More Undisclosed Synthetic Melee Discovered

With all the talk of undisclosed synthetic melee, there has been some pushback over how bad the situation really is. I have always been a little skeptical. Still, you can’t deny, the reports keep on coming. Here is the latest, from The Times of India:

Sources in the market said that a Japanese client of a DTC sightholder company has sent back the diamond parcel after half of the stones were detected as ‘synthetic’. Similarly, another Mumbai-based company received around 50 percent of synthetic stones in parcel sold by a local trader. A total of 30 to 50 carat of synthetic diamonds were mixed with the parcels of original diamonds.

Chaim Even-Zohar at Diamond Intelligence Briefs also reported ($) last week on an incident here in the United States, where a dealer submitted a parcel to GIA and found out the stones were lab-grown.

Now, however many of these incidents have occurred, most agree that even a few is too many. Lab-grown diamonds are—it goes without saying at this point—a legitimate product. They have their selling points, as do natural diamonds. As long as everyone is honest about those points, in the end, the consumer will decide. 

But they have to be sold for what they are. And it’s not just me, or the industry, saying this—it is U.S. law. “It’s not even ambiguous,” says Cecilia Gardner, president and CEO of the Jewelers Vigilance Committee. “That is what the statute says.” 

But synthetic melee has proved a sticky situation. It is hard to detect, and not necessarily economical to check every stone. And “peppering” parcels can be profitable, considering the 20 to 30 percent price differential. 

Some are now saying dealers need to be clearer about what they sell. H. Goldie broker Mark Boston has echoed a suggestion made by Martin Rapaport:

It seems to us that Sightholders as well as all other manufacturers, dealers and traders need to self-regulate in terms of only buying polished parcels where there is a signed declaration from the supplier confirming that the polished being traded is not from synthetic rough and this would create an accountability chain where everybody is responsible from one end of the pipeline to the other.

Yet Gardner notes that by declaring you are selling “diamonds” without any qualifiers, you are legally warranting that the diamonds in your parcel are natural and untreated. “If you just say ‘diamond’ and is not natural or it is treated, you are engaged in a deceptive trade practice,” she says.

What should happen if you buy a parcel of what you thought were natural diamonds, and found that some were synthetic? “The supplier is liable,” she says. “If you can prove the supplier knew, you have an action at law. If you aren’t able to prove the supplier knew, the supplier should accept the return of the parcel or pay the difference in price.” 

So in addition to all the trade and consumer confidence aspects of this, this issue could lead to an endless round of lawsuits. All the more reason the industry needs to up its game on transparency, detection, quality control, and self-policing—before this gets any worse.

JCK News Director