Disclose All Treatments!(Whatever That Means)

Nothing stirs industry ethicists more than a discussion of treatment disclosure, and the recent brouhaha over Lazare Kaplan International’s plans to market “whitened” diamonds through its new Pegasus Overseas Ltd. subsidiary is no exception. Most feel that if the mystery “process” is a heat treatment, it should be disclosed under the law. End of story.

But dig a little deeper, and the issue becomes more complicated. LKI officials say their attorneys studied existing laws and decided the process didn’t have to be disclosed. They argued that because they were into uncharted territory, the standard rules didn’t apply. “This is something the trade has never dealt with before,” one top LKI official noted at the height of the controversy. “How do you handle a process that’s permanent, adds nothing to the stone, and is undetectable?” In fact, LKI still refuses to call the Pegasus stones “treated,” preferring the heretofore unknown gemological term “processed.”

Most gemologists disagree with LKI’s view, noting that while the process probably doesn’t add anything to the stone, it likely takes something away—namely, the brown in top-light-brown diamonds. Yet even those critical of LKI acknowledge the episode has raised an unpleasant truth: The current rules on gem treatment disclosure are exasperatingly fuzzy. Some even argue there is no consistency to the rules at all.

No definitions. How fuzzy are they? Consider the word “treatment” itself. Even many authorities aren’t sure what it means. “That’s a difficult one,” says Dr. Jack Ogden, secretary-general of CIBJO, the International Jewelry Federation. “It’s a good question,” agrees Dr. Ilene Reinitz, a Gemological Institute of America researcher. “It certainly needs further discussion.”

Let’s start with what we do know: If an enhancement is “nonpermanent,” requires special care, or is potentially reversible—like fracture-filling or certain diamond coatings—the law requires disclosure. From there, consensus breaks down, even among gemologists. In GIA’s Diamond Dictionary, “treatment” is cross-referenced with “enhancement”—another controversial term—which it calls “any post-recovery process that alters the appearance, especially the color or clarity, of a natural diamond or other gem material. Coating, filling, fracture-filling, annealing, and lasering are all forms of enhancement.” Noted gemologist Dr. Kurt Nassau defines “treatment” similarly: “Any process used by man on a natural gemstone that alters its color, clarity, appearance, or stability.”

Yet those definitions are broad enough to include both cutting and polishing—as well as accompanying processes such as acid boiling. Therefore, the American Gem Trade Association’s Gemstone Information Manual’s definition of treatment specifically excludes “cutting and polishing.” But this leads to another gray area: Where does “cutting and polishing” begin and end? Should it encompass laser drilling, as some diamond people contend? Or LKI’s process, as the company maintains?

The situation has led some to look for a more precise definition. Dr. James Shigley, GIA’s director of research, thinks it should specify that the “chemical composition” of a stone is “altered.” And Dallas colored stone dealer Ray Zaijeck, a former AGTA president, suggests “treatment” and “enhancement” be defined as two distinct things. “An enhancement is routine, something nature requires we do to produce a gemstone,” he says. Heating sapphire and oiling emerald are two examples. “Without enhancements, there would be no industry. But a treatment is something you don’t have to do. It is outside the normal enhancement process.” Irradiating cape-color diamonds to create fancy colors is an example. He suggests letting trade experts decide which process falls into what category.

And what does the law say? Not surprisingly, it ducks the question altogether. “[The term ‘treatment’] is not specifically defined in the FTC’s Guides for the Jewelry Industry,” notes Cecilia Gardner, executive director of the Jewelers Vigilance Committee. And when you examine the Jewelry Guides’ rules on treatment disclosure, things get even fuzzier.

What’s disclosable? In general, the FTC Guides stipulate only disclosure of nonpermanent treatments, says Robin Rosen, an attorney with the agency. “We generally let the product stand for itself,” she explains. “With a nonpermanent treatment, the reason [jewelers have to disclose] is because the product may change over time. But when something is permanent, it will always look the way it does when you bought it.”

Most gemologists reject that logic. GIA’s Shigley thinks it leads to another definition problem. “We don’t have a good definition of ‘permanent,’ ” he says. “Does it mean forever? One year? Ten years? What if it can be reversed by extreme heat?” And Nassau notes that “there are some awfully drastic permanent treatments.”

As it turns out, even FTC agrees—sometimes. The Jewelry Guides list several permanent treatments that have to be disclosed, including pearl culturing and certain forms of gem irradiation. “Permanence alone is not necessarily the standard for disclosure in the Guides,” Gardner says. “The standards vary from product to product. There’s no internal consistency.”

Why the discrepancy? The Jewelry Guides were written with input from the trade, which clearly favors some treatments more than others. Many industry leaders worry that when you define everything as a treatment, you put well-accepted processes, such as the heating of sapphires, on the same “moral level” as controversial ones, such as fracture-filling. (That thinking lay behind the diamond industry’s one-time opposition to disclosure of laser-drilling.) Some also believe that if a process is routine or traditional—Zaijeck’s “enhancements”—mandating disclosure could be burdensome. “If you call every emerald in the store ‘treated,’ that wouldn’t be particularly good for the industry,” says Ogden of CIBJO, which nevertheless favors full disclosure.

Gardner, a relative newcomer to the trade, says she doesn’t buy such distinctions. “To me, the fact that something’s been done for hundreds of years is not necessarily relevant,” she says. “I think the consumer still wants to know.” AGTA agrees, mandating disclosure of every treatment, well-accepted or not, in its Code of Ethics. “We’re not making value judgments on these treatments,” says Douglas Hucker, the organization’s executive director. “Our view is, if it’s done, it’s done, and it should be disclosed.”

Other criteria. Price sheet publisher Martin Rapaport has his own take on the disclosure question, arguing that a treatment should be disclosed based on what it does to a stone’s value. “If the value of a diamond upon resale is less than the value of a similar-quality diamond without the treatment, then the treatment must be disclosed,” he writes. Indeed, that would mean both filling and drilling would have to be disclosed, but not the more routine treatments, like acid boiling. But would that affect LKI, whose “enhanced” diamonds will sell for the same price as “non-enhanced” ones?

LKI officials briefly floated another possible criterion—detectability. They argued that since their process is undetectable (and, for all the trade knows, might have been used for years), mandating disclosure is impossible. But the Jewelry Guides have never included detectability as a criterion, and the idea has few fans in the industry. “If something’s done to a stone and no one knows about it, that doesn’t mean it wasn’t done,” Hucker says. Moreover, many argue that “undetectable” is, once again, a vague term. Every treatment is undetectable when it first enters the market, because no one has any idea what to look for. But gemologists argue that every man-made scientific process inevitably leaves “fingerprints” for scientists to discover. “People find a way to detect things sooner or later,” Ogden says.

Given all this, Gardner and others want to develop a consistent set of guidelines so that when someone else develops a new treatment, their legal responsibilities are not in doubt. In the wake of the LKI controversy, Gardner has requested a meeting with industry leaders and FTC attorneys to hammer out a consistent standard. “We are going to have to buckle down and address these differing standards within the Guides,” she says. And, with any luck, we can avoid a “Pegasus 2.”