13 May 2016
Editorial: Assume No Liability for Your Errors!
Reading the disclaimers on the major gem lab reports?
This editorial topic is so heinous that the more I researched it the less enthusiastic I was about writing it: Major Gem Lab Limitations and Restrictions. Above you see the IGI version in actual size comparative to this document, with the exception that I had to darken the very faint type to make it even visible. The original is so faint as to be virtually illegible. And yet, this extremely small and very faint type totally absolves the IGI from any liability for any error in their report, even if it is "...caused by or resulted from the negligence or other fault of I.G.I. or any of its employees..."
EGL USA
If you think that is absurd, read Section 8 of the EGL USA (Issuer) Terms and Conditions:
http://www.eglusa.com/report-terms-and-conditions/
8. Neither the Issuer nor any of its employees or representatives shall be liable for any losses, expenses, or damages (including special or consequential damages), based upon any act, error, omission, inaccuracy, or any other fault of the Issuer or any of its employees or representatives, even if caused by negligence or other fault.
But this one gets worse. In the event that EGL USA employees do make an error of negligence, guess who is financially responsible?
8. (cont.) In any event, any liability shall never extend to a party other than the purchaser and shall never exceed the cost paid by the purchaser for the report.
The "purchaser" is you the jeweler or you the consumer. Which means if EGL USA makes an error of negligence on the report that costs money, it is you who incurs the cost of liability. YIKES!
GIA
The GIA has become the world's foremost authority on deflecting liability of its employees in the event of errors of negligence or any other reason. From my 2014 report: Gem Lab Report Fantasy, here is the GIA disclaimer I found on the back of a GIA Diamond Grading Report:
“GIA and its employees and agents shall not be liable for any loss, damage or expense resulting from any error in or omission from this report or from the issuance of or use of this report or any inscription, even if the loss, damage or expense was caused by or resulted from the negligence or other fault of GIA or any of its employees…”
In other words…….
If we make an error that causes damage….we are not responsible.
If we omit a fact that causes damage….we are not responsible.
If our employees are found to be negligent in doing their work…..we are not responsible.
This type of disclaimer is not limited to the GIA but also to every major lab world-wide. This is the state of our industry. On this basis are virtually all of the diamonds of the world markets being sold to consumers.
The State of the Diamond Industry
The result of the above is that conditions exist in the world diamond industry that look like this:
The world diamond industry relies on major gem lab grading reports to buy and sell diamonds.
The world's major gem labs refuse to take responsibility for negligent errors caused by their employees in diamond grading.
Where does this leave the diamond buying public? Does anyone see that this is totally FUBAR? (look that one up, I cannot actually print it)
Who is really at fault?
The answer to this question is: We all are! The vast majority of the world's diamond industry has abdicated its responsibility to maintain professional training and expertise in diamond grading, and handed that responsibility off to the major gem labs. These gem labs are more than willing to accept the millions of dollars in diamond grading revenue, but not willing to accept responsibility for their employee errors which documented cases show have cost hundreds of thousands of dollars in litigation fees.
What is the future of the diamond industry?
Around 0400hrs this morning I "googled" the search terms: "GIA diamond grading report" and was immediately confronted with this advertisement for Blue Nile you see at left. "GIA Certified Diamonds". I have to wonder if Blue Nile is aware first that GIA does not "certify" any diamond, so in my opinion this is a deceptive trade practice by Blue Nile to begin with. But secondly, and perhaps most importantly, I have to question whether Blue Nile's customers are aware that the "GIA Certified Diamonds" that Blue Nile touts carry a specific disclaimer that the GIA protects their employees from any liability of errors, even if they make negligent errors that cause "loss, damage or expense" to the consumer? This is the unfortunate present and future of the industry.
Final thought to diamond dealers.
One final thought that everyone who sells diamonds needs to think about. When you pitch a diamond sale using a major lab grading report, you are accepting full liability for any error that may exist on that report, including litigation, legal fees and losses.
Stop and think about that for a minute, then compare the two GIA Grading Reports below. Look carefully. Same report, same date, same report number. But one reflects no color treatment, the other says the same diamond is HPHT treated to change its color. This GIA error (which the GIA admitted was their error) resulted in over $100,000.00 in litigation costs.
The GIA hid behind their disclaimer: "GIA and its employees and agents shall not be liable for any loss, damage or expense resulting from any error in or omission from this report...."
Compare the reports below and think about this the next time you allow a major lab to do your diamond grading for you.
Heinous, FUBAR, caca de toro....or just plain nuts. Take your pick. It's the current diamond market, and why the place is in such shambles.
Until we start being diamond professionals again, this is our future.
It is time to re-establish the concept of a professional diamontaire, and end the concept of diamond merchants who cannot grade diamonds for themselves. We can see where that has taken us.
Robert James FGA, GG
President, International School of Gemology
This is my opinion, I welcome your responses and rebuttals. This editorial is archived in the ISG Global Network Archives, Articles and Editorials section. Click the ISG Global Network icon below to join. It is free. Use the ISG logo below right to visit the ISG and learn about our world-class programs in gemology and appraisal.
http://www.isgglobalnetwork.com/assume-no-liability/
©2016 International School of Gemology. ALL RIGHTS RESERVED. We encourage sharing and caring throughout the industry as long as all copyrights are left intact.
