U.S. FTC Warns Synthetic Diamond Companies About Deceptive Marketing

03/04/2019 09:40

The U.S. Federal Trade Commission, which investigates allegations of deceptive advertising, sent eight letters to jewelry marketers warning them that some of their online advertisements of jewelry made with simulated or laboratory-created diamonds may deceive consumers, in violation of the FTC Act. The organization warned that failure to follow the Guides may result in enforcement actions if the FTC determines the companies engaged in unfair or deceptive acts or practices.

Specifically, the FTC points out examples where the advertising might imply that a simulated diamond is a lab-created or mined diamond, or that a lab-created diamond is a mined diamond, or where required disclosures about the source of the diamonds are not proximate to the individual product descriptions on their websites. Some companies had ads showing pictures that appear to be diamond jewelry or use the word diamond without disclosing close to the product depiction or name, or in the product description, that it was a lab-created or simulated stone. FTC staff also encouraged companies selling simulated diamonds to avoid describing their products in a way that may falsely imply that they have the same optical, physical, and chemical properties of mined diamonds.

Furthermore, several letters also note that the companies have advertised their jewelry as “eco-friendly,” “eco-conscious,” or “sustainable,” and that such terms can be interpreted to imply certain specific environmental benefits, while "it is highly unlikely that they can substantiate all reasonable interpretations of these claims." The FTC adds, "Sellers must have a reasonable basis for making such claims for any products and the claims should be adequately qualified to avoid deception.” The FTC has asked the companies to advise them within 10 days of receipt of the letter of the steps they plan to take to revise their marketing so that it follows the Jewelry Guides.

According to Reuters, the FTCdeclined to identify the recipients of the letters, but an unredacted version of one of the letters seen by Reuters identified that recipient as Diamond Foundry, a California company that makes laboratory diamonds. Diamond Foundry declined to discuss whether the letter would lead to changes in its marketing. The Diamond Producers Association (DPA) welcomed the FTC insistence that companies distinguish between diamonds that are mined and those that are made in laboratories. “The DPA has for several months expressed serious concerns about misleading marketing communication and unsubstantiated eco claims coming from many laboratory grown diamond marketers,” DPA Chief Executive Jean-Marc Lieberherr told the news outlet. De Beers said it was pleased by the move, adding the two kinds of diamonds were “distinct product categories.”

In 2018, the FTC made a number of changes to its traditional guidance regarding both lab-grown diamonds and diamonds in general. It removed the word 'natural' from the definition of a diamond; allowed new descriptors for lab-grown gems as long as they clearly describe the product as not mined; said that implying lab-grown stones are not real could be deceptive and deleted the word synthetic from its list of approved lab-grown descriptors. However, the new guides require that all lab-grown diamonds must be clearly and conspicuously disclosed.