The Certification Scam That Will Hurt

This is my last column for 2013. In less than two weeks 2013 will end, and another tough year for the diamond industry will be finished. In the past, this column discussed events in the industry characterized by illegal actions, immoral behavior and a host of other wrongdoings. It led to the conclusion that these actions will hurt the image of diamonds and diamond jewelry in the eyes of consumers. It is not a stretch of the imagination to believe they will not want to spend their hard-earned money on what can be viewed as supporting these questionable actions. I might be wrong.

Two years ago, for example, I wrote about the Lazare Kaplan’s lawsuit against Antwerp Diamond Bank (ADB): “As an industry, we need to brace ourselves for the outcome. (…) war is headed in our direction; a war for the good name of a very precious and unique product. It won't be a pajama party.” About a month ago, a New York Times reporter called to ask about the public's reaction to the case. Truth be told, there wasn’t a meaningful response that resulted in a drop in sales.

A far more publicized issue, conflict diamonds, got plenty of attention following the release of the movie ‘Blood Diamond’ but did not result in a noticeable decline in diamond jewelry sales either – in the US or elsewhere.

Are consumers a gullible group of people, driven by personal desire to look pretty that outweighs care for others? Is it possibly a misplaced expectation that consumers be more moral than the lowest among the diamond industry? Or is it possible that the real issue is that most consumers care only when it affects them personally? There is no doubt that a concern for being ripped off or conned is more discerning than what happens to other, anonymous people – such as diamond diggers – on the other side of the world.

Of course, that is not a cause for celebration – for most people or for those perpetrating the wrong doings. We should not ignore the higher standards of society, even if there are those who do. Our constant aim should always be to do better. Now let’s all hold hands and sing a harmonious round of Kumbaya. Nothing will happen on its own. We must fight for a better place, not just hope for it.

Of all the unlikely sources, two local TV stations in the US may shake people out of their slumber, as Rob Bates reports. They reported on an age-old scam that too many took part in – selling low quality diamonds as high quality goods. The scam is simple: buy low-cost diamonds and have them graded by a lab that has, let’s call it “different” grading standards. What the GIA or AGS may grade as an “I” clarity would get an SI or even a VS2 at such a lab. The difference in price between an I clarity and a VS clarity is hundreds, if not thousands of dollars – depending on the size of the diamond. Combined with how much the diamond’s color gets “upgraded” too, and a consumer will pay much, much more than they should. Now that is personal.

Imagine seeing or hearing of these news stories on the eve of purchasing a diamond. What is the chance a purchase will actually be made? Slim. Slim because a consumer does not want to be conned out of their hard-earned money, which is what may happen if he or she steps into a store offering such goods – and whose to know which stores do this? It is simpler to avoid diamonds all together. Broadcast during the holiday season purchase madness, this is even more damaging.

So where does this leave us? On which side of history will we be?

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