The Diamond Lab System Is Broken. How Do We Fix It?

The issue of variable lab diamond grading standards has been around for a while, but it seems to be dominating trade chatter in a way that it hasn’t before. Undoubtedly, there are some good labs out there. But the problem is most consumers don’t know the good graders from the lenient ones. And the whole system of labs, meant to raise standards in the trade, now seems to be aiding and abetting misrepresentation as much as preventing it.

So the question is: What should we do about it? We covered some possible solutions in our June story. The recent Rapaport conference offered a few more, which I would like to review. 

Martin Rapaport—who, we should note, is looking into launching his own lab—believes this is an opportunity for jewelers to use their expertise to differentiate themselves and win customers. And so we see retailers like Dan Gordon using blogs to explain their opinions on different labs.

There is merit to this. But lately we have seen a lot of well-respected jewelers—people who have the reps and expertise—selling diamonds with reports from “lenient” labs, simply because their competitors carry them, and they feel they have no choice. So at this point, the situation may be a little too far gone for even the best retailers.

The other oft-mentioned solution by Rapaport is a class action lawsuit. Simply sue the worst offenders out of business, and the rest of the trade will pay attention. Yet it’s possible that some of the targeted entities may be overseas—and of course, the consumer confidence aspects of that would be disastrous.

Other solutions include having an outside group judge industry graders—and there are organizations dedicated to doing just that, such as the International Standards Organization and the Laboratory Accreditation Bureau, which looks at food and crime labs. This makes sense; the whole point of having labs is that jewelers and dealers can’t be trusted to grade their own diamonds. So why should an organization, or business owner, be allowed to grade their own lab? In the past, certain groups have said they don’t need to be judged by outsiders, as we have the reputation and stature. That doesn’t cut it anymore. Every lab in our business should be subject to independent review. 

My feeling has always been that, down the road, grading needs to be mechanized—meaning the grading needs to be done mostly by machines, with some quality control by humans. After all, you can’t bribe a device. They don’t—or shouldn’t—get tired after grading too many stones. And if they are programmed properly, they will give you consistent results, and really that’s what grading needs most: consistency. 

Right now, we have things we call “certificates.” But we all know they don’t really certify anything. That’s because diamond grades are subjective. We need a way to make grading more objective—and consistent. At the Rapaport seminar, moderator Saville Stern noted that two of the test stones had been graded previously by GIA. When re-submitted, they received different grades—showing that even a lab which operates with the best of intentions doesn’t always generate repeatable results.

Both De Beers and to some extent GIA use proprietary devices in their color grading; given that consumer confidence is important to both organizations, perhaps it’s time to make those machines available to the industry at large. The idea that someone’s opinion—or even the best of three opinions—can mean a thousand- or even-million dollar difference in the value of a stone seems pretty outdated in this day and age. (This, of course, may cost people jobs. But good gemologists will always be needed for quality control and to spot things like treatments and synthetics.) 

Granted, a reliable, widely-embraced clarity-grading machine will prove a little tougher to develop than a color-grading one. But I don’t think it’s impossible (De Beers has one in development). And even if only color grading gets mechanized, that will be a huge improvement, as color seems to bring the most grading variations, and lenient labs will only have clarity to “play” with.

With the exception of cut, the current system for grading and evaluating diamonds was developed in the early 1950s. Perhaps, 60 years later, it’s time to modernize it, and figure out a system that truly serves the consumer and honest people in the industry. The current situation of “good” and “bad” labs is embarrassing and will ultimately damage our business. If we’re lucky, however, it will lead to a period of innovation and fresh thinking in the grading sector. 

JCK News Director