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September 1999


Growing Up

The jewelry industry has this incredible knack for tying itself into knots looking for complicated solutions to simple problems. The latest example is the hue and cry over how to disclose Lazare Kaplan International's GE POL-processed diamonds.

The lawyers I've spoken with seem surprised by the controversy. To them, it's a simple matter of jewelers' obligation to disclose material facts under all states' consumer protection laws. As our Managing/Legal Issues story explains on page 130, a material fact is one that would reasonably have an impact on a consumer's decision to buy. And what consumer wouldn't want to know his D color diamond used to be H color? Or that such a process exists but scientists haven't figured out yet how to detect it.

Besides the fact such diamonds cost less than comparable unprocessed ones, many consumers believe diamonds come out of the ground the same color they see in the showcase. They may accept color alteration if it's explained, but it's not widely known such alteration is even possible. Therein, I think, lies the problem for the jewelry industry. The fact a diamond's color is alterable strikes fear in the hearts of jewelers. The industry relies on the almost magical belief among many consumers that gems, especially diamonds, are natural rarities untouched by human processes. That this hasn't been true for most gems for many years doesn't matter. Consumers continue to believe it – and the industry by and large is loathe to change this perception.

Many jewelers carefully honor the FTC Guides for the Jewelry Industry, which currently say sellers need not reveal permanent gem treatments that don't require special care. For example, they believe it's unnecessary to reveal most rubies are heat-treated. But if you apply the concept of materiality, most consumers would consider such heating a material fact and could take you to court for not revealing it, regardless of the FTC Guides. Why would a consumer do this, even after learning a comparable unheated ruby would cost more than his yearly salary? Because he believed the ruby came out of the ground that color. This simple belief is what makes a consumer feel betrayed when he finds out it's not true.

I do believe price-sensitive consumers will readily accept that their gems required human intervention. Many jewelers who have routinely disclosed treatments for years back me up. But the transition period, when consumers are first widely told these facts, will be challenging. It's a bit like when, as youngsters, it dawns on us what our parents had to do to bring us into this world. Our first reaction? Probably horror, then disgust. After a while, however, we grow up and learn the "process" is actually pretty swell and one that resulted in a beautiful product! So don't be afraid to let consumers grow up. It's time they learned the facts of life.

– by Peggy Jo Donahue

Copyright © 1999 by Bond Communications.


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