Diamonds / Industry / Legal

Ad Watchdog Now Rebukes Natural Diamond Council


The National Advertising Division (NAD), which earlier this month asked Diamond Foundry to modify some of its advertising language to make the origin of its diamonds clearer, today asked the Natural Diamond Council (NDC) to stop making certain claims regarding mined gems’ eco-impact and scarcity.

A summary of its decision can be seen here.

The NDC said in the NAD statement that it “agrees to comply with the NAD’s recommendations” and is “grateful for the NAD’s constructive feedback about its substantiation and will incorporate the NAD’s suggestions as it collects additional data to support its advertising claims.”

In the decision, the NDC added that it “appreciate[s] that the NAD has recognized that diamonds are a rare and finite natural resource that have been treasured by families for generations.”

The NDC’s claims were challenged by Diamond Foundry, following the initial complaint from the NDC.

First, the NAD objected to an NDC claim that “carbon emissions associated with LGDs [lab-grown diamonds] are three times greater than those associated with mined diamonds.” The claim originated in a report produced by Trucost ESG Analysis in 2019, which was commissioned by the NDC’s predecessor, the Diamond Producers Association.

The decision determined that the carbon-emission comparison in the Trucost study contained “several flaws.”

First, it did not collect data directly from the lab-grown manufacturers, and relied on “second and third-hand” information (including some originally reported in JCK).

“[Mining c]ompanies providing information directly to Trucost had the ability and opportunity to vet such data while [lab-grown] manufacturers likely did not have any input on certain information as it was conveyed through second and third-hand sources, or the opportunity to correct for faulty assumptions,” the NAD said.

The NAD also found that the report used old data, and failed to note some lab-grown companies now use renewable energy. Its calculations also excluded “significant stages of the mining process,” including exploration, mine closure, and cutting and polishing, the group said.

In addition, “NAD was concerned that [such] claims conveyed a broader implied message about the overall environmental benefits of mined diamonds versus man-made diamonds, a message that was not supported,” it said.

The NAD also objected to some claims in the NDC’s online advertising, which emphasizes the increasing scarcity of natural diamonds, arguing it did not have a “reasonable basis” for those claims.

These claims “create a sense of urgency about the supply of natural diamonds that is not supported by the evidence,” the NAD said.

The decision said that while most diamond forecasts have suggested mined diamond production will decline, the NDC’s communications convey an “unsupported message that the decline is irreversible and will absolutely and dramatically impact consumers who wish to purchase natural diamonds in the coming years,” and “that consumers might become ‘priced out’ of the diamond market and unable to purchase natural diamonds in the future, and that they must therefore act now.”

Among the claims the NAD advised be discontinued:

• “…full carat and larger natural diamonds are becoming rarer by the day as supply continues to decrease and no significant deposits have been found in decades.”

• “Natural diamonds are finite and rare. The number of recovered diamonds peaked in 2005 and will decrease significantly over the next decade. Diamonds are becoming rarer every day because no new discoveries have been made in about 30 years.”

The NAD said that the NDC is not precluded “from making truthful and non-misleading claims about the global supply of natural diamonds, including their relative availability.”

In perhaps the most surprising ruling—since it’s a contention that is widely believed in the diamond market—the NAD asked that the NDC cease certain claims about the resale value of lab-grown gems.

Among the claims that the NAD frowned upon:

• “Laboratory created diamonds are currently sold at a slightly reduced price compared to natural diamonds, but the cost continues to decline due to mass production.… Therefore, they have little to no resale value.”

• “A laboratory created diamond has no resale value and its price is falling rapidly.”

• “[M]ass-produced lab-grown diamonds are sold at comparable prices, but have little to no resale value because they can be endlessly replicated.”

The NAD wrote that the submitted evidence “does not provide a reasonable basis for claims about man-made diamond’s and natural diamond’s respective resale values, especially claims that man-made diamonds have ‘little or no resale value.’ NDC did not submit consumer relevant data relating to the resale prices actually paid for either man-made diamonds or natural diamonds.”

Finally, the NAD objected to the NDC’s use of the word real in certain contexts, as it might imply that lab-grown diamonds are not actual diamonds, something the Federal Trade Commission has said might be misleading.

Among the challenged statements:

• “Today, there are many laboratory-grown and synthetic diamonds on the market. These are also made of carbon, but without the earthly origins of real diamonds, they lack the unique qualities infused by nature.”

• “The difference between a real diamond and a lab-grown diamond is simple.… A real diamond is unique and rare, formed one hundred miles below Earth’s surface up to 3 billion years ago.”

Wrote the NAD: “In the context of NDC’s challenged advertising, consumers may incorrectly conflate LGDs like Diamond Foundry’s with imitation diamonds like moissanite and cubic zirconia, which do not share the same physical properties as mined diamonds.”

The decision added: “The issue is not that NDC uses real as a term to describe its own mined diamonds; nothing in the FTC Jewelry Guides would flatly prohibit that use. The issue is that NDC uses real in a pointed manner to distinguish mined diamonds from LGDs.”

Diamond Foundry’s head of public policy, Gwyneth Borden, tells JCK: “This is a historic moment for the diamond industry. These claims that an advertising regulatory body is now requesting to be discontinued—from scarcity to resale value to being ‘real’ to environmental impact—have been the bedrock of marketing of the diamond industry for too long. Consumers will greatly benefit from better clarity in marketing.”

The NDC did not respond to request for a comment by press time.

UPDATE: The National Advertising Division talks to JCK here.

(Photo: Getty)

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By: Rob Bates

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