Is It Or Isn't It?

By George Holmes, editor in chief -- JCK Online, 7/1/1995 2:00:00 AM

The lab report says the diamond weighs 1.09 cts, has a G color, a VVS clarity. No cut grade but a selection of dimensions. The lab report also says these figures and letters represent opinion, not necessarily the exact grading they seem to represent.

This odd situation has existed for years. The report says, in effect, "These are the facts." Then adds that they may not be.

As an academic exercise, such an apparent contradiction might be considered harmless, if somewhat puzzling. In the real world, where even a slight shift in a diamond's grade can involve thousands of dollars, the situation is far from academic. Yet the jewelry industry seems to accept it with only the rarest murmur of dismay.

To be fair, the labs have always made their disclaimers right up front, even if the type is pretty small. But such disclaimers are disingenuous when the reports themselves are presented in such precise terms, and with such authority. They don't say this could be a G color or it could be an H. Nor do they say this could be a VVS clarity but, on the other hand, it could be a VS.

The message is garbled. "These are the precise characteristics of this diamond. But if they're not, don't hold me accountable."

What's not at all garbled is another message the labs send: "If there are any grading discrepancies, it's the jeweler's problem and responsibility, not the labs'," to deal with a confused or angry customer. In a very revealing story on diamond grading in this issue, the major U.S. labs unanimously, clearly and bluntly take that stand.

Significant numbers of jewelers, according to a poll of JCK's 500-member retail panel, say they're not surprised. They accept as a practical matter that reports they get from the labs often have a plus-or-minus error of one grade. They also say they explain such a possibility to their customers.

Most diamond dealers, the primary users of grading reports, also are aware of the labs' fallibilities. It's common enough for a dealer with a borderline stone to submit it more than once in the hope of getting a better grade the second time around. It's also a reflection of grading inconsistencies that a dealer who holds his breath while his diamond is being graded is very happy when he ends up with "a lucky G."

Offsetting these jewelers and dealers, who understand that grading always depends on the freshness or tiredness of the human eye, are significant numbers of other jewelers who regard lab reports as Gospel. At the very least, such jewelers consider any grading error to be the lab's responsibility. I suspect that most consumers who are familiar with diamond reports - largely because a jeweler has presented such reports as "certificates" that "guarantee" the quality of a diamond - also would be shocked to learn that the "guarantee" is by no means as hard as the stone itself.

The real issue is not whether the labs' diamond grading is right or nearly right or right most of the time. It is what should be done with this potentially volatile industry problem. Inescapably, dealing with the issue appears to sit firmly in the retailer's lap.

What are jewelers to do?

First, accept that grading reports are fallible and that the labs are not willing to stand behind their work.

Second, make sure customers know that grading reports are only informed opinions by well-qualified people - and not necessarily absolute, unchallengable judgments of a diamond's characteristics.

Third, abolish the word "certificate" from sales presentations. It's a loaded word that promises far more than it can deliver.

Fourth, be very, very careful in using grading reports in conjunction with price lists. In this issue, we show how using such a combination yielded a $15,000 price discrepancy on a single stone. Enough said. Read the story.

Fifth, urge the labs to 'fess up much more openly about their grading reports' limitations.

It's worth taking these steps because diamond grading reports are a tremendously valuable industry asset. The Gemological Institute of America brought order and good sense to diamond marketing when it refined diamond grading to a near science and created a workable grading language. The value of its contributions is reflected in the world-wide acceptance and use of the GIA system.

Every jeweler must salute this achievement. But every jeweler also must strive to ensure that the achievement is kept in proper perspective and the system wisely and honestly used.