The Federal Trade Commission Releases New Jewelry Guides
The DPA welcomes the FTC’s new Jewelry Guides following six years of consultation with the industry. The FTC Guides play an important role, alongside other applicable norms and standards, in protecting consumers from deceitful communication by marketers, allowing consumers to make informed purchase decisions.
The DPA commits to respecting the FTC Guides — as it has always done — in its communication, and in particular as it pertains to the way it describes synthetic diamonds — diamonds created in a laboratory — and natural diamonds. We note and welcome synthetic diamond manufacturers’ public pledge to respect the new Guides.
The DPA appreciates that the FTC still requires marketers of man-made stones to differentiate their product conspicuously from natural diamonds in their marketing communication.
However, we are concerned about a number of issues in the new Guides which — in our view — pose a risk of confusion, deception and consumer harm. Unfortunately, the Guides introduce areas of ambiguity that will require more investigation and enforcement action by the FTC to make sure that consumers receive accurate information about the products they buy.
1) Removal of the qualifier “natural” from the diamond definition
This decision — which was not announced as one of the proposed changes — was based on the FTC’s viewpoint that the natural origin of a diamond is not what makes it a diamond, but that it is its molecular composition only that matters. The FTC pointed to scientific factors to explain this decision, without a reference to consumer perceptions of the term.
We understand the basis for this decision but we are concerned that it will be exploited by man-made diamond marketers who may feel they can use the term “diamond” without properly qualifying it, leading to more consumer confusion and deception.
We are satisfied however that by stating that “It is unfair or deceptive to use the unqualified words ‘ruby,’ ‘sapphire,’ ‘emerald,’ ‘topaz’ or the name of any other precious or semi-precious stone to describe any product that in not in fact a mined stone of the type described,” the FTC clarified its meaning and intention. The Guides continue to consider it unfair or deceptive to use the word “diamond” without qualifier to describe a laboratory-grown diamond because essentially the origin of the stone matters to consumers.
2) Use of the word “cultured” to qualify synthetic diamonds
The FTC recognized that “cultured” without qualifier is misleading as a majority of consumers would incorrectly assume “cultured diamonds” to be natural. (During the review period, the DPA and other parties argued that “cultured” referred to a biogenic process in which nature does its work without human intervention, e.g. cultured pearls.) However, the FTC declined to ban it altogether on the basis that this misunderstanding can be successfully corrected through communication.
The implications of this decision is likely to be more consumer confusion and deception. Indeed, this would suggest that any factually incorrect term known to be misunderstood by consumers can be accepted on the basis that it can be clarified through additional language, a departure from previous FTC practice. This approach potentially negates the value of factual correctness and consumer understanding, sanctions communication ambiguity and makes every marketing communication subject to subjective interpretation and debate.
3) Use of the term “synthetic” to describe man-made diamonds
The DPA understands the concerns of the FTC that the term “synthetic diamond” if used in a deceptive manner, might lead some consumers to believe that synthetic diamonds are in fact simulants such as cubic zirconia or moissanite and not man-made diamonds.
Of note the FTC did not prohibit the use of the term “synthetic diamond” unless it is used to suggest that a synthetic diamond is “not an actual diamond” (i.e. a simulant).
4) Use of the terms “real,” “genuine” and “natural” to describe man-made diamonds
The FTC did not change their Guides because no commenter sought to change this section. It therefore remains that “it is unfair or deceptive to use the word ‘real,’ ‘genuine, ‘natural,’ ‘precious’ and ‘semi-precious’ or similar terms to describe any industry product that is manufactured or produced artificially.”
Consumers have a clear and long-standing understanding that these terms relate to diamonds made in the Earth, not a factory. The DPA produced — after the comment period — a rigorous Harris study showing that 68 percent of consumers believe that a diamond produced in a factory is not “a real diamond” because it does not come from the Earth or because it is a produced in a factory.
We are concerned however that the FTC now effectively expects the diamond industry to demonstrate that these terms “cannot be used non-deceptively to describe lab-grown diamonds,” when we have already demonstrated through research that a large majority of consumers associate real diamonds with natural diamonds from the Earth.
Furthermore, the avoidance of the term “natural diamonds” throughout the Guide is a cause for concern for the DPA. Indeed, the term “mined diamonds,” largely promoted by laboratory-grown diamond producers and used throughout the FTC document, refers to the extraction method of the product and not to its creation process. Most natural diamonds will, in fact, never be mined. Describing the entire category in this way is therefore incorrect and concerning.
In conclusion, the DPA welcomes the issuance of Guidelines and commits to respecting the Guidelines in its marketing practices. It applauds the declared intention to do the same by synthetic diamond manufacturers. However, the new Guides introduce the possibility of substantial consumer deception and harm in several important respects. Unless the FTC further clarifies these issues, the agency will likely need to address a large number of claims on a cumbersome case-by-case basis. DPA had hoped that the agency would provide clearer guidelines for industry on these important issues.
