eBay Educates Sellers on FTC Guides; German Court Bans Term "Cultured Diamonds"

November 1, 2004

eBay Educates Sellers on FTC Guides;
German Court Bans Term "Cultured Diamonds"

Web auctioneer eBay informed jewelry buyers and sellers it will do more to educate its online sellers about the Federal Trade Commission's Guides for the Jewelry, Precious Metals, and Pewter Industries, according to a notice at the eBay site. In related news, a panel of three judges in a Munich district court have issued a restraining order to a German distributor of gem-quality synthetic diamonds produced by Gemesis Corp., Sarasota, FL, to cease using the term "cultured diamonds" when marketing its products to the public in Germany, declaring the term misleading.

At eBay, representatives of its departments of law enforcement, trust and safety policy, jewelry and watches and community development held an live online chat Oct. 29, where they fielded a variety of questions and comments on eBay's proposed policies on listing jewelry.

At the site's jewelry community page, eBay lists a new jewelry and watch buying guide, jewelry definitions, other information and links, as well as fraud and scam reporting links to eBay authorities, the FBI's Internet Fraud Complaint Center, the FTC and many others. It also contains a complete copy of the FTC Guides.

German Rule
The verdict in a German court room to ban the term "cultured diamonds" was triggered by a case brought against Gemsmart GmbH, a Munich-based distributor of Gemesis, by the Zentrale zur Bekaempfung unlauteren Wettbewerbs (Central Office for Control of Unfair Competition), according to a release from CIBJO, the World Jewellery Confederation.

Additonally, the company can only refer to laboratory created diamonds as "diamonds" if the word is immediately preceded by one of the modifying adjectives, "synthetic" or "artificial." In reaching the decision, the judges relied on the terminology and definitions contained in CIBJO's Diamond Book.

The judges also attached to their ruling an order that a financial penalty of up to 250,000 euros would be incurred for each case of noncompliance with the restraining order, adding that jail will be ordered for the respective manager of the defendantıs company in the case of non payment of the penalty. Legal commentators have suggested that since the ruling has taken place within the jurisdiction of a member country of the European Union, the verdict could have an impact on future rulings in other EU countries.

In the U.S., the world's largest jewelry market, the term "cultured diamonds" has not yet been challenged in court. Cecilia L. Gardner, the executive director and general counsel of the Jewelers Vigilance Committee in New York City, told CIBJO the FTC Guides address the use of the term "cultured" only as applied to pearls. "However, It is the view of the JVC that the use of the term 'cultured' as applied to diamonds without additional information about how the product was created is insufficient disclosure to describe the true nature of a synthetic or laboratory grown diamond," says Gardner.

"At a time in which we seek to protect, reinforce and strengthen the consumers' confidence in natural diamonds and natural diamond-set jewelry, this is an important achievement. I am sure that soon, we will have an industry-wide consensus on the banning of the term 'cultured diamonds,'" says CIBJO President Gaetano Cavalieri.

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