GE Requests Exemption From FTC Guides Disclosure

September 22, 1999

GE Requests Exemption From FTC Guides Disclosure

General Electric Co. asked the Federal Trade Commission to refrain from imposing disclosure requirements on currently undetectable gem alterations such as its GE POL color enhancing process.

GE's Washington, DC-based law firm made the request in a letter responding to the FTC's call for comments on proposed amendments to its Guides for the Jewelry Industry. The FTC's suggested changes would require disclosure of all gem treatments that significantly affect the value of a gemstone. At the Gemological Institute of America's International Gemological Symposium in late June, Martin Rapaport, publisher of the Rapaport Diamond Report, announced that the few GE POL stones on the market at that time were selling for about 15% less than unprocessed diamonds of comparable grade. If such price discrepancies continue, the proposed change in the Guides would affect GE POL diamonds.

In its letter, however, GE told the FTC that "it's far too early to predict whether a price differential, if any, would be 'substantial' within the meaning of the proposed new [requirements]." GE also said that "it is too early to tell ... how the marketplace will ultimately judge the value of GE-processed diamonds versus indistinguishable non-treated diamonds of the same color, brilliance and brightness."

GE cited the voluntary marking of its processed diamonds as a show of good faith about full disclosure and said the FTC already has the authority to prosecute unscrupulous sellers who try to erase the GE POL mark. "Even were such an erasure to go undetected ... a consumer would not be exposed to a 'laser-drilling' type of injury," GE said, claiming that because neither consumers nor jewelers who may buy back stones can detect the GE process as they would a laser-drilled diamond, a GE POL diamond won't cause financial loss. Thus, GE said, the usual inequity between a consumer and a knowledgeable expert doesn't exist.

"In the case of an undetectable permanent process that improves the color or brilliance of diamonds, but does not physically add to, or detract from, their [diamonds'] natural content, the absence of disclosure does not put the consumer at risk in the same way," the GE letter said.

Among GE's other revealing statements to the FTC was a description of the GE POL process, which is still a trade secret. "The process, conducted prior to final cutting and polishing of the diamond, complements the many other physical processing steps to which a diamond is customarily subjected in its transformation from a rough diamond at the mine to a finished product," the letter said. A footnote added: "There are many other processes that are performed in the manufacture of ... gem diamonds or gemstones that are taken for granted, without disclosure to the consumer. These include so-called 'green skin' removal and acid boiling in the case of diamonds ... no one in the industry is advocating routine disclosures for these types of processes, detectable or not. The GE process is much more akin to these routine manufacturing steps than to laser drilling or the other detectable treatments on which comment was requested."

Though most gemological research has leaned towards the belief that the GE process involves a high-pressure, high-temperature treatment, such a treatment could never be characterized as a complement to customary processes. Instead, this statement may lend credence to another less-popular theory that the process involves a deep-cleaning technique to reduce or eliminate microscopic amounts of oxidation or radiation stains on a diamond's skin, perhaps even in feathers and other surface-reaching fractures. (See related story.)

- by Peggy Jo Donahue