Fraud and Deception in Internet Jewelry Stores

The idea of fraud and deception within the retail jewelry business is not a topic that I am comfortable discussing.  After all, I have spent a lifetime within the wholesale diamond trade. There comes a time, however, when at the potential expense of harming the industry as a whole, it is necessary to speak about such fraud and deception in the hope that I can protect a consumer from being duped and deceived by unscrupulous diamond sellers.

As for me personally, this post is about my personal frustrations.  In business or whatever we are doing in life, the one principle that we wish for is that we are all playing on a level playing field.  Certainly one may sometimes attempt to gain an edge in one way or another (perhaps by deflating a football below regulation pressure!), but when you see things that make you realize that the playing fields are not even on the same planet, it is necessary to speak out.  These are the times that you wish there was some sort of “Internet Police” or at least the “Jewelry Police”. Unfortunately there is no one in the universe who regulates unscrupulous jewelry practices whether in bricks-and-mortar or online internet jewelry stores!

A few years ago, a local diamond seller here in my city was successfully sued by Tiffany & Co.   In a suit that was eventually settled for $600,000.00 in damages paid to Tiffany and Co in addition to hundreds of thousands of dollars in legal fees, the suit correctly alleged that the seller was selling counterfeit Tiffany jewelry on Ebay as well as on the seller’s website. Quite simply, this jeweler was making diamond engagement rings in a mounting very similar to that used by Tiffany & Co. and was supplying his own diamond and stamping the ring with the Tiffany & Co. trademark.

It is interesting to note, in this case, Tiffany successfully sued the seller on the basis that ‘It’s reputation and name were infringed upon by the defendant’s sale of counterfeit jewelry”.  The buyers, however, were not a party to this lawsuit although they were the party that was truly damaged.  The counterfeit “Tiffany & Co.” engagement ring was worth significantly less than the “real” Tiffany & Co. engagement ring.  In addition to the item not being authentic, you can be sure that the quality standards of the diamond ring was significantly inferior to what they “thought” they were getting!

The Tiffany story that I have just told is unique in that, whereas the jewelry buyer was duped and deceived, it was the legal department at Tiffany & Co. that successfully pursued the deceptive and fraudulent diamond seller.  In most cases, innocent diamond dealers like myself must stand by and watch as deceptions and frauds occur and consumers are misled and cheated.  As previously stated, there is no one who polices or otherwise enforces ethical and honest standards. And no one who protects the consumer!

I must admit that I do sometimes waste my time looking at jewelry on the internet.  Often I see deals that are too good to be true. This is because these deals usually show photos that do not accurately represent the actual item and make claims with regard to quality standards that are greatly exaggerated. It is like seeing an advertisement for a new Mercedes Benz for the price of a used 1990 Hyundai.  As one who is familiar with the diamond industry, “I know it ain’t so” and understand that there is inherent fraud and deception in the promoted product.  Unfortunately, the buyer who purchases the promoted item is either very much uninformed or just doesn’t care about the falsified information because he otherwise cannot afford the desired item.  In the end, the buyer is buying an item that is often significantly different from the advertised jewelry item.

Throughout time there has been the expression of “Caveat Emptor” or “Buyer Beware”. Quite simply, this expression states that the buyer’s responsibility to do due diligence and to decipher fact from fiction when making a purchase. This is especially true when purchasing a diamond or diamond jewelry. Sometimes it is important to know that it is just simply not possible to buy a dollar bill for10 cents or 25 cents!  Again, I repeat  – It is just not possible!

An illustration of such a deal is shown in the image below.  This image is that of a screenshot that I took on my computer yesterday of an actual item promoted on a jewelry website. The headline reads “Diamond 3.50CT Engagement Ring – Round Brilliant Cut 6 Prong 14K White Gold”  The purchase price for this item is the unbelievable low price of $2,699.99!  Even more amazing than the low price was the fact that this vendor has concluded thousands of transactions!

Pompei Eng Ring

I can understand how an uninformed buyer may think he has discovered Internet Nirvana with this product offering and the thousands of other jewelry items offered by this seller.  After all, in my wholesale world where I buy and sell diamonds to reputable retail jewelers, a 3.50 carat round brilliant diamond sells on the wholesale trading market for between $25,000.00 to upwards of $100,000.00 or more.  Yes, there are “garbage” quality diamonds that have no beauty and little value that sell for less money.  There are also boarded-up houses that are inexpensive in neighborhoods where you dare not enter!

pompeiActualPhoto

The photo to the right is a photo of the actual ring.

Without going into the details of the many levels of fraud within the context of this particular item, all I can say is this:  Imagine you have somehow managed to get a date with Margo Robbie on an Internet dating site and when you show up at your romantic dinner to meet your internet date, Margo Robbie turns out to be Rosie O’Donnell!

I understand that a diamond engagement ring may be the desired object of the buyer. There are many beautiful engagement rings that can be purchased for $2,700.00 or less.  But, trust me that you do not want this advertised diamond ring even if you could get it for $2,699.99!

The Federal Trade Commission sets forth guidelines for jewelry advertising:

16 CFR 23.2 – Misleading illustrations.
It is unfair or deceptive to use, as part of any advertisement, packaging material, label, or other sales promotion matter, any visual representation, picture, televised or computer image, illustration, diagram, or other depiction which, either alone or in conjunction with any accompanying words or phrases, misrepresents the type, kind, grade, quality, quantity, metallic content, size, weight, cut, color, character, treatment, substance, durability, serviceability, origin, preparation, production, manufacture, distribution, or any other material aspect of an industry product.

As for the details of this fraud, the advertised photo appears to be a nice ring.  The actual photograph is of a lifeless, worthless, brownish color diamond that is very highly included (I3 clarity) and, most importantly, UGLY!

The terms of the website advertisement states that the ring is 3.50 carat.  The actual center diamond is a 2.00 carat diamond – worth considerably less than the promoted 3.50 carat size in the ad’s headline description.  Furthermore, the diamond is promoted (in the small print) as HI color and I2-I3 clarity..  The diamond is certainly I3 clarity as seen in the photograph.  The “I3” clarity grade is the absolute worst clarity grade for a diamond and is rarely used in jewelry.  As for the color, though the promised color grade of “H/I” is very common and very acceptable, the diamond in the photo (which I requested from the online merchant and had to make several attempts to obtain!) is of a brownish color that is not within the GIA color grading scale.

The bottom line is this: Yes, it is possible for someone to sell this ring for the low price of 2,699.99.  This ring is made from worthless diamonds that have no value and, more importantly, no beauty. None!

NDR-3.00 RBCThis is what a diamond engagement ring is supposed to look like. It should be something beautiful.  It should be a magnificent work of nature that is filled with brilliant color and scintillation and “fire”. It is these qualities that make a diamond desirable and valued.

The internet seller of the ring pictured above has many thousands of items for sale on the company’s website as well as EBAY and other websites.

Additionally, there are hundreds of other internet websites offering similar worthless diamonds and diamond jewelry at otherwise appealing price points.

I believe in the beauty of diamonds and diamond jewelry.  Unfortunately, I also have come to believe that the internet can be a dangerous place for consumers who want to believe that they have found their Internet Nirvana!

Caveat Emptor!

 

 

Follow Up:   Fraud and Deception in Internet Jewelry Stores; Caveat Emptor- Part II 

 

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