An earrings ad crosses FTC's legal line

The Jewelers Vigilance Committee (JVC) recently received an inquiry on an earrings advertisement that appeared in a local newspaper.

The ad boasted that the company's "laboratories" produced an "unflawed," "lab-created" diamond product that compared favorably to mined diamonds in terms of color and clarity, and in some ways, was superior to mined diamonds. The company's other marketing materials made similar claims.

The question before the JVC: Does such language violate the Federal Trade Commission's (FTC) Guides for the Jewelry, Precious Metals and Pewter Industries, also known as the "Jewelry Guides"?

As the JVC reviewed the advertising materials, a big question arose: What was the company selling? The references to labs and lab-created stones suggested synthetic diamonds, but it was unclear.

The JVC sent the company a letter, asking about the product, but received no response. JVC then purchased the featured earrings and examined both the product and the accompanying literature. Still stumped, the JVC took the jewelry to a respected, independent appraiser for analysis. The result: The mystery product was cubic zirconium (CZ).

From there, JVC's analysis was not complicated, as the FTC guides provide unambiguous direction on imitation and synthetic diamonds.

A synthetic diamond is man-made with pure carbon—the same chemical substance that turns into diamond when exposed in nature to extremely high pressure. While the natural process occurs either deep within the earth's lithospheric mantle, or at the site of a meteorite strike, the man-made process takes place above ground. Despite the difference in production, the laboratory-produced synthetic diamond has the same physical, chemical and optical properties as a natural diamond.

An imitation diamond, on the other hand, does not share the same physical properties as a natural diamond. It is a man-made simulant that resembles a diamond but is not made of carbon. Imitations are typically made of glass or plastic or, cubic zirconium. CZ is the cubic crystalline form of zirconium dioxide (ZrO2), a material that is hard, optically clear and usually colorless. While CZ does a good job of imitating a diamond, it is not a synthetic, and it is not a real diamond.

The differences between the natural, the synthetic and the imitation diamond are reflected in their value, with the imitation being the least expensive. Hence, the goal of the FTC guides is to ensure jewelry buyers are not misled.

Compliance also puts jewelers on a level field, with no one losing market share to exaggerated claims.

The FTC jewelry guides clearly define natural, synthetic and imitation diamonds
and lay down the rules for describing each to consumers in Section 23.23(c): "It is deceptive to use the word 'laboratory-created' to describe an imitation diamond."

What about using the word "unflawed" in ads? Again, the guides are clear. Section 23.26(c) states that it is deceptive to describe any imitation diamond as "flawless" or "perfect"—or anything else that conveys that meaning. So the CZ ad violates this section.

Analysis complete, the JVC contacted the company with its findings and explained that the violations exposed the company to legal action, not only by the FTC, but by competitors who could bring false advertising claims pursuant to the federal Lanham Act.

Now understanding the law, as well as the possible consequences, the company acted quickly. Working with the JVC, it amended its advertisements to be in compliance with the law. For a nominal fee, the company also bought copies of Buying Gemstones and Jewels with Confidence.

This JVC publication (copies of which are available via its Web site, JVCLegal.com) explains the meaning of "synthetic" and "imitation" and includes a description of various diamond treatments that can improve the appearance of a diamond, but also affect its value. These brochures were distributed to the company's employees and became part of its training materials.

To stay in compliance with laws relating to marketing, jewelers should maintain up-to-date information on all applicable regulations and make sure that employees are trained on relevant law. The JVC is there to help by providing general educational resources-as well as jeweler-specific advice.

Suzan R. Flamm, Esq., is assistant general counsel of the Jewelers Vigilance Committee (JVC). In an occasional series of articles, the JVC offers its advice on how industry members can avoid litigation in an effort to benefit the parties to a dispute, and the industry as a whole. The advice is strictly the opinion of the JVC.
Source: nationaljewelernetwork