FTC Issues Warnings to Sellers of Lab-Grown

RAPAPORT... The US Federal Trade Commission (FTC) has sent letters toeight companies selling lab-grown or simulated diamonds, warning that theirmarketing violates the government's recently issued guidelines. In the letters, the FTC notes some of the companies'advertising may be deceptive to consumers, specifically in instances where themarketing implies a simulated diamond, such as cubic zirconia or moissanite, iseither synthetic or mined, or that a lab-grown stone comes from the ground, itsaid Tuesday. The FTC cautioned the companies - whose details were not released -not to use the name of any precious stone, including diamonds, to describe asimulated or lab-grown stone, unless the name is immediately preceded by a"clear and conspicuous disclosure that the product is not a mined stone." It also advises companies selling diamond simulants to avoiddescribing their products in a way that may falsely imply they have the sameoptical, physical and chemical properties of mined diamonds. In July, the FTCrevised its guidelines, including its definition of a diamond, from which itdropped the word natural, noting that lab-grown stones have the same propertiesas a mined diamond. However, the chemical makeup of simulants is completelydifferent. In addition, the consumer watchdog has issued warningsagainst using claims such as "eco-friendly," "eco-conscious" or "sustainable"without qualification, noting that these terms can be misinterpreted to implycertain specific environmental benefits. Sellers need to have a reasonablebasis for making these statements, the FTC said, explaining that such claimsare difficult to substantiate. Within 10 days of receiving the letter, all companies arerequired to advise the FTC how they plan to revise their marketing so that itfalls in line with the current guidelines. Failure to respond or meet theregulations could result in enforcement actions or civil penalties from theFTC. The warning emphasizes the FTC's intention to enforce its guidelines, the Diamond Producers Association (DPA) noted."The DPA welcomes the FTC's warning to synthetic diamond manufacturers against misleading consumers with their marketing tactics," it said in a statement to Rapaport News Wednesday. "This warning is an important step toward transparency and consumer protection."Image: A woman wearing a simulated-diamond necklace. (Shutterstock)