because we recognize you trust us to be honest.
We are careful to examine the diamonds in our store so we
can assure you they haven't been altered or discuss
it with you if they have been altered. But there is a remote
possibility a diamond could enter our inventory with an alteration
we can't detect gemologically.
If gemological detection becomes possible and you're unsure
about a diamond you bought here, our trained gemologist can examine
it or send it to a gem laboratory for independent verification.
If we sold the diamond as unaltered and it's found to be altered,
we'll refund your money or replace the diamond with an unaltered
by Robert Weldon, G.G.
||This 1.16 ct. diamond with VVS2 clarity
received a color grade of E after the GE POL process; it reportedly
started out a much lower color. Courtesy of Lazare Kaplan International
and Pegasus Overseas Ltd., New York City.
|The GE POL laser inscription (in white rectangle)
on the faceted girdle.
Copyright © 1999 by Bond Communications.