Is it worth sending gems to the major labs?

[PinkDiamond]

Publicity is finally bringing the issues with the labs to the consumer level, so it will be interesting to see if anything comes of this, but no matter what, it would be good if all the labs upgrading gemstones were exposed so the trade as well as consumers would know which ones are reliable.


Different Grading Lab Standards: Jewelers Strike Back
By Rob Bates, Senior Editor - Posted on May 8, 2014

"Whether it strikes a nerve with consumers, the two-part TV story that ran this week on Genesis Diamonds in Nashville certainly found a responsive audience in our industry, given the number of times I’ve seen it posted, tweeted, and emailed. The story criticized the three-store chain for using what it calls “exaggerated” EGL International reports as the basis for comparison prices. One competitor said: “People think [the store is] comparing apples to apples. They think they’re getting a great deal. But it’s not the same thing.”

Whatever happened at this particular store, the fact that different labs have different standards is old news for the industry. One Florida retailer even started a campaign called Diamonditis, making TV appearances warning consumers about the dangers of a “diamond not matching the paperwork.” And jewelers have written innumerable blog posts on the topic. (So has JCK.)

I have even seen a few well-respected and reputable retailers—tired of having to explain that their competitor’s reports don’t use the same standard theirs do—throw up their hands and say, if you can’t beat ‘em, join ‘em, and start carrying reports from less-respected labs. They aren’t too happy about it, but they figure if they tell shoppers the reports use a looser standard, they have given them the right information. And, one told me, most shoppers ..."

http://www.jckonline.com/blogs/cutting- ... -306540353

[PinkDiamond]

EGL International has been getting a bad reputation for overgrading and fraud, so EGL USA is trying to distance themselves.

EGL USA: “We’re Different”
By Rob Bates, Senior Editor - Posted on May 21, 2014

"Earlier this month, a Tennessee TV station slammed a local store for using reports from EGL International, a lab that it claims has lower grading standards. (EGL International did not return a request for comment on that report.)

That report found a receptive audience in EGL USA, which has been engaged in an eight-year legal battle with other EGLs stemming from its attempts to have overseas EGL reports banned from U.S. shores. That case went to trial in June 2013, but no decision has been issued.

While all the particulars of this fight over trademark and licensing of the EGL name are not really of interest to readers, the issue of lab standards has played a role. Appearing before the court last year, EGL USA’s lawyer claimed that his evidence shows evidence of overgrading by overseas EGLs.

He said that when labs regularly rate a gem two or three color or clarity grades higher than the GIA standard that is a “fraud on the public” because “you are telling people that they are receiving a product, a diamond, that has certain characteristics when, in fact, it doesn’t.”

The difference in labs is one of the reasons the case was set forth, director of the EGL USA’s New York branch Mitchell Jakubovic tells JCK.

“I wish people would understand that EGL International is not affiliated with EGL USA,” he says. “We have done everything we can to differentiate ourselves."

He says that the lab considered changing its name, but that the name EGL was known in the United States. "

Link to the original story and this one:
http://www.jckonline.com/blogs/cutting- ... -306540353

[PinkDiamond]

I think I would change the company name from EGL USA to another company name because of EGL International's reputation (bad) for grading, wouldn't y'all?

Jewelers Responsible for Grading Reports They Use, Panel Says

By Rob Bates, Senior Editor - Posted on June 4, 2014

"Retailers should be held accountable if they sell stones with inaccurate grading reports, panelists agreed at the Rapaport Corp.’s annual Certification Conference, held June 1 during the JCK Las Vegas show.

“There will always be labs that do whatever their customers want them to,” said Saville Stern, chief operating officer of RapNet, who moderated the session. “It’s up to [jewelers] to take the high road.”

Cecilia Gardner, president and CEO of the Jewelers Vigilance Committee, argued that, under the law, retailers are liable for representations in their stores, including those of grading reports.

“What we have to rely on is the safest harbor, which is to comply with legal standards that require accurate descriptions,” she said.

She added that while a diamond grade does not have a legal definition the way the karat weight of gold does, the industry standard is a one-grade variation.

“The law acknowledges that assessing color and clarity do require the human eye, and therefore subjectivity is built into the process,” she said. “Therefore, this is a matter of case law. Beyond a one-grade difference you get into an argument that [the grading difference] has been purposely done. When you get three or four grades, you get evidence of a clear intent to deceive.”

She noted that her group often hears from consumers who complain they have bought a diamond with an inaccurate grading report.

“Very often in the end they have paid the right price for the diamond,” she said. “They just thought that they were getting a huge bargain. There aren’t necessarily grounds for a lawsuit: They have lost the benefit of the bargain, but there is not tangible economic harm. But they walk away with a tremendously negative impression of the jewelry industry. Next time, they are buying handbags. We have lost a customer for life.”

She also said that reports should never be called certificates, even though that is common trade slang (and the conference was called a certification conference).

“They don’t meet the legal standard for certifications,” she said. “Does the public call them certs? Yes. Am I on a mission to change that? Yes.”"

http://www.jckonline.com/2014/06/04/jew ... -306540353

[PinkDiamond]

The ISG chat last night was about the lab reports sellers use to give buyers a sense of security about buying from them, and how totally useless they are, both for the seller who uses them, and the customer who buys because a stone has one. Turns out sellers who use them had better make sure they're correct, because it's the seller, not the lab, that is held responsible for its accuracy.

RJ put out 3 newsletters on it, 2 of which are worth reposting here because sellers need to know that they are the ones held responsible if the report turns out to be inaccurate.



a publication of the International School of Gemology 24 June 2014

Condition Critical: Lab Report Façade Crumbling
Open letter to the gemstone and insurance industry from Robert James, ISG President

If the insurance industry truly understood the facts behind gemstone Lab Grading Reports, they would immediately stop allowing policy services to include them in insurance applications and polices, and require sellers to do the grading and identification for themselves.

If consumers truly understood the facts behind Lab Grading Reports, they would stop buying diamonds and gemstones based on these unsupported and worthless pieces of paper.

Unfortunately, the gemstone industry is aware of these facts, but continues to push them on both the insurance industry and consumers.

This………is about to stop. Lab Grading Reports are a façade. And that façade is crumbling in court rooms and arbitration offices across the country. Here is why….

10 Facts About Lab Grading Reports

1. Retail jewelers bear all liability and cost for any error made by a Gem Lab Report on any gemstones sold by the retail jeweler.
2. Gem Labs are not liable for any losses incurred by a seller or buyer in the event that the Gem Lab Report is in error, even if that error is a heinous error based on employee misconduct.
3. Gem Lab Reports are just opinions that carry no legal weight or substance. Every lab has a long list of disclaimers that, even if their employee makes an error…they are not responsible.
4. Gem Lab Reports are “hearsay evidence” in a court of law since the labs will not produce the actual graders to be available to the litigants for deposition and witness testimony.
5. Gem Lab Reports carry no uniform standards from one lab to another, every lab grades to their own standards with some grading several grades higher than others just to get more business.
6. Gem Lab Reports have no legal industry or governmental oversight. Gem Labs operate on a basis of business anarchy; there are no controls on the labs.
7. Gem Lab Reports have been exposed in the US and Europe to contain higher grades based on a dealer’s willingness to pay more money to the grader.
8. Gem Lab Reports are sales tools used by dealers and jewelers who do not have the training or knowledge to identify and grade diamonds for themselves.
9. Consumers are not protected in any way by a Gem Lab Report.
10. Insurance companies are not protected in any way by a Gem Lab Report.

This is the status of Gem Lab Reports in this industry and the façade is crumbling. The truth is that this industry has too many sellers who don’t know what they are doing when it comes to grading and identifying diamonds and colored gemstones, and they use the Gem Lab Reports as a crutch to operate their business.

These sellers have no business being in this business. Anyone who cannot grade and identify gemstones for themselves should not be gemstone dealers.

Anyone who uses a Gem Lab Report to do their professional grading and identification for them…has no business being in this business. They are not professional jewelers, they are merchants.

This industry has too many merchants and not enough professional jewelers.

We urge the insurance industry and consumers to realize the situation surrounding Gem Lab Reports.

They are worthless paper.

Let me say this again: From a legal and insurance standpoint, Gem Lab Reports are worthless paper. They provide no protection to the retail jeweler. They provide no protection to consumers. They provide no protection to the insurance company.

Gem Lab Reports are sales tools, pure and simple. And it is documented that Gem Lab Reports graders are without standards and have even resorted to selling higher grades to high paying dealers.

So….why are we still seeing them in such high volume use on the market?

I have no answer to that.

What is the solution?

I have two answers to that….

1. Retail jewelers need to go back to the old days and get themselves trained and equipped to identify and grade gemstones and diamonds. Don’t say you cannot do that! We did it for decades. There are many fine schools out there, (including the ISG), that offer quality education and gemological tools. Professional jewelers are professionally trained and equipped. Otherwise they are just merchants. Don’t be a merchant, be a professional jeweler.

2. Stop this MADNESS of pushing these bogus Gem Lab Reports on consumers and the insurance industry. These reports are legally without substance and they push their own errors off on the retail jewelers, consumers and insurers. The only way to stop this blight on the market is to stop using them, and start educating consumers and the insurance industry regarding just how worthless these pieces of paper really are.

This is not some future problem coming at us; this is a current problem that is having a huge impact on the market. There are simply too many dealers out there that should not be there. The use of these bogus Gem Lab Reports allows untrained dealers to operate in the market creating the perfect storm for consumer and insurance fraud.

We need to clean house. We need to finish tearing down this façade of Gem Lab Reports.

Robert James FGA, GG
President, International School of Gemology
Texas Department of Insurance P&C Adjuster #1300433
Texas Department of Insurance CE Provider: #33143 and other states

cc. National Association of Insurance Commissioners

To receive this letter via PDF please click this link: Gem Lab Reports
http://www.schoolofgemology.com/Conditi ... eports.pdf

We welcome your comments, feedback and rebuttal. Submit in writing to the ISG office by clicking this link: Contact the ISG
http://www.schoolofgemology.com/Contact_the_ISG.html

If you are ready to stop using the crutch of the Gem Lab Reports and want to become a professional jeweler or gemstone dealer, we invite you to study with us by clicking the ISG logo below. But if not with us....study somewhere and learn your profession...become a professional!

©2014 International School of Gemology. ALL RIGHTS RESERVED. We encourage sharing and caring throughout the industry as long as all copyrights are left intact.


The second one is geared to sellers who are gemologists/appraisers, but sellers wanting to become professionals, and those who wish to stay on the right side of the law, as well as buyers will find this information quite useful




a publication of the International School of Gemology 25 June 2014
Selling Against Gem Lab Reports
How to be a professional jeweler when you are competing with untrained merchants

After our ISG Journey Thru Gemology last night we received numerous requests from various members of the ISG Community to post this information up in our newsletter. So today we offer a follow up to yesterday's report on Gem Lab Reports with some important additional pointers on how to sell against competitors with little or no training who sell based solely on the use of Gem Lab Reports.

Consider for a moment this equation from our presentation last night:
"Blue Nile" - "GIA Grading Reports" = "X".

What is the value of "X"? It is ZERO. ZED. NADA. ZILCH.

Why? Because there is no way that Blue Nile or any other internet diamond or gemstone seller could have established themselves as major internet sellers without the GIA Diamond Grading Report, or any other Gem Lab Report.

But here is the problem, as we discussed yesterday, these Gem Lab Reports have major inherent flaws:

• They don't stand up in court,
• They offer no guarantees of quality
• They have disclaimers that quite literally absolve the labs of even the most heinous of errors.

Consider the disclaimer on the back of the 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…”

How many Blue Nile customers do you think are given this disclaimer before making their purchase? We don't know. But it is on the representations made by these Gem Lab Reports that people actually buy diamonds from internet sellers? And using these Gem Lab Reports anybody can become a gemstone dealer?

For those of you in the gemstone business trying to deal with this level of competition this is a tough situation. The "schtick" of these Gem Lab Reports is tough to compete with when you are trying to do honest business. But you can compete. You can Sell Against the Gem Lab Reports if you take a few steps and get proactive. Here are some suggestions....

Much of what I am going to review here was taught to me by Harry Vandegriff, and Vandegriff Jewelers, Fort Walton Beach Florida where I earned my AGS Certified Gemologist title. The American Gem Society was the first to teach that jewelers should be professionally trained and equipped to be self-sufficient when it comes to being a professional jeweler. Consumer confidence should be with the local, home town independent jeweler rather than with some unknown and distant Gem Lab where unnamed faces with unknown training do unknown things to grade the diamond or identify the gemstone. A truly professional jeweler has the training, experience and equipment to do all of the required gemological testing and grading to operate without the need of a far-off entity that will not take responsibility for their errors. With that in mind, here are a few steps to take to Sell Against the Gem Lab Reports and those who use them.

1. Get professional training. As a Texas Department of Insurance Licensed Insurance Adjuster (TDI#1300433) I am professionally licensed and have to renew that license every 2 years with Continuing Education hours and recertification. Just because there is no such thing in the jewelry industry does not mean that you should not hold yourself to the same standards as other professionals. Get trained, get educated and get experience. And never stop learning. That is #1 for a reason.
2. Invest in equipment. You are a professional jeweler and professional jewelers need professional tools. It is an investment and one that you will need to be able to instill consumer confidence. Consider the confidence level difference of a professionally equipped jeweler and a gem merchant with only a stack of Gem Lab Reports. The professional jeweler with professional training and equipment will always win the day.
3. Sell yourself. Customers do not just buy diamonds or gemstones, they buy people. They buy professionals. The example is the US Virgin Island of St. Thomas where I once lived and worked. There are over 300 jewelry stores in a 9 square block area. How to you think they compete in that area? Too many jewelry stores for a one day cruise line customer to remember. Too many jewelry pieces for anyone to remember. So how to they compete? They sell themselves. Customers remember professional presentations and professional people. Cheap prices and fancy looking Gem Lab Reports are a dime a dozen on the market. But a professional presentation from a professionally trained and equipped jeweler...that is something that customers will remember and return to.
4. Educate the customer. Don't be shy. Put that GIA disclaimer in front of them and let them know what to expect if they make a decision based solely on a Gem Lab Report. Lab graders have been caught selling higher grades to dealers. The labs do not take any responsibility for the quality of their reports. And the gem lab reports do not stand up in court. Make that plain to your customer. Take some time to educate them to the facts surrounding these Gem Lab Reports, and that anyone with a website can become a gem dealer these days. But you are a professional. You must take time and educate your customer to the pitfalls and fallacies of the Gem Lab Reports. Don't be shy, be aggressive. You are fighting for market share against a foe who has little invested in time and money so they have little to lose. You must make customers aware of the inherent problems with Gem Lab Reports and earn their confidence in your own professional ability.
5. Finally, work with your customer. Offer quality information about who you are and what you do. Your training. Your education. Your experience. Your professional equipment. Your commitment to ethics. And your commitment to be there for the long term rather than a "wham bam thank you 'ma'am" type of sale where the customer cannot even find the website when they try to go back to the merchant sellers.

On the issue of #4 I have placed some links below to articles about the problems with Gem Lab Reports that you can use, print out, show to your customer to help them understand that there are major problems with basing any buying decision solely on the word of a Gem Lab Report. Educate, instill confidence, sell yourself.

These are the basic keys to selling against the Gem Lab Reports and it can be done. The most successful jewelers I know never use a Gem Lab Report because they have the training and knowledge as professionals to do the grading in-house, and know how to market that professional knowledge and turn it into consumer confidence.

It takes work and dedication. But it not only can be done, it is being done by many excellent professional jewelers out there. You just have to decide which you are going to be: a Professional Jeweler....or just a Merchant using Gem Lab Reports in place of knowledge and training.

Here are the links. Use these and constantly research more about the inherent problems with Gem Lab Reports. Make these available to customers. Make them understand that a Gem Lab Report is no guarantee of quality and they offer no warranty on which the customer can make an informed buying decision. The customer should always rely on the home town, independent professional jeweler, in store or on the internet, but a true professional jeweler who is professionally trained and equipped to offer these services locally. Not some far off, unknown distant office with unknown graders who will take no responsibility for the quality of their work.

http://click.icptrack.com/icp/relay.php ... ID%3D13569

http://click.icptrack.com/icp/relay.php ... news-again

http://click.icptrack.com/icp/relay.php ... rfect_.php

http://click.icptrack.com/icp/relay.php ... d-industry

http://click.icptrack.com/icp/relay.php ... monds.html

http://www.jckonline.com/2013/05/20/lab ... rades-labs

http://click.icptrack.com/icp/relay.php ... L-Diamonds

http://click.icptrack.com/icp/relay.php ... 6oWBbknJD8

http://click.icptrack.com/icp/relay.php ... t-Fantasyy

The façade of the Gem Lab Reports is indeed crumbling. Consumers are starting to understand that the best buying decision is to buy from a professional jeweler with the knowledge and tools to service their needs professionally and locally. There are many good schools out there and we urge you to check them out. Including the Canadian Institute of Gemmology, Diamond Council of America, and the Texas Institute of Jewelry Technology. And of course, the ISG. When considering where to get your professional training, we invite you to also review our ISG programs by clicking the link below. We offer a cost effective portal to professional jewelers everywhere. But where ever you study, work to become a professional jeweler. It is the best method to Sell Against the Gem Lab Reports.

Robert James
President, International School of Gemology

http://schoolofgemology.com/

[PinkDiamond]

Well now, looks like we've got ourselves a test case.

Tennessee Retailer Sued Over Grading Reports
By Rob Bates, Senior Editor - Posted on July 23, 2014

"A new court case may test whether jewelers bear legal liability for the representations on their grading reports.

Genesis Diamonds, the Nashville, Tenn., retailer whose use of reports from EGL International made it the subject of a critical local newscast in May, has now been slapped with lawsuit over the way it uses those reports—and the plaintiff’s attorney says he expects more suits to follow.

The complaint, filed July 22 in circuit court for Davison County, Tenn., charges the store with fraud and violations of the Tennessee Consumer Protection Act for “misrepesent[ing] the quality and characteristics of the diamonds it sells.”

According to the suit, on March 10, plaintiff James Wells bought a diamond engagement ring at Genesis with a 2.06 ct. G VS2 center stone, as represented by its EGL International report. He paid $17,793 for the diamond, though the suit says a Genesis-supplied appraisal valued it at $27,500 based on its grading report, adding, “Throughout the sales process [Wells] was assured that the diamond’s grading…was equivalent to GIA values.” (Genesis responds that the appraisal was for both the diamond and the mounting, and says the customer paid a total of $21,293.)

The suit says that the stone’s diamond grading report was from EGL International, the Israeli lab that the suit claims “is widely known to overstate the qualities, and consistently the value, of the diamonds it grades.” A month later, the diamond received a GIA report that said it was a J SI2, worth about $16,000 on the Rapaport list.

(EGL International did not respond to a request for comment on the lawsuit. However, in response to the initial newscast, CEO Guy Benhamou denied his lab had lower standards, noted that labs often differ on grades, and argued his lab’s grading is more “practical and realistic.” His full statement can be seen here.)

The suit also maintains that Genesis “is trafficking in what amounts to counterfeit certificates,” since EGL International reports are subject to a border ban requested by EGL USA. (The ban is 10 years old and is currently the subject of litigation.)

The suit seeks triple the difference between what the stone was represented as and what it is actually worth (about $30,000), plus attorney fees and other damages.

Genesis attorney Eli Richardson ..."

http://www.jckonline.com/2014/07/23/ten ... -306540353

[PinkDiamond]

Another drive thru lab. Not a bad idea at all.

AGS Offers Los Angeles Take-In Window
By Rob Bates, Senior Editor - Posted on August 19, 2014

"The American Gem Society Laboratories will open a take-in window at the Brink’s office in Los Angeles.

The window opens Aug. 29. The lab will offer free shipping and insurance for Los Angeles take-in window clients through Oct. 31.

On Aug. 28, at 1:30 p.m., lab executive director Peter Yantzer and AGS director of membership Ash Shah will give a presentation at the Diamond Club West Coast’s monthly lunch.

“It’s a natural move for AGS Laboratories to open a window in Los Angeles, as Las Vegas is in its backyard,” said Ruth Batson, AGS and AGS Laboratories CEO, in a statement. “We are very excited about this opportunity and look forward to serving members of the jewelry industry in Los Angeles.”

AGS Laboratories offers clients a turnaround time of five to seven business days. "

http://www.jckonline.com/2014/08/19/ags ... -306540353

[PinkDiamond]

Retailer Faces More Lawsuits Over EGL Int’l Reports
By Rob Bates, Senior Editor - Posted on August 20, 2014

"Two more consumers are suing Nashville, Tenn., retailer Genesis Diamonds over its sales of diamonds with EGL International reports.

The retailer has already been the subject of a critical local news broadcaston the issue, as well as a lawsuit filed one month ago from a consumer complaining that he was sold an over-graded diamond.

The two new suits, filed this week in the circuit court for Davidson County, Tenn., bear certain resemblances to the initial one.

In the first, plaintiff M. Nathaniel Averitt says that in October 2012, he bought a pair of diamond cufflinks from the three-store chain, which carried EGL International reports. Those reports called one diamond a 3.01 ct. G SI excellent cut and the other a 3.04 ct. G SI very good cut. They were appraised at $135,000, it said.

But according to the lawsuit, another appraisal called the 3.01 ct. stone an M SI1 very good cut, and the 3.04 ct. stone an N SI1 good cut. It valued them at $22,500.

The suit also contends that Averitt later bought a diamond eternity band with was represented as a 7.8 ct. F VS1 excellent cut, purported to be worth $45,000. A second appraisal termed it a J VS1 good cut, worth $18,000, the suit says.

Genesis lawyer Eli Richardson says the cufflinks were ..."

http://www.jckonline.com/2014/08/20/ret ... -306540353


If the courts rule in favor of the consumers and hold the jeweler accountable as expected, I hope Admin removes EGL Int'l from the list of approved labs. But sellers are still responsible for the accuracy of what they sell, so no matter what lab is used they need the skills to be able to test their gems themselves to make sure the lab is right, so what's the point of offering certs?

[PinkDiamond]

This has gotten very serious, and any of our sellers using EGL certs ought to think twice about using them. With any luck Admin will remove EGL from the list of approved labs.

It's hard to believe they're so far off that RapNet took them off their list, and there are multiple lawsuits pending against jewelers who used them, so to anyone who's relying on an EGL report to support the value of their stones - get another lab's opinion! Unbelievable!!

RapNet Bans EGL Reports From Trading Network
By Rob Bates, News Director - Posted on September 9, 2014

"Trading network RapNet is no longer allowing diamonds to be listed on its services with reports from any branch of European Gemological Laboratory (EGL).

Reports from EGL International—formerly known as EGL Israel—have recently come under fire, with Nashville, Tenn., news station WSMV airing a series of reports criticizing local jeweler Genesis Diamonds for carrying them. That had led to lawsuits targeting the jeweler for carrying those reports.

“The Rapaport Group is opposed to the misrepresentation of diamond quality,” said Martin Rapaport, chairman of the Rapaport Group, in a statement. “The over-grading of diamonds is an unfair practice that destroys consumer confidence and the legitimacy of the diamond industry. Retailers who sell over-graded diamonds using GIA terminology and non-GIA grading standards are at great risk. When consumers try to resell their diamonds or send them to the GIA for regrading and discover significant quality differences, there will be hell to pay.”

The statement adds “we reject the idea that there is no diamond grading standard and caution RapNet members not to use GIA grading terminology to describe diamonds that are below a reasonable tolerance range of the GIA standard.”

Some were surprised by RapNet’s decision to no longer list any EGL reports, including those from EGL USA. When a 2013 Rapaport survey compared grades from labs, EGL USA was said to be “in the same ballpark” as GIA, if softer on color.

Martin Rapaport did not answer JCK’s requests for comment. However, the RapNet statement said, “While some EGL grading reports are more consistent with GIA grading standards than others, there is, in our opinion, confusion and inconsistency among the various EGL grading reports.”

EGL USA and EGL International did not respond to requests for comment from JCK, though both said ..."

http://www.jckonline.com/2014/09/09/rap ... -306540353

[PinkDiamond]

Wow, we've got 2 articles today on EGL's policy of overgrading diamonds. Of course, EGL S Africa isn't one bit happy about RapNet banning EGL reports, but Martin Rappaport is right that consumers won't be able to distinguish between various EGL lab reports. I feel bad for EGL S Africa, so maybe they'd better distance themselves from EGL.

EGL South Africa Disappointed in RapNet Ban
By Rob Bates, News Director - Posted on September 11, 2014

"The head of EGL South Africa said he was disappointed in RapNet’s ban of diamonds that carry European Gemological Laboratory reports, arguing his lab operates to the highest standards.

“Whilst I strongly agree with Martin Rapaport that action must be taken against any laboratory that issues overstated certification and in so doing damages consumer confidence in the diamond industry, I am very disappointed that EGL South Africa was grouped with some of the other EGLs around the world when it comes to ethics or grading policy,” said Alan Lowe, the lab’s managing director, in a statement.

He maintained his lab operates independently of other EGLs.

“We believe our Johannesburg laboratory is one of the best-equipped labs on the continent, and as such it allows us to certify diamonds to the highest international standards,” Lowe said.

In an interview this week, Rapaport Group chairman Martin Rapaport states banning all EGLs was necessary because not everyone can distinguish between them.

“Some of them may be better, but they are all under the same banner,” Rapaport says. “How is the consumer supposed to tell the difference? It is time for the legitimate EGLs to change their name. You can’t expect the consumer to tell the difference between EGL USA and EGL International.”

He says he decided to take this action because he felt the industry was enabling a “culture of misrepresentation.”

“You can’t say, ‘I don’t think this is an F, but the lab said it,’ ” he says. “You are hiding behind the report. A jeweler is absolutely liable for what he represents to the consumers. We are setting ourselves up to get our reputation destroyed.”

“When people say there is no grading standard, anything goes, and that is not acceptable me,” he says. “We have standards, and it is not a theoretical standard. You will see us enforcing that standard. If EGL International wants to say we are using a new grading system, fine. But if you are using GIA terminology you need to use the GIA standards.”

He adds that about 10 percent or more of the diamonds listed on the trading network, generally considered the largest in the industry, bear EGL reports.

“Maybe we will take a hit here, but we need to do what we need to do,” he says.

He has also banned green-tinted diamonds from his network, as diamonds from the Marange region of Zimbabwe generally show a green tint. "

http://www.jckonline.com/2014/09/11/egl ... -306540353


Is Carrying Lenient Diamond Grading Reports Actionable? A Talk With the Genesis Nemesis
By Rob Bates, News Director - Posted on September 9, 2014

"Nashville, Tenn., lawyer Brian Manookian is currently suing local jeweler Genesis Diamonds for carrying reports from EGL International. You can read some details of the suit here.

Whether retailers bear responsibility for the reports they carry has become a hotly debated topic in the industry. And while this particular case—or the other suits it has spawned—has yet to be decided or litigated, Manookian has agreed to answer some questions about his view of the legal issues involved.

JCK: We are interested in how you became interested in the topic, and how you as an outsider/consumer perceived it when you learned that there are different lab standards in the industry.

Brian Manookian: I received a personal introduction to the topic after being sold a 3 ct. diamond that was five color grades off. After some research, I perceived the “different lab standards” the same way I think every competent and honest jeweler has for a decade: namely, that certain labs exist primarily to over grade and exaggerate the qualities of the diamonds they grade. Let’s call it what it is. That’s their business model, it’s how they distinguish themselves from other labs, and that’s how they make their money.

JCK: How much case law/prior litigation has there been on this topic?

Manookian: I follow the comments on JCKonline articles as well as the debates on Polygon. I think there’s a misconception among some jewelers that there is a lack of case law on this topic. While there are no published cases (that I’m aware of) examining the specific issue of diamond-grading reports, there is enough case law on retail misrepresentation and consumer fraud to fill a small library. Forty-three states and the District of Columbia have some form of consumer-protection statute that expressly prohibits misrepresenting the quality of goods you sell or making deceptive statements about their certification, sponsorship, or affiliation. It is beyond settled that doing those things will subject a retailer to significant legal liability. The short answer is: a lot.

JCK: If a lab makes a bad or inaccurate call on a report, does a retailer bear responsibility for that?

Manookian: If the retailer is adopting those bad or inaccurate grades into the representations he makes to the customer, then yes, absolutely he bears legal responsibility. It doesn’t matter whether you’re a jeweler, a car salesman, or an antiques dealer, a retailer has an obligation to honestly and accurately represent the goods he offers to the public. You can’t pass off an over-graded stone then hide behind the same lab report you used to sell it. In cases where a jeweler is blindly adopting bad or inaccurate grades or worse, and knowingly passing on over-graded diamonds, he is going to find himself legally liable for the consumer’s damages.

JCK: Does the fact that grading is subjective make these cases harder to argue?

Manookian: I think so, within a certain range. One grade off is a professional difference of opinion. If you’re five grades off, you are either incompetent or intentionally misrepresenting what you’re selling.

JCK: We often hear that lawyers are not interested in this topic because even if the grade is found to be inaccurate, the consumer generally paid a fair price for the stone so there is not much economic harm to the consumer. Do you agree?

Manookian: Again, I think that’s a jeweler-created fiction. I certainly haven’t heard it from any other lawyers. The reality is that you have an expensive luxury good at the center of the litigation, and in most cases you can recover an additional three times the consumer’s damages as well as attorney’s fees. That can be a significant amount.

JCK: If a retailer honestly represents that the report is graded to a different standard, does that make him less culpable legally?

Manookian: Absolutely. Honestly representing the quality of a good is not actionable.

JCK: Do you think we can expect similar litigation of this type in other jurisdictions?

Manookian: This is just getting started. I think the practice of passing off over-graded diamonds as equivalent to similarly graded GIA counterparts was pervasive among a small number of bad apples in the industry. Those actors should expect to see a lot of angry customers and lawsuits in the near term. "

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[PinkDiamond]

Polygon Bans EGL Int’l Reports From Network
By Rob Bates, News Director - Posted on September 15, 2014


"The Polygon trading network will no longer list diamonds with European Gemological Laboratory (EGL) International reports on its service—although another platform, IDEX, says EGL reports remain welcome.

The announcements come in the wake of trading network RapNet’s decision to ban all EGL reports.

“We have been closely following the current discussions regarding EGL International, both on and off of Polygon,” said a note from Polygon senior director Lindsay Watkin. ”The general consensus in the industry does not support the trade of these stones based on EGL International grading reports.”

As of Sept. 17, Polygon will remove all EGL International listings from the Certified Diamond Database and restrict the sale of EGL International goods on the Buy/Sell channels, Watkin announced.

Watkin says member reaction has been “overwhelmingly positive.”

“The majority see this as a positive and needed move, and we are supporting the direction the industry is taking,” she says. “Most feel that in order for reforms to happen downstream, they need to happen upstream first.”

However, in an article posted on its site today, trading network IDEX Online said that ..."

http://www.jckonline.com/2014/09/15/pol ... -306540353