IGR: Guidelines for the Correct Marketing of Gemstones. Honesty and Transparency for the Industry. If Not Now, When?
Paolo Minieri –
IGR – ITALIAN GEMOLOGICAL REVIEW –
Transparency issues in disclosing gemstone characteristics are not unique to Italy. The Italian Gemological Review (IGR) has revealed through interviews with renowned gemologists and dealers worldwide that fraud, inflated valuations, and misleading information are global threats to the industry’s credibility. Fair disclosure, among other corporate social responsibility actions like environmental sustainability and traceability, is a critical challenge that demands urgent attention from the entire industry.
While the need to regulate the market and protect consumers is widely recognized, achieving this is complex. The Italian jewelry industry, admired globally, must urgently address this weakness by adopting appropriate gemological standards.
There is an urgent need for regulation and change can come from bottom up. Even if state law is not yet equipped (will it one day?) with specific regulations to combat the “gemological Wild West”, the Italian gemological community and industry stakeholders can take proactive measures and set a positive example.
While waiting for a National regulatory bill that may not even come, one such effort is the proposed voluntary adoption of the “Guidelines for the Correct Marketing of Gemstones”. These Guidelines were established by a group of Italian gemologists in 2023 under the supervision of impartial academic authorities, such as Sapienza University of Rome and other Italian Universities, in collaboration with Trade Associations. The development of the Guidelines has been coordinated by Prof. Eugenio Scandale and Michele Macrì.
The Italian Guidelines aim to complement and integrate with the numerous, at times overlapping, sources of gemological regulations. Each legal system addresses fraud and disputes according to its own structure and traditions. Will the Italian Guidelines meet this challenge? To answer this question, it is necessary to look at what is happening in other countries.
The current situation.
The poor application of correct terminology is visible on a wide scale
The most important regulatory body in the United States is the Federal Trade Commission (FTC), which works to prevent fraudulent, deceptive, and unfair business practices but still faces significant challenges. Teri Brossmer, President of the Accredited Gemologists Association (AGA), the most reputable international community of gemologists, notes the US market’s long-standing issues: «Our market has been disrupted by inaccurate identifications, labels, sources, and properties of gemstones for decades, and more recently, diamonds».
In Europe, with the exception of France, regulations generally fall under broader civil codes that do not specifically address gemstones. Consequently, the fraud interpretation in this area falls under the margin of applicability of general rules.
«In Spain», notes Almudena Gómez Espada, director of the Spanish Gemological Institute (IGE, Instituto Gemológico Español), «we have a significant lack of information about the nature and treatments of gemstones. Some companies sell quartz and other gemstones without indicating whether they are natural or synthetic. For instance, a well-known jewelry brand sells synthetic emeralds as “recrystallized” natural emeralds with a Colombian origin».
When contrasting fraudulent sales based on unfair disclosure often the law proves to be generic. In Italy, judicial bodies rely on specialists and fraud cases are interpreted on a discretionary basis. Marco Calabrò, a jurist and forensic gemology expert, notes that providing more tools, such as the proposed guidelines, can streamline decision-making processes for judges.
«This is the practice that has long been followed in Italian courts, where the judge and the technical consultant – declared to IGR Marco Calabrò – collaborate to frame the case and find the most suitable solution. Over time, this collaboration has led to the establishment of de facto rules of judgment. New specific Guidelines can definitely support the Judiciary».
At the end, in some ways, the judiciary has taken on a supplementary role. In Italy, however, the road remains a winding one and all this often results in failing to determine the appropriate set of rules and take timely anti-fraud measures such as warning or prosecuting.
Within this framework of indeterminacy, there is skepticism about how to curb abuse. IGR has highlighted that in Italy domestic brands often take a casual approach in their media communications, leading to confusion between natural and synthetic stones.
«But unluckily, if one case is successfully reported», Alberto Scarani, a well-known manufacturer of gemological equipment and editor of IGR engaged in the development phase of the Guidelines, bitterly argues, «many other abuses remain hidden in the shadows. Many, unfortunately, turn a blind eye. There is distrust and resignation, leading people to think that nothing will change anyway».
In 2021, a well-known Italian jewelry company stated in the Italian newspaper “La Repubblica” regarding a synthetic diamond: «It’s a real diamond, natural, not a synthetic stone». This case suggests that neither the marketing departments of companies selling jewelry with synthetic stones nor the journalists of major publications are accustomed to checking such misleading claims with gemologists before launching marketing campaigns.
Moreover, no public authority in Italy has the power to at least warn companies that make such mistakes. Given this condition, many honest and respectful players are isolated and only occasionally take a stand. But for reputable dealers and gemologists, laxity in verifying such sensitive information as the nature of gems is unacceptable.
In addition, there is growing concern about the superficiality and unreliability of an increasing number of inadequate gemological reports produced in a quite unscrupulous manner with poor qualification.
«We have seen fancy diamond reports», says Almudena Gómez Espada, «issued by gemological laboratories that grade diamonds as natural without verifying the origin of the color. For example, a blue irradiated diamond certified as a natural blue diamond without specifying if they are treated or not».
Michele Macrì, one of the founders of IGR, professor of Gemology and Curator of the University Museum of Earth Sciences (MUST) at Sapienza University of Rome, offers a vivid summary: «The efficiency of a laboratory depends on the advancement and up-to-dateness of its equipment. When they point out that we are fat, we all go on a diet; but when they point out that we are ignorant, no one goes on a study! In the face of the constant innovations that take place in gemology (new discoveries, new deposits, new syntheses, new treatments), a gemologist is always ignorant, and to be as less ignorant as possible, he or she is forced to study and constantly update. Moreover, a gemologist is not defined solely by his skills, but by the responsibility determined by his education and integrity, particularly by how well he adheres to the correct terminology recommended by authoritative and widely accepted sources».
Lack of Fair Disclosure is a slow-release poison that can intoxicate a trust-based industry
«Relationships between jewellery businesses – has noted Victoria Gronwald and Estelle Levin-Nally (CEO of Levin Sources, a social enterprise supporting responsible sourcing in the mining industry) – have always been built on trust». Deceptive practices and failure to disclose quality factors through accurate terminology undermine the foundation of an industry that relies heavily on trust throughout the supply chain. Jewelry is a sector based on trust and compliance. «If we lose the confidence of our consumers, and in so doing undercut the value of our product, we will not remain in business, let alone prosper», Gaetano Cavalieri, President of CIBJO, had already stated in 2017.
Safeguarding market integrity is crucial and can only be achieved by adhering to rules based on solid scientific foundations. «The Guidelines proposed in Italy in June 2023 aim to ensure that consumers are provided with information based on scientific parameters and terminology. It’s time to react against all arbitrary and misleading statements» said to IGR Rocco Gay, vice president of the International Colored Gemstones Association (ICA).
The victims of frauds resulting from opaque and misleading information are not the only losers; the entire industry including manufacturers and marketers suffers the consequences.
«When a buyer’s decision is based on false or misleading information», Teri Brossmer astutely observes, «the reputation of the entire gem and jewelry market is damaged. The failure to disclose gemstone characteristics is the real issue. Overpricing will always exist, but a knowledgeable buyer makes decisions based on provided information».
Almudena Gómez Espada concurs: «In my opinion, the lack of transparency is detrimental because it can deter potential customers». There are also cases where characteristics are correctly disclosed but the price is fraudulently inflated. «But failure to transparently disclose gemstone characteristics regarding treatments, synthetic origin, or outright imitations», notes Jeffery Bergman, «is a much larger problem compared to overpricing».
Bergman is a global whistleblower and advocate against fraud. He has extensively covered disproportionate gemstone valuations, revealing the mechanisms behind such practices. «Misrepresented gemstones sold on eBay, Etsy, and other online platforms are a rampant problem», Bergman states, «bringing disrepute and distrust to the gem and jewelry trade».
In issue 18 of IGR, Jeffery Bergman covered the Ophir collection case, demonstrating how financial speculation and overvaluation of gemstones can artificially inflate company balance sheets. «Grossly overvalued appraisal scams, especially of low-grade rough gemstones appraised for as much as 10,000 times fair market value, are a growing problem featured in several mainstream media articles worldwide».
The issue of unbalanced information. Ordinary people do not have any idea of what gemologists take for granted.
Disclosure can be correct and yet not completely honest. Another significant weakness can be noted, allowing more cunning and less honest sellers to exploit the gray area. «Many people think black diamonds have high economic value», notes Almudena Gómez Espada, «but when they bring a black diamond to our lab, we have to explain that black diamonds are not comparable to colorless diamonds in quality and price. This common mistake is due to a lack of market information».
This is just one of many examples. The prestige associated with names such as diamond, ruby, emerald, or sapphire often leads unaware buyers to perceive them as more valuable than they actually are. This ties back to Bergman’s provocative paradox of overpricing: 10,000 times compared to a fair market value!
Industry insiders take it for granted that the consumer is as knowledgeable as they are because of their experience. «Few people outside the gem field have the gemological knowledge to know what they are really buying», pointed out to IGR Antoinette Matlins, an internationally respected gem and jewelry expert and lecturer, «and worse, they have no idea of the many ways that diamonds and gemstones can be altered, duplicated, and imitated. Even when documentation is provided, the unknowledgeable have no way of knowing if it is reliable, or if the stone matches the information reported on it»
According to Matlins, the enemies of transparency operate not only in ambiguous gray areas but also venture into outright illegality.
There is no shortage of cases to prove this. Recently in Italy, the Gem-Tech Gemological Laboratory has reported cases where synthetic diamonds have been fraudulently laser-inscribed with false data to match authentic GIA reports intended for different stones with the same weight and measurements.
Time to take action, Gem labs and Associations can give a hand
Cases like these have prompted GIA (Gemological Institute of America) and IGI (International Gemological Institute) to take immediate measures to allow already certified stones to be returned for re-examination. Reputable gem labs have every interest in isolating frauds based on falsified inscriptions.
«Everyone in our industry must be vigilant», recently stated IGI International Gemological Institute’s CEO Tehmasp Printer. «As attempted fraud increases, the need for ongoing verification is a necessary step to protect consumers from purchasing misrepresented gems and jewelry».
Gemological institutions can undoubtedly lend a hand through the commitment of Trade Associations and the constant dissemination of necessary information to the market, and especially to end consumers, to help them navigate among the many gemological materials and choose only when information is exhaustive.
«The Guidelines are instructions, defined as soft law (voluntary self-regulation)», said to IGR Gennaro Mincione, CEO of Oromare, a jewelry manufacturing center in Marcianise, Italy, that covers approximately 69,000 square meters and is home to more than 150 companies specializing in goldsmithing and jewelry manufacturing. «These are rules that become more and more useful for the regulatory framework the more they are disseminated and adopted. In such cases, unity is strength! That’s why it’s important to set a good example and take the first step. It’s also worth mentioning that the Italian Antitrust Authority (AGCM) upholds the right to transparency in order to protect consumers. As the CEO and manager of one of the largest jewelry production centers in Italy, I believe it is most appropriate to propose their voluntary adoption. Companies that feel ready can join them immediately, while retailers can receive information to help them first understand the issue and then join the initiative».
«Any action that can help protect the end consumer from deception has our support», notes Arduino Zappaterra, However, their implementation needs training and dissemination. «I have been involved in Gemological education, disseminating and sharing the correct nomenclature for more than 35 years, and I am aware that it is never enough and it is never done», Loredana Prosperi, Director of IGI Istituto Gemmologico Italiano and one of the authors of the Italian Guidelines, declared to IGR.
Training should not be limited to faint warning signals when a blatant case of fraud occurs. Instead, it must become an ongoing process. Prosperi has no doubt about this: «All serious players should think about their continuing education and should not be afraid to tell and explain to their customers the existence of synthetic gem materials, the existence of treatments that gems undergo to improve their appearance». Education as a key factor again emerges. «We are in favor of the introduction of guidelines to guarantee the buyer», Raffaella Cancellieri, Campania’s President of Federpreziosi has declared. «This could become a strong point for the dealer who wants to voluntarily comply. Consumers have few guarantees. Sellers have no code of conduct and no clear information from their suppliers, whom they often trust because of long-standing relationships. Often the retailer is not adequately trained. Our association has already taken such an interest in this issue that a training course in gemology for retailers is in the works».
Straight to the point
What do the guidelines actually mean and how can a gem dealer put them into practice, beyond statements of principle and good intentions? There are eight points, and they are extremely concise. «The extreme brevity in no way prevents the guidelines from being precise and easy to apply», says Gary Roskin, the Editor in Chief of the Roskin Gem News Report, Former CEO for the International Colored Gemstone Association, Senior Gemstone Editor for JCK Magazines. «Such an extremely flexible framework allows to present the Guidelines as a simple tool rather than another burdensome task».
The main concept is to ensure that stones and jewelry pieces are accompanied by documents accurately describing them whenever transactions and promotional/ advertising communications involve gemological materials. «In fact – says Michele Macrì – «companies will have to put in writing exactly what every reputable company already practices today: ensuring clarity about the actual nature of the stones, specifying their mineral species (if applicable, otherwise the group), variety, origin (natural or artificial), treatment indications and mass. The geographical origin is not mandatory, but an optional additional indication».
So, will those who comply have to produce gemological reports? «No», Alberto Scarani specifies, «in practice only a proper and simple “description of goods” is required. Such description in many cases will be issued by manufacturers or importers at the source and passed along the supply chain. There is no requirement to produce extensive lab gem reports all the time». However, the text clarifies that «in the case of transactions involving gemstones, lots of gemstones or high-value jewelry, it is recommended, for the protection of 50 the buyer and due to the lack of adequate instrumentation of the signatory, that the transactions be conducted with the issuance of an extensive gemological analysis report issued by recognized laboratories».
On balance, it is fully agreed upon by the authors of the text as well as those who inspired it that this is already the case today and it is no coincidence that it is the market however — and not other factors or interests — that recognizes the important role of experienced laboratories. If the material has a significant value, they can provide safety and value to the user.
In the dissemination of Fair Disclosure, gemologists and laboratories play a key role as they can improve knowledge, not only at the advanced level, but also at the basic level, in an industry that in Italy accounts for more than 29,000 employees (who represent 27 percent of the total workforce in the European Union), some of whom definitely need to improve their gemological skills.
Clear and comprehensive documents to protect all parties involved in the supply chain, especially the end consumer, can spread good practices through a multiplier effect: the more companies that subscribe to Guidelines, the more others will be willing to follow the example.
But compliance can result in a trigger for sales growth, too. «For some time now – Giacomo Esposito of Agemina, a jewelry manufacturer based in the Oromare Jewelry Center in Marcianise, Italy, stated – we have been providing our jewelry pieces with a gem lab report. Initially, we did this to ensure the gemstones met our quality standards. Then we found that our customers saw the report as an added value and were happy to hand it over to the retailer who would then deliver it to the consumer».
The sources
To achieve the main goal, which is the application of appropriate nomenclature to correctly describe gemological material, the Guidelines are primarily based on the directives of UNI (Italian National Unification Body), a private national standardization organization recognized by the European Union. The standards issued are agreed upon by specialized committees, in this case, gemologists.
Many of the gemologists who contributed to the drafting of the Guidelines have previously worked on UNI committees. Essentially, to develop the Standards on terminology and classification of gems, they drew inspiration from the main regulations in use at the international level.
Gemology, as specialists know well, is a continuously evolving discipline. This is why other internationally recognized sources, such as the valuable CIBJO Blue Books and LMHC Sheets, are included in the Guidelines. They are also Guidelines that have the advantage of being continuously updated to clarify Fig. 15 The CIBJO Blue Books. the treatments that continually appear on the market. Additionally, the Codes of the ICA (International Colored Gemstone Association) and the RJC (Responsible Jewelry Council) are recommended.
If it is true that abundant sources can result in different interpretations and possible discrepancies, it must also be said that most of the terminology is shared. «It may be difficult to be using the Blue Books and the LMHC sheets – Gary Roskin said to IGR – as I think they disagree in a couple of areas (or swerve a little bit from each other). I think the use of the term ‘Paraiba’ is one that is a bit different, but that shouldn’t be an issue here. Something can be improved by specifying better how a lab can be considered ‘qualified’, but I like everything else — the Italian Guidelines are very complete in thought».
«The group who authored the Italian Guidelines – Michele Macrì concludes – is aware that they are subject to interpretation. Regulations must be applied and a break-in period is necessary. Common sense must be applied. But the key factor that can ensure the success of the guidelines is the involvement of independent and impartial public bodies such as universities. I think the Italian model can be an example to be followed».
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