Should You Disclose That a Diamond’s a Trade-In?

We have heard a lot lately about recycled diamonds. At an informative discussion on trade-ins last week at the American Gem Society Conclave (ably summarized here), a retailer raised a loaded question: Must a jeweler disclose to a consumer if a diamond, or piece of jewelry, is pre-owned?

Sure, retailers have to declare if a stone is lab-grown or treated—but whether it’s used? There doesn’t seem to be much industry consensus about this (other than, if the buyer asks, tell him the truth). We are, after all, talking about products that are one billion years old. And a loose diamond, assuming it’s properly cared for, won’t lose its value, even if it’s had 10 owners.

But veteran retailer Christopher Bramlett felt strongly that consumers should be told.

“A diamond is the most emotionally loaded gift that has ever been,” he told the group. “What if word got out that it belonged to someone who died or someone who got divorced or that it was a pre-owned diamond? It could ruin us.”

Of course, there are solid reasons why a consumer should be told if they are getting a treated or lab-grown gem; that affects a stone’s value. The only reason why a consumer wouldn’t want a diamond involved in a busted engagement or marriage, one could argue, is superstition. Sure, some do believe that diamonds have auras, but that’s not something laws are generally built around.

As it turns out, there are rules on this, according to Cecilia Gardner, president and CEO of the Jewelers Vigilance Committee. She points to this FTC entry:

Jewelry that is returned in accordance with the conditions disclosed by the seller at the time of sale (7-, 10-, 30-day money-back guarantee, etc.) may be sold as new, however, the jewelry must be returned in good condition. For the purpose of this rule, “used” includes used, rebuilt, remanufactured or reconditioned goods or parts of an item of goods. Further, for the purposes of this rule, returned goods that the purchaser never used shall be considered new or unused. 

If this seems unfamiliar, you can’t find it in the standard FTC Jewelry Guides; it’s part of the FTC guides on consumer deception.

“So, if a diamond is re-sold after being returned within the seller’s policies, or if it has never been worn, it can be re-sold as new,” Gardner says. “If it is returned after having been worn, or it has been recut, or the jewelry item has been reconditioned in some manner, it cannot be re-sold as new.”

So in most cases, according to the JVC, the fact that a diamond has been recycled does have to be disclosed to consumers. And it doesn’t have anything to do with juju or anything like that: It’s because a used item is generally considered to be in worse shape than a new one. The fact that we are dealing with a product that in most cases doesn’t have the standard reaction to wear and tear is apparently not an issue.

In fact, some consumers might find a recycled diamond to be a good thing, for environmental or human-rights reasons. (Of course, there’s debate on that). Regardless, I’m willing to bet most jewelers don’t bring this up to customers. Certainly none of the people at the AGS panel knew it was a rule—and neither had I, until I emailed Gardner.

Perhaps this is something that the FTC could clarify when it revises its Jewelry Guides. In the meantime, I’ll open the floor: Do jewelers disclose this? And should they have to?

JCK News Director