News

Apr 03, 2019

FTC Issues Warnings to Eight Companies Against Advertising Synthetic Diamonds Without Clear Disclosure

The Federal Trade Commission (FTC) of the US has issued warning letters to eight companies stating that some of their online advertisements of jewellery made with simulated or laboratory-created diamonds do not meet the norms of “clear, conspicuous” representation, in violation of the FTC Act.

The letter noted that in July 2018 the FTC had provided guidelines for non-deceptive representations about jewellery and related products, including mined, lab-created, and simulated diamonds.

The companies have been given 10 days to advise FTC “of steps they plan to take to revise their marketing so that it follows the Jewelry Guides and therefore complies with the FTC Act”.

It further said that failure to comply may result in enforcement actions if the FTC determines the companies engaged in unfair or deceptive acts or practices. It could result in civil penalties if the company engaged in practices knowing that the Commission has already deemed them deceptive in earlier litigation. 

The Diamond Producers Association (DPA) welcomed the FTC’s warning, describing it as “an important step toward transparency and consumer protection”. In its comment DPA stated that it is “now crystal clear that synthetic diamond manufacturers cannot use the word ‘diamond’ without qualifying it with an unambiguous descriptor about the manufactured origin immediately before the word ‘diamond’”.

While not releasing the names of companies to which such letters have been sent, the FTC said it provided each of them with examples where the advertising might imply that a simulated diamond is a lab-created or mined diamond, or that a lab-created diamond is a mined diamond. It also highlighted some cases where required disclosures about the source of the diamonds are not proximate to the individual product descriptions.

The FTC letters also said that similar non-deceptive disclosures are required when advertising jewellery containing precious stones other than diamonds, including emeralds and rubies, as well as pearls.

Many of the letters further admonish the companies not to use unqualified claims such as “eco-friendly,” “eco-conscious,” or “sustainable,” as it is highly unlikely that they can substantiate all reasonable interpretations of these claims. It pointed out that use of these terms is only possible when sellers “have a reasonable basis for making such claims for any products and the claims (are) adequately qualified to avoid deception”.

The DPA said that this makes it clear that the FTC will not tolerate unsubstantiated claims about the environmental impact of synthetic diamonds that violate the FTC’s Green Guides.

The DPA said it will continue to support the FTC’s efforts to ensure consumers are protected.