Recent changes to the Commission’s jewelry rules add new facets but keep sharpness

Confession

This is hard to admit, but please hear us out.

This article is about eight warning letters sent by the Federal Trade Commission (FTC or Commission) to jewelry marketers. When we ran across it, we naturally gave free reign to our unhealthy desire for snappy pop cultural references. Because dated or not, this one was good: Prince’s 1991 R&B chart-topper “Diamonds and Pearls.” How would we shoehorn it into our finely crafted prose?

Unfortunately, during our research, we were brought up short by a July 2018 blog entry from the Commission announcing revisions to its Guides for the Jewelry, Precious Metals, and Pewter Industry (Jewelry Guides). And there it was: a Prince reference. Our Prince reference. Complete with rewritten lyrics and this groaner: “…we like to think of [the Jewelry Guide] as the C.F.R. Entry Formerly Known as the Guides for the Jewelry, Precious Metals, and Pewter Industries.”

Apparently, we have the same sense of humor as the Federal Trade Commission.

We’re thinking about hanging it up, folks.

Scratching Glass

Back to the fruits of our research (with no further pop references): In July 2018, the Commission announced changes to its Jewelry Guides as part of its regularly scheduled review process. The revisions covered quite a bit – adjustments to alloy thresholds, the nature of composite gemstones, just what “gem” means anyway, and so on.

One of the major revisions tackled “qualifying claims about man-made gemstone products.” For those unfamiliar with the concept, labs have been churning out man-made gems – products that are chemically and structurally identical to mined gems but available at a much lower cost – for some time now.

The old rules advised against marketing a synthetic gemstone product with the name of a natural stone “unless an equally conspicuous ‘laboratory-grown,’ ‘laboratory-created,’ ‘[manufacturer name]-created,’ or ‘synthetic’ disclosure immediately preceded the term.”

The Takeaway

The new rules add a bit of flexibility, allowing marketers to “use words or phrases immediately preceding the gemstone name other than the ones listed … if they clearly and conspicuously disclose that the product is not a mined stone.” For example, the use of the word “cultured” to describe synthetic diamonds creates confusion in the mind of consumers, so it is verboten without an additional tag like “laboratory-grown.”

In its warning letters, the FTC is accusing the unnamed companies of violating the new rules in their online advertising, specifically because they fail to disclose that their jewelry is made with simulated or lab-created diamonds and falsely implies that the jewelry contains mined diamonds. If these companies continue to fail to comply with the new rules, they could face a maximum penalty of $42,530 for each violation. You can view a sample letter here.

In several of the letters, the Commission directs the companies to its Green Guides and further warned them against touting “the environmental benefits of your jewelry compared to mined diamonds … we note that marketers must have a reasonable basis for any environmental benefit claims they make for their products and qualify any such claims adequately to avoid deception.” We wouldn’t blame you for wondering how the same letter could caution against failing to adequately disclose that the diamonds are laboratory grown and at the same time warning about potentially falsely claiming that your laboratory grown diamonds have environmental advantages over mined diamonds.

The timing is unclear, but companies were given at the most two weeks to reply with a plan for revising their ads.