In this column, members of the jewelry industry can state their views, wax poetic or otherwise pen their thoughts in slightly longer form than the traditional letter to the editor. We welcome your submissions. Please send them to P.J. Donahue, JCK, One Chilton Way, Radnor, PA 19089; fax (610) 964-4481, e-mail firstname.lastname@example.org.
JBT RESPONDS TO JEWELER’S CRITICISM
by Nathaniel Earle Jewelers Board of Trade East Providence, R.I
While reading Mr. Pollack’s letter outlining what he believes to be the “strong arm” tactics and unfair practices of the Jewelers Board of Trade (see “Federal Fair Credit Reporting Act & JBT,” JCK, April 1997, p. 31) it was readily apparent that his argument reflected several inaccuracies, omissions and misconceptions which, in fairness to JBT and to all who either seek or grant credit within the jewelry industry, must be brought to the attention of your readers.
The Federal Credit Reporting Agency Act was enacted in 1970 by Congress to require that consumer credit reporting agencies adopt reasonable procedures for meeting the needs of commerce for assembling information pertaining primarily to consumer credit, personnel and insurance matters in a manner which is fair and equitable to the consumer. The general purpose of the act is to protect the reputation of the consumer with regard to inaccurate information contained in a consumer credit report which is being used to determine an individual’s eligibility for credit, insurance or employment. However, the measure specifically was not enacted to protect consumers in procuring business (commercial) credit, as subchapters of the law expressly do not apply to commercial credit reports or business credit reports pertaining to business activities of individual persons, such exclusions being clearly supported by case law and legal proceedings recorded during the past 20 years. In short, there must have been ample discussion and adequate reasons which led the lawmakers who drafted such legislation to not simply omit commercial credit reporting activities from the scope of such laws, but to expressly exclude them!
Legal considerations aside, Mr. Pollack questions why JBT does not voluntarily comply with the provisions of the law pertaining to consumer protection as a means of avoiding the hypothetical “horror story” which he portrays. In response, JBT wishes to relate its own hypothetical scenario:
Hypothetically, let us assume that JBT were to agree to reveal the names of creditors whose trade references appear in JBT credit reports. In the case of ABC Jewelry Inc., 20 trade references appear in the credit report, with 14 of these trades accurately indicating some degree of slowness and the other six reflecting prompt payment, the result being that ABC is assigned a “53” rating by JBT.
Obtaining a copy of its own credit report containing the names and references of the vendors who are reporting its delinquent paying habits, ABC contacts these same vendors threatening to stop all future payments and/or cancel all future orders and/or file a lawsuit for libel and slander unless the vendors immediately contact JBT to report now and in the future that ABC is a prompt-paying account. Not wishing to jeopardize cash flow or future orders and wishing to avoid an annoying and costly lawsuit brought by contingency fee attorneys, the creditors comply with the request.
Going forward, despite continued slow payments, all of ABC’s vendors report ABC as a prompt paying account. JBT responds by changing ABC’s credit rating to a “51”.
There are two very important points to consider in evaluating the above scenario. First, the scenario is not strictly hypothetical, rather a somewhat common occurrence in our experience. To illustrate, there are jewelers who obtain copies of their own JBT reports and who, through either guesswork or the matching of the nature and dollar amounts of trade references, are able to make an “educated guess” as to the identity of those creditors who, albeit accurately, are reporting a history of slow payments from the jeweler. Once the supplier is identified, the “strong arm” tactic as outlined above is employed, leaving many creditors with no choice but to accede to the request of the debtor. Secondly, imagine the “horror story” which would follow if the above-described scenario were to become prevalent within our industry. “Slow paying” accounts would ultimately be accorded credit ratings similar to those assigned to businesses who pay their bills promptly. With no means of measuring the true creditworthiness of an account, many suppliers would be forced to drastically revamp their credit policies and/or pricing, with such changes having a potentially adverse impact on all jewelers.
Moving away from addressing hypothetical situations, there are several points raised in Mr. Pollack’s letter which are inaccurate and which deserve appropriate attention and correction, as follows: While Mr. Pollack asserts there is “no procedure to allow (one) to dispute any information,” JBT wishes to emphasize that such a procedure does exist. Specifically, any member of the industry can contact JBT and speak to the credit investigator (and manager) assigned to his/her account to review the basis for an assigned credit rating. By providing JBT with the names of current suppliers as well as the terms under which credit is extended by these suppliers, JBT can seek to expand the information contained in the report as well as verify the accuracy of such terms with suppliers. Where discrepancies exist, JBT will endeavor to educate either or both parties in an attempt to remedy the differences.
Mr. Pollack states there are wholesalers who are annoyed by the fact that there are too many retailers with a “–” (blank) rating appearing in JBT’s Confidential Reference Book as a result of the decisions by these retailers not to submit financial statements to JBT. While it is true many jewelers in all sectors of the industry elect to withhold financial information, their JBT credit reports often contain a wealth of information – trade and bank references, public filing information, antecedent information on the business and its management, etc. – which may be of sufficient quality and quantity to allow JBT to assign a partial rating or can assist a vendor in formulating a credit composite as a basis for making an informed business credit decision. Furthermore, there are many “–” rated accounts whose complete financial statements are included in the corresponding JBT report but which, for documented reasons, are assigned a “–” rating by JBT. Belatedly, it should be noted that JBT has undertaken a substantial effort in recent years to educate its members as to the advisability of ordering a current credit report as opposed to placing sole reliance upon a Red Book rating which, due to the volume of information regularly received and promptly processed by JBT, may quickly become outdated.
While Mr. Pollack may refuse to submit financial statements to JBT until it adopts consumer credit reporting standards, we wish to remind him that he has previously submitted financial information to JBT which is contained in his current credit report. Details regarding this information as well as the reasons underlying his currently assigned “–” rating may be reviewed by JBT members who elect to order the report. As to other information contained in the report, we wish to emphasize that the JBT report on Mr. Pollack’s business originally reflected his home address, as his business was once operated from his personal residence. As the business now reportedly operates from a commercial address, the personal residence address is no longer contained in the JBT report.
Mr. Pollack states that “as a small operation, [his] business credit information is the same as [his] personal information and should be treated with equal respect.” JBT wishes to remind Mr. Pollack that his business is incorporated and, as such, is a distinctly different “person” or entity from Mr. Pollack, the individual. In view of this important distinction between the commercial business corporation and the consumer, JBT will continue to apply the standards substantially similar to those employed by other commercial credit rating agencies while maintaining the respect due both the business and its individual owner.
Finally, JBT wishes to emphasize that it serves as a vehicle for business in the jewelry industry to efficiently exchange credit and background information. As already noted, such information may include financial statements, a complete list of current suppliers, banking references, the history of operations and antecedent information on the principals of the business. When added and compared with other assembled data, this information will hopefully provide the reader with sufficient detail to assist in the formulation of an informed business decision which will serve as the basis for establishing and maintaining healthy and ongoing business relationships.
WHO DO THEY TRUST
I really enjoyed reading a little article in Market Place titled “Who Do They Trust, Where Do They Buy?” (JCK, April 1997, p. 36). The article states that according to a JCK/JA quarterly poll, 48.5% of the consumers polled picked the independent jeweler as the jewelry source with the most integrity and honesty. Of those same consumers, only 3% bought from the independent jeweler. You know, as we independents lose more and more market share to the big guys, you may find more and more of us independents working for them. We will be dynamite salesmen for them, though, because we’ll have the best line of all: YOU CAN TRUST ME, I USED TO BE AN INDEPENDENT!!!!!!
Jamie Sharples Sharples Jewelry Chinook, Mont.
STAND UP FOR BELIEFS
I disagree with your policy of printing unsigned letters (“Everybody’s A Jeweler!” (JCK, March 1997, p. 29). If the letter writer is so passionate about our industry, he should sign his name and stand up. This person’s idea for licensing businesses and individuals to sell jewelry is ludicrous. Does he want bureaucratic pencil-pushers defining standards? Just look at what the feds did with laser drilling.
Why stop the licensing of salespeople with jewelers? “Why start with jewelers?” is a better question. If the public needs to be protected, let’s get our priorities in order. The person selling you your car or furnace can hurt you more than a jeweler can. Not that I condone it, but no one has ever been hurt or killed because their jeweler misled them. Can the same be said for a car dealer who resells a totaled vehicle without disclosing the damage?
Dear name withheld, there are plenty of avenues for a disgruntled customer to seek fairness. Licensing and regulating everyone who sells jewelry isn’t the answer. You sound like a competent merchant who must possess a great knowledge about our industry. Do your job, educate your customers and tell the world about yourself. Don’t hide in obscurity.
Jay Seiler Security Jewelers Duluth, MN
QVC & HSN: N.G.
All the trade magazines have been singing the praises of QVC and HSN for years! Why? They lie and they tear the independent jewelry stores to shreds! Their ethics are not AGS standards! We should use them as a bad example, not a good one! Thank you for your time.
Stuart & Lucinda Palestrant via e-mail
DON’T FORGET THE MIDDLE CLASS
I read with great interest your editorial on luxury (JCK, April 1997, p. 288). It seems you are totally preoccupied with the thought of every jeweler in America catering to the ultrawealthy, because “the middle class increasingly is too busy saving for college and searching for bargains at mass merchandise stores to patronize a lot of jewelers.”
You ought to get out of your office more often and start to walk the shopping malls and streets of America. Encouraging retailers to cater to the ultrawealthy by highlighting what a few have successfully accomplished is a very unfortunate point of view for a magazine representing the entire jewelry trade.
If you were to analyze the sales of jewelry, watches and diamonds, I am sure you would find that jewelry stores are still the most important source of products for the middle class. A very large number of very astute retailers make their daily sales volume selling to the middle class.
In fact, there are very few true luxury jewelry stores in America, compared with the total number of good quality independent and chain jewelry stores. While the idea of going up-market is a valuable concept, there are very few people in America who go as far up-market as your article claims.
Finally, I challenge you to find out what percentage of Tiffany & Co.’s sales are for true luxury products and how much of its volume is done to corporations that are buying items under $500 at retail. Those of us in the middle class protest. Your thoughts may be noble, but your facts are less than middle class.
Laurence R. Grunstein, president Citizen Watch Co. of America Inc. Lyndhurst, N.J.
[Editor’s note: While it is difficult to believe that the president of a large watch company is in the middle class, JCK acknowledges Laurence Grunstein’s very important point. That’s why the JCK Luxury section is planned to appear in JCK only four times a year. Throughout the rest of the pages of the issues in which JCK Luxury appears, plus the other eight issues, we will continue to cover the entire jewelry market.]
Ben Janowski’s article on selling diamonds today (“Diamonds May Be Forever, But How They Are Sold is Not,” JCK, April 1997, p. 90) is a masterpiece, providing the framework for a clinic on changes in the industry landscape in recent years. I hope all tradespeople – at every level of the diamond pipeline – take stock of what Janowski has articulated, and as importantly, develop strategies to cope and even thrive in the context of the present and future he describes.
It is easy to become complacent, set in one’s way, or simply discouraged amid today’s rapid pace of change. While there are no easy answers to the challenges that will confront this industry in the coming years, half the battle is recognizing these changes and accepting them for what they are: opportunities to grow and stay constructively ahead of competition.
I commend Ben Janowski for a wonderful and timely contribution to the literature, and JCK for providing it.
William E. Boyajian, president Gemological Institute of America Carlsbad, Cal.