FTC Attorney Answers Questions on Jewelry Guides

This morning, Reenah L. Kim, staff attorney for the Federal Trade Commission’s (FTC) Bureau of Consumer Protection, Division of Enforcement, spoke with JCK about the commission’s recent overhaul of its Jewelry Guides. Here, she discusses disclosure of lab-grown diamonds, the FTC’s perspective on the term real, and its decision on low-karatage gold.

For reference, the FTC’s Federal Register notice spelling out the changes can be seen here; the FTC’s Statement of Basis and Purpose explaining the revision can be seen here. A “plain English” summary from the Jewelers Vigilance Committee on major changes can be seen here.

JCK: You have changed the definition of diamond by removing the word natural. Do marketers still need to qualify the word diamond if it doesn’t come from a mine?

Reenah Kim: Yes. There is no change to marketers having to make the necessary disclosures. That guidance still applies. Marketers still need to make those disclosures that it’s not a mined diamond. [That guidance] just happens to be in a separate section.

So what was the thinking behind changing that definition?

The Guides have been around for a very long time. The idea that manufacturers could create a product that is optically, chemically, and physically the same as a mined diamond wasn’t really part of anyone’s thinking originally. Now the market has changed, and there are diamonds that meet those qualifications. We updated the diamond definition in light of those new realities.

So does the change in the definition of diamond have any practical effect?

That’s a good question. There is a section in the Statement of Basis and Purpose that goes into detail and talks about the different provisions in the guides and the terms real, genuine, and natural. The removal of the term natural from the diamond definition shouldn’t be looked at in isolation.

Along those lines, your statement calls it possibly deceptive to use the term real to imply a lab-grown diamond is not an authentic diamond. Would something like “Real Is Rare” now be considered a deceptive campaign?

I can’t comment on a particular marketing campaign or an ad, especially without full context. To the extent that we offer guidance and advice, if anyone is going to use real or natural to imply a lab-grown diamond isn’t an actual diamond, that would likely be deceptive.

But there are people in the industry who, while they understand that a lab-grown diamond is not the same as a simulant like cubic zirconia, still also feel that they are different from what they consider “real” diamonds. Is it now deceptive to communicate that?

Obviously, there are folks on both sides of the issue. We have invited comment and further evidence on this point.

I notice that the Guides are now letting manufacturers use other terms describing lab-grown diamonds, as long as those terms “clearly and conspicuously convey that the product is not a mined stone.” Are you worried about opening the door to a lot of possibly misleading descriptors?

The Guides say if you are going to clearly qualify the use of the term diamond, certain terms are acceptable. They also say there may be other ways to effectively make those disclosures. Part of what prompted this is manufacturers aren’t hiding the fact that these are lab-grown diamonds. We wanted to provide marketers with greater flexibility.

Some manufacturers asked that the terms foundry, grown, or created be approved as solo descriptors of lab-grown diamonds. The FTC declined to rule on them, saying you lacked consumer perception evidence. How should those companies be guided regarding those terms?

We said we didn’t have enough evidence to make those changes. I can’t talk about a particular term. It would depend on the context of the ad, how the product is being described. The commission has provided context on how you qualify those disclosures. We advise companies to effectively describe that the product is not a mined stone.

But those companies believe that those terms do effectively disclose that they are not selling mined stones. Are they free to use them?

Anytime a marketer is using a word to describe this product, if they are using a term that is not in the Guides, they need to have a basis for that.

Clearly consumer perception evidence, like a survey, is an important part in making a change in the Guides.

The Jewelry Guides have been around a very long time and have been a big part of how the industry looks at these issues. The commission’s approach is to make changes based on consumer perception. So anytime we make a change we [prefer it] based on actual consumer perception evidence. 

Are you concerned that these perception surveys and such could be slanted by whoever is submitting them?

In the last proceeding, different folks submitted perception evidence. Some of it was useful. Some of it might be useful. It depends on the particular issue. In our statement, we spelled that out and explained where the commission ended up.

So let’s say someone wants to complain about a specific term or campaign they feel is misleading. Do they now need to provide a consumer perception study to back up their complaint?

Not necessarily. If someone wants to raise an issue with us and bring it to our attention, we always welcome that.

As part of its revision, the FTC is also letting marketers describe under-10k gold as gold, as long as they accurately disclose its karatage. Are you worried that a lot of consumers may now buy low-quality product that they think is gold but may not behave like it?

What we saw in the record, with the evidence that we received, is that consumers understand karat disclosures and what they convey. There was evidence that consumers understand the difference with the lower-karatage product.

You have mentioned that the FTC is still seeking new evidence and input on certain issues. Do you expect further revisions?

I can’t predict what the next step will be or next format will be. We issued these revisions to the Guides, but that doesn’t mean that we are not open to considering different things.

 

JCK News Director