July 30, 2018

"Diamonds Are a Girl's Best Friend" – But Are They Real?

Seller Beware: Consumer Protection Insights for Industry

We previously reported on the Federal Trade Commission’s (FTC’s or the Commission’s) efforts, commenced in 2012, to buff up its Guides for the Jewelry, Precious Metals, and Pewter Industries, 16 C.F.R. Part 23, (Jewelry Guides). By unanimous approval, the Commission has finally adopted amendments to the Jewelry Guides that reflect public comments.

Through its Jewelry Guides, the Commission assists marketers, retailers, and other members of the jewelry industry in avoiding making claims considered "unfair" or "deceptive" under Section 5 of the FTC Act, 15 U.S.C.§ 45. Although they are not legal obligations, the Jewelry Guides provide those "in the business" with very useful guidance as they shape their marketing and advertising strategies. The Jewelry Guides apply to a sparkling array of products, including gemstones, precious metals such as gold, silver and pewter, and pearls (natural, cultured, and imitation). They specify, among other things the proper meaning of the word "diamond"; when a product can appropriately be described as "hand-made"; how a product's gold or silver content should be marketed; and many other facets of jewelry advertising.

Among other things, the revisions speak to products containing more than one precious metal; composite gemstone products; the definition of "diamond"; "cultured" diamonds; qualifying claims about man-made gemstone products; the types of disclosures that should be made for pearl treatments; and how the term "gem" should be used. For example, as to manufactured gemstones, the amendments caution against use of the unqualified terms "composite [gemstone name]," "hybrid [gemstone name]," or "manufactured [gemstone name]," stating that additional disclosures should be used, i.e., stating prominently that that the product: (i) does not have the same characteristics as the named stone; and (ii) requires special care. Among other things, previous versions of the Jewelry Guides did not specifically discuss whether or not the term "cultured" should be used to describe laboratory-created diamonds. The amendments examine this hotly-debated question in depth, concluding with these advisories: the term "cultured" should not be used for laboratory-created diamonds, but marketers may use the term non-deceptively when appropriately qualified -- but should not use the term "synthetic."

Although the amendments are extremely extensive, the Commission has published with the amendments a comprehensive, well-organized, and easy-to-follow Statement of Basis and Purpose, which examines the comments made and the rationale for each of the amendments.

© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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