A Defining Moment for Lab-Grown Diamonds

RAPAPORT... When is a diamond a diamond, and does it matter? Thosewere two key questions that emerged from the wide-ranging changes the FederalTrade Commission (FTC) made to its jewelry guidelines last week. In thatupdate, the US consumer agency amended its definition of a diamond, removingthe word "natural," thereby giving synthetics suppliers ammunition when arguingthat their products are the real deal.That change, on a basic level, is largely academic. Itremains prohibited to sell synthetics just as "diamonds," Sara Yood, seniorcounsel at the Jewelers Vigilance Committee (JVC), explained. "The use of the unqualified term 'diamond' still refers to anatural diamond," Yood said in a statement Thursday. As before, marketers muststill use a word or phrase such as "laboratory-grown" to clarify that theirproducts are not from a mine, though the FTC advises against the term "cultured"without an additional qualifying word. Furthermore, the rules only permit the useof words such as "real" and "genuine" for mined diamonds. (See the JVC's fullinterpretation of the guidelines here.)"In a practical sense, not much changes for the trade," saidReuven Kaufman, president of the Diamond Dealers Club of New York. "If aproduct is sold as a 'diamond,' without other qualifying language, it stillmust be a natural diamond." Even so, the new definition has much symbolic significance.Lab-grown diamond manufacturers will almost certainly use the amendments formarketing purposes, now that they can tell consumers that their stones are diamonds even if they're not from the ground. The new guidelines "have created confusion andmisunderstanding as they redefine the word 'diamond' to include synthetic,man-made, non-natural, artificial, imitation diamonds," Martin Rapaport,Chairman of the Rapaport Group, said in a trade alert Monday. Those stones might have "essentially the same optical,physical and chemical properties as mined diamonds." But the FTC's decision isbased merely on diamonds' physical properties, rather than on "scarcity andvalue differentiation," Rapaport added. Standard deviationThe move could force the trade to rethink its currentpositions. The FTC is now at odds with the International Organization forStandardization (ISO), which in 2015 defined the mineral as being "created bynature," stating that "the denomination 'diamond' without further specificationalways implies 'natural diamond.'" The new delineation also conflicts with thatof the Blue Book, the set of industry standards the World Jewelry Confederation (CIBJO) publishes, and with the "Diamond Terminology Guideline" that ninenatural-diamond organizations published in January. None of the members of the technical committee responsiblefor the ISO's treatment of jewelry and precious metals has asked for a reviewof its standards yet, a spokesperson for the organization said Saturday.However, CIBJO may need to amend its Blue Book - which acted as the basis forthe ISO's standard - in light of the FTC's decision, according to GaetanoCavalieri, president of CIBJO. The confederation's diamond commission willdiscuss whether its characterization of the mineral is still valid at itsOctober congress in Bogota, Colombia, Cavalieri added. "Clearly [the congress] session will be among the mostimportant conducted in recent memory," he said. Growing confidenceLab-grown diamond companies, on the other hand, welcomed theFTC's changes. They also had other wins, such as new permission to use a widerrange of terms to describe lab-grown diamonds than before, as well as thecommission removing "synthetic" from its list of recommended adjectives.Members of that sector have long criticized the ISO's definition of diamond, claimingit only served the natural industry. "Removing the word 'natural' [from the FTCdefinition]...legally clarified what we produce: diamond, identical to anaturally occurring diamond," said Tom Chatham, CEO of Chatham Created Gems& Diamonds. The FTC's previous guidelines, which it wrote in 1956, didn'tmake sense anymore, lab-grown diamond manufacturer Diamond Foundry argued incomments during the FTC's review process. The commission agreed, explainingthat mining was no longer the only way of producing diamonds. MartinRoscheisen, CEO of Diamond Foundry, hopes the change will be a "call to action"for the ISO. "We are presently reviewing how to champion change in regardto the ISO," he added. Emotional battleSynthetics makers are mainly acting on principle, as fulldisclosure is still obligatory by all standards. However, their endeavors showthe emotional importance of the FTC's decision, even if the practical implicationsremain the same. "To equate a natural diamond with a synthetic stone, irrespective of how they were sourced, is akin to saying that an original Rembrandt is the same as a forgery, simply because they both physically are paintings," said Cavalieri. "Just as that would clearly be unacceptable, so should be likening diamonds sourced in nature to those mass-produced in a factory."The dispute over what defines a diamond, while theoretical on the surface, goes to the heart of the debate, as it represents a turf war between the two sides.Image: Diamond Foundry