Different Grading Lab Standards: Jewelers Strike Back

Whether it strikes a nerve with consumers, the two-part TV story that ran this week on Genesis Diamonds in Nashville certainly found a responsive audience in our industry, given the number of times I’ve seen it posted, tweeted, and emailed. The story criticized the three-store chain for using what it calls “exaggerated” EGL International reports as the basis for comparison prices. One competitor said: “People think [the store is] comparing apples to apples. They think they’re getting a great deal. But it’s not the same thing.”

Whatever happened at this particular store, the fact that different labs have different standards is old news for the industry. One Florida retailer even started a campaign called Diamonditis, making TV appearances warning consumers about the dangers of a “diamond not matching the paperwork.” And jewelers have written innumerable blog posts on the topic. (So has JCK.)

I have even seen a few well-respected and reputable retailers—tired of having to explain that their competitor’s reports don’t use the same standard theirs do—throw up their hands and say, if you can’t beat ‘em, join ‘em, and start carrying reports from less-respected labs. They aren’t too happy about it, but they figure if they tell shoppers the reports use a looser standard, they have given them the right information. And, one told me, most shoppers don’t care. They think they are getting a deal, even when it’s explained to them when they are not. 

Still, this exposé might mark a turning point. One local story tends to lead to others elsewhere in the country, so retailers might think twice about using lenient reports if they worry they will end up on the wrong side of the TV camera. Of course, it’s not clear how legally actionable using bad reports is, given that diamond grading is inherently subjective. Granted, that traditionally has meant a one-grade difference, rather than two or three (or four!). But the law here is fuzzy, though it’s possible some enterprising lawyer could make a class action out of it.

The biggest danger might be toward our industry as a whole. While several Nashville jewelers seemed to have no problems publicly bashing their competitor—the owner is not a popular guy locally—reports like this are terrible for the industry’s image. They make diamond buying seem confusing, treacherous, and frightening. Still, some retailers feel they have no choice but to bring this issue into the open.

At the annual JCK Las Vegas Rapaport conference on certification, someone usually mentions the perils this issue poses for consumer confidence. We are seeing that now in Nashville. The question is now: Will this problem have legs with consumers, and if so, what will the fallout be?

JCK News Director