JVC Uncovers Underkarating in New York; State Fines Distributors and Retailers

November 13, 2001

JVC Uncovers Underkarating in New York; State Fines Distributors and Retailers

Following more than a year of investigation in the state of New York, the Jewelers Vigilance Committee found two distributors and 60 retailers underkarating gold jewelry and selling it to unsuspecting customers. Millions of dollars worth of inventory was affected.

JVC reported its finding to the New York State Attorney General's office and the state subsequently issued fines totaling $125,000, paid by the guilty parties. "Thanks to the involvement of the Jewelers Vigilance Committee, the state ... has successfully brought enforcement actions against a number of jewelry firms," says New York State Attorney General Eliot L. Spitzer.

"JVC assists the industry in policing its own – that is consistent with our mission – and we will continue to do so with anyone who is breaking the law," says Cecilia Gardner, JVC executive director and general counsel. "This is not a widespread problem – but it is a very serious problem in certain places. We want to ensure the integrity of the entire industry is not compromised by the actions of a few. This was one reason why we took this case to the authorities."

JVC conducted its investigation by shopping the marketplace and doing precious metals testing. It found some jewelry was being mass manufactured deliberately underkarated, mismarked as to karatage and sold in large quantities to retailers. The investigation was underwritten by a JCK Industry grant.

Underkarating involves selling gold marked as 14k when the amount of gold in the piece actually only amounts to 13k or 12k worth of gold, for example. While the National Gold & Silver Stamping Act allows small variations (tolerances) when manufacturers are alloying gold with other metals, these tolerances are small. Overall, the gold fineness of a piece of jewelry (including solder) must not vary by more than 7/1,000ths from the amount indicated in its quality mark.

Marking jewelry's gold karatage is not required by the National Stamping Act, but if the mark does appear, a manufacturer's trademark must appear with it. With unmarked karat gold jewelry, a retailer wishing to call it karat gold must disclose its karatage through in-case signs, tags or sales receipts. In the U.S., nothing under 10k can be identified as gold.

Jewelers interested in conducting spot checks of the gold they carry can receive five free precious metals tests with their annual JVC membership. Otherwise, testing costs $15, excluding shipping. Last year, the JVC tested more than 1,000 pieces of jewelry. The organization, which has been working to maintain ethical standards in the jewelry industry since 1912, also advises jewelers to purchase from suppliers who stand by what they sell. Jewelers should ask suppliers to have their own independent assays done routinely as part of their sales contract with retailers. Jewelers should also have a quality assurance programs, including regular checking of precious metal quality.

For more information, contact JVC at (800) JOIN-JVC, (212) 997-2002, www.jvclegal.org.

- by Peggy Jo Donahue

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