JVC, One Spin Too Many
July 24, 08Eleven U.S. and international diamond, jewelry and pearl trade associations petitioned the U.S. Federal Trade Commission (FTC) with one fundamental request: amend the FTC jewelry guides and state “that it is deceptive or unfair to use the term ‘cultured’ to describe laboratory-created gemstones.” In a unanimous (4 to 0) decision, the FTC knocked down the specific request and went the other way – all the way.
Actually, the FTC specifically allows the use of the term “cultured diamonds,” though it described some guidelines as to how the term should be used. It also specifically found “that there is insufficient evidence to establish that the qualified use of the term ‘cultured diamonds’ is deceptive or unfair.” Any way one looks at it: the petition was totally denied.
Upon receiving the FTC’s ruling, the prestigious Jewelers Vigilance Committee (JVC), the “industry’s guardian of ethics and integrity… a resource for the entire jewelry industry,” which spearheaded the petition effort, immediately turned into spin mode. President and CEO Cecilia Gardner told trade blogger Rob Bates “our view is we won. The FTC said that, if you just call it cultured, that’s insufficient. I’m very pleased with that.”
It really needs a considerable amount of guts and a fair measure of audacity to be knocked down and then to declare victory. But Ms. Gardner is entitled to her opinion and, maybe, her expectations were so low that anything may seem to her as an astounding success. She is an experienced professional; she knows what she is doing.
However, there are also limits to spin. A short JVC press release tries in an ethically rather questionable way to suggest that the FTC agreed with the JVC on something. Says the JVC: "The FTC agreed with us that the use of the word ‘cultured’ alone to describe synthetic gemstones would be insufficient to protect consumers.” That statement isn’t correct on various scores.
First of all, to the best of my recollection, the JVC has never said that that the word “cultured” alone would be insufficient to protect consumers. The JVC has always maintained that the very use of “cultured” to describe a synthetic diamond is misleading, deceptive, etc. irrespective of whether it stands alone or not. So why imply that the FTC agreed with the JVC on anything while, in fact, every single request was unanimously defeated?
Secondly, the FTC statement did NOT say that the word “cultured” alone would be insufficient to protect consumers. The JVC’s suggestion to that effect is misleading – and apparently part of a spin to imply congruence between JVC and FTC positions where there is none. The FTC states: “The Commission does not conclude that the use of the term ‘cultured’ by itself is sufficient to qualify the term ‘diamond’ when describing stones created in a laboratory. The Commission was not asked to evaluate whether ‘cultured’ may be used alone to qualify the term ‘diamonds.’” [Emphasis added.]
Contrary to what the JVC wants its members and worldwide following to believe, the truth is that the FTC says that it has NOT reached a conclusion, because it wasn’t asked to rule on using the word “cultured” alone. The JVC’s spin has really gone out of control; the only point of “agreement” to which the JVC press release refers is in respect to a position that the JVC never publicly espoused before and that the FTC, itself, specifically didn’t address since it wasn’t asked to do so.
Thirdly, to ensure that the spin will be soundly anchored in our minds, the JVC continues to develop its success story by noting “their [i.e. FTC’s] ruling that marketers be required to include one of the four clear terms already obligatory under the Guides that disclose the true nature of the product will go far to protect against consumer deception.” What “deception” is the JVC referring to? Here, the JVC sticks to its own time-honored position that the word “cultured” is “deception” – a view it shares with all the other petitioning associations and with many (if not most) people in the natural diamond business. The JVC is entitled to its opinion. But the context of that statement is questionable.
The JVC sticks to its consumer deception notion, while the FTC has actually said quite the opposite. The FTC states: “The Commission concluded that there is insufficient evidence to establish that the qualified use of the term ‘cultured diamonds’ is deceptive or unfair.” It repeats that statement in its conclusions and asserts positively: “The Commission cannot find that the use of the term ‘cultured diamonds’ is unfair.”
Again, while it is JVC’s prerogative to continue to hammer the “deception” flag, it seems dubious to me to use the word in a context where the FTC has clearly not established any deception.
Quality Research Needed
A careful reading of the FTC ruling shows that it is a “work in progress.” The FTC is apparently looking for more documents, for more information and for more research. It is leaving a door open to amend its views in the future – something which one should consider as probably the only positive point from the petitioners’ perspective. The petitioners ought to consider accepting the challenge.
But, before doing so, the JVC and the other petitioners must have the intellectual integrity to analyze what actually happened. What went wrong. The petitioners submitted three consumer-perception surveys from which the FTC needed to decide whether marketers’ use of the term “cultured” to describe laboratory-created diamonds is likely to deceive consumers. “The petitioners contend that the three surveys they submitted demonstrate that the use of the term ‘cultured’ to describe laboratory-created diamonds misleads consumers to their economic detriment,” says the FTC, which found methodological flaws in the surveys preventing it from reaching similar conclusions.
Also on other points, such as the international harmonization arguments, the soundness of the reasoning was questioned. In essence, the petition’s supporting documents, research and consumer surveys failed to have an impact and/or were dismissed as “insufficient evidence” to support the petition.
My concerns are not with the FTC decision itself or whether the term “cultured diamonds” should or shouldn’t be used. My concern is with the way the JVC conveyed the essence of this enormously important FTC decision to the public. Instead of spinning (“we won”), it would have been better to give positive guidance.
The bottom line of the FTC decision is that you are allowed to advertise the term “cultured diamonds” – provided that somewhere else in the advertisement it becomes clear that the diamond is laboratory-grown. The FTC notes specifically that “in evaluating whether a representation is misleading, the Commission examines not only the claim itself, but the net impression of the entire advertisement.” The operational conclusion of the FTC ruling, as far as the market is concerned, is not only that it approves of the use of the term “cultured diamonds” but also cautions that the “staff will continue to evaluate advertising using the term ‘cultured diamonds’ on a case-by-case basis and recommend enforcement action when appropriate.”
Thus, the term "cultured diamonds" is allowed – and it would have been nice if the JVC would have given this guidance to the industry – as its mission statement endeavors.
What troubles me – and quite a few others – is the unnecessary spin of the JVC. It is the guarantor and guardian of marketing integrity. Surely, that would also apply to its own press releases – especially very important and significant ones, in areas where JVC is seen as the foremost (and maybe only) authority.
To quote one U.S. industry captain with an interest in this whole issue: “In an environment where there is an increasing demand for transparency and governance (both from outside of the trade and within) this type of blatant misinformation and deceit is totally unacceptable and is exactly what groups like the JVC are mandated to be fighting against. Is it just me or does is appear that many of our industry’s trade organizations seem bent on doing their best to work themselves into irrelevancy? I also wonder if the other signatures to the petition were asked to comment on the press release prior to the JVC sending it out or are they simply going to be ‘painted with the same brush’ due to their involvement in the original petition?
“With the world’s economy in the mess that it is and the ever growing competition for the average consumers shrinking disposable dollars, we as an industry (the diamond jewelry trade) can ill afford to continue to act in the arrogant way that we do and potentially reduce the public’s confidence in our product (diamonds...regardless of source) any further.”
There is no need to elaborate. Personally, I have always greatly admired the many ways the JVC and Cecilia Gardner protect the consumer against misleading statements. One unfortunate press release is not going to change my wholehearted support for what the JVC is doing. They are doing by and large a terrific job.
The “cultured” debate is one of the hottest issues facing our industry and future. The JVC succeeded in getting its views out very quickly and decisively. Press reports talk about victory – where there was none and “compromise” – where there was none. That, by itself, underscores how effectively the JVC can manage and shape market views. None of this changes the fact that the petition to amend the FTC rules was utterly and totally denied.
Have a nice weekend.