FTC Asks: If Treatments Affect Price, Should You Disclose?

June 7, 1999

FTC Asks: If Treatments Affect Price, Should You Disclose?

LAS VEGAS - This week, the Federal Trade Commission will publish a proposed change to the Guides for the Jewelry, Precious Metals and Pewter Industries stating the failure to disclosure diamond laser drilling is an unfair and deceptive trade practice. It will also accept comments on the proposal until July 9. The FTC made the announcement at the JCK International Jewelry Show today.

In the 1996 revision to the Guides, lasering was among the trade practices exempt from disclosure, a controversial decision. The FTC reasoned that lasering is a permanent process that does not require special care and would cause no harm to consumers.

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

The FTC is also asking 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, do not have to be disclosed because the treatment is permanent with no special care requirements. But if a heat-treated ruby's price is lower than a non-treated ruby, the FTC wonders if it should require disclosure of that treatment to consumers. The FTC is also asking the industry and public to name other permanent gemstone treatments that create price disparity, and asks if consumers can detect such treatments reasonably.

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

The FTC made a tentative decision to amend the Guides on lasering, but it will post notice of this proposed change, as well as a call for comments about changing the gemstone guides, on the Federal Register for 30 days for public comment. To comment, write jewelry@ftc.gov or Secretary FTC, 600 Pennsylvania Ave., NW, Room H-159, Washington, DC 20580.

- by Peggy Jo Donahue