FTC Guides Revision: Lingering Issues

April 4, 2000

FTC Guides Revision: Lingering Issues

The Federal Trade Commission should rule by the end of summer on changes to the Guides for the Jewelry Industry regarding gem disclosure, says Cecilia Gardner, executive director of the Jewelers Vigilance Committee. But lingering arguments remain about the wording of the revisions. The controversy centers on two issues.

The proposed revision reads that disclosure is warranted for: Any treatment which has a significant effect on the value of the gemstone (diamond or colored gemstone). Some critics believe the use of significant to modify value will leave an interpretive loophole. In other words: who decides whats significant?

They say such judgment would place an undue burden on retailers or that unethical jewelers could simply say they dont believe the difference in value is significant. Theres also confusion whether the value statement refers to:
1. The difference in value between a treated stone and a comparable untreated stone.
2. The difference in value of a particular stone before and after it's treated.

Consumer or Retailer Knowledge
The other issues involves the second half of the proposed statement, which says disclosure of treatment is warranted for any treatment that affects a gems value ... if a consumer, acting reasonably under the circumstances, could not ascertain that the stone has been treated. Critics believe this is unfair to consumers because the majority are unaware of routine gem treatments.

Others believe its also unfair to jewelers because it requires them to make judgments about what their customers do and dont know. It also could give unscrupulous jewelers a loophole to argue the consumer knew or should have known about the treatment, therefore, the jeweler isn't responsible for nondisclosure. At the very least, this provision has the potential to complicate the enforcement process.

by William H. Donahue Jr.