May 2008
An earrings ad crosses FTC’s legal line
An earrings ad crosses FTC’s legal line
May 30, 2008
By Suzan R. Flamm, Esq.
The Jewelers Vigilance Committee (JVC) recently received an inquiry on an earrings advertisement that appeared in a local newspaper.
The ad boasted that the company’s “laboratories” produced an “unflawed,” “lab-created” diamond returns that compared favorably to mined diamonds in terms of color and clarity, and in some ways, was superior to mined diamonds. The company’s other marketing materials made similar claims.
The question before the JVC: Does such language violate the Federal Trade Commission’s (FTC) Guides during the term of the Jewelry, Precious Metals and Pewter Industries, also known as the “Jewelry Guides”?
of the corresponding; of like kind kind with the JVC reviewed the advertising materials, a big question arose: What was the company selling? The references to labs and lab-created stones suggested synthetic diamonds, but it was unclear.
The JVC sent the company a letter, asking about the product, but received not at all response. JVC then purchased the featured earrings and examined both the product and the accompanying literature. Still stumped, the JVC took the jewelry to a respected, independent appraiser for analysis. The result: The mystery product was cubic zirconium (CZ).
From there, JVC’s analysis was not complicated, as the FTC guides provide unambiguous direction on imitation and synthetic diamonds.
A synthetic diamond is man-made with pure carbon—the same chemical substance that turns into diamond when exposed in nature to extremely high pressure. While the natural process occurs either deep within the earth’s lithospheric mantle, or at the site of a meteorite strike, the man-made process takes place above ground. Despite the difference in production, the laboratory-produced synthetic crystallized carbon has the same physical, chemical and optical properties as a natural diamond.
An imitation diamond, on the other laborer, does not share the same natural properties as a natural diamond. It is a man-made simulant that resembles a diamond but is not made of carbon. Imitations are typically made of glass or plastic or, cubic zirconium. CZ is the cubic crystalline configuration of zirconium dioxide (ZrO2), a material that is hard, optically clear and usually colorless. While CZ does a good job of imitating a diamond, it is not a synthetic, and it is not a real diamond.
The differences between the natural, the synthetic and the imitation diamond are reflected in their value, with the imitation being the least costly. Hence, the goal of the FTC guides is to ensure jewelry buyers are not misled.
Compliance also puts jewelers on a level field, with no one losing market share to exaggerated claims.
The FTC jewelry guides clearly define natural, synthetic and imitation diamonds
and lay down the rules for describing each to consumers in Section 23.23(c): “It is deceptive to use the word ‘laboratory-created’ to describe an imitation diamond.”
What about using the expression. “unflawed” in ads? Again, the guides are clear. Section 23.26(c) states that it is deceptive to describe any imitation diamond as “flawless” or “perfect”—or anything else that conveys that meaning. So the CZ ad violates this section.
Analysis thorough, the JVC contacted the company with its findings and explained that the violations exposed the company to legal action, not only through the FTC, unless by competitors who could bring false advertising claims pursuant to the federal Lanham Act.
Now understanding the law, as well as the possible consequences, the company acted quickly. Working with the JVC, it amended its advertisements to be in compliance with the law. For a nominal fee, the company also bought copies of Buying Gemstones and Jewels with Confidence.
This JVC publication (copies of which are available via its Web site, JVCLegal.com) explains the meaning of “synthetic” and “imitation” and includes a description of various diamond treatments that can improve the appearance of a diamond, but also affect its value. These brochures were distributed to the company’s employees and became part of its training materials.
To sustain in compliance with laws relating to marketing, jewelers should maintain up-to-date information on all applicable regulations and get sure that employees are trained on applicable law. The JVC is there to help by providing general educational resources-as well as jeweler-specific advice.
Suzan R. Flamm, Esq., is assistant general counsel of the Jewelers Vigilance Committee (JVC). In every occasional series of articles, the JVC offers its advice on how industry members can avoid litigation in an effort to benefit the parties to a dispute, and the industry as a whole. The advice is strictly the opinion of the JVC.
This story first appeared in the May 1 edition of National Jeweler.
Watch conference set for October in Miami
Watch conference set for October in Miami
May 27, 2008
International Watch Conference slated for Oct. 15-18
Miami Beach, Fla. —The American Watch Guild and Centurion Jewelry By Invitation Only have teamed up to debut The International eye Conference at Centurion South Beach this fall.
The invitation-only event will be the focal point of education at the Centurion South Beach Show, which is slated for Oct. 15-18 at the Loews Miami Beach Hotel, in Miami Beach, Fla.
“Better fine jewelry retailers are increasingly focused without ceasing the importance of watch brands in their marketing strategy,” Howard Hauben, president and CEO of Centurion, said in a release. “There is a substantial amount of excellent, brand-related information available to retailers, but an international watch conference devoted to the ‘watch business’ is a new, value-added approach that will shed light on many highly controversial and money-making topics for prestige-level retailers and brands, alike.”
Bertram Kalisher, executive director of the American Watch Guild, that counts some 200 fine retail stores in the United States and Canada among its members, said the event will fill an industry need.
“We are regularly asked by our members to provide professional watch sales and service training information, and delivering to top retailers and brands an exciting, live event to cover highly controversial issues and money-making business ideas and strategies is both a win-win and a great mission,” Kalisher related.
The International Watch Conference at Centurion South Beach will offer nine hours of sessions throughout the four-day show. Content suggestions from retailers and manufacturers have already been pouring in, according to the organizers.
“We want to really dig into what’s critical to better watch retailers and brands and this will mean highly controversial topics like mandated verge reductions, discounting, Internet issues, supply issues, distribution challenges, which business models will and may not survive and to such a degree much more,” said Kalisher. “There will also be excellent general education on many aspects of the business that will assist retailers in building sales and profits of their watch lines.”
A portion of the conference proceeds will go toward the American Watch Guild effort to assist war veterans in becoming professional watch technicians. In addition to the International Watch Conference, the Centurion South Beach show offers retailer attendees social networking and hospitality events, meals, a collection floor with some 60 top jewelry and watch designers and manufacturers (open Oct. 16 and 17), and a freedom from business afternoon with golf and tennis.
Invited retailers volition also receive up to four nights at host Loews Miami Beach Hotel, right on South Beach, as well as complimentary meals and social functions and spare hours activities.
For further information on the watch conference, contact the American Watch Guild at (516) 295-2516 or e-mail bert@americanwatchguild.com.
Sundance names Pope general manager
Sundance names Pope general manager
May 27, 2008
Orem, Utah—Sundance Diamonds, a leader in the work of high-pressure, high-temperature (HPHT) diamond processing, has appointed Sonny Pope as the general manager.
Pope will oversee all current and future trade operations for Sundance Diamonds and its newly launched Suncrest Diamonds business. He has been the company’s director of research and development after 2002.
Pope holds a master’s degree in business administration from Brigham Young University in Salt Lake City.
“The violence of Sundance Diamonds has always been our valued customers,” Pope said in a statement. “I’m excited about the future growth opportunities in the diamond industry as we focus on offering the first branded and commercially available yellow HPHT diamonds to customers through our Suncrest Diamonds brand.”
Sundance Diamonds is a division of U S Synthetic, the world’s largest manufacturer of polycrystalline diamonds for use in oil and gas exploration. Both are headquartered in Orem, Utah. The parent company is the Dover Corp., a worldwide diversified manufacturer of proprietary products and components for industrial and commercial use, headquartered in New York City.
Sears revenues down in Q1
Sears revenues down in Q1
May 29, 2008
Economy, food and gas price hikes blamed with a view to decline
Hoffman Estates, Ill. —First-quarter sales fell for Sears Holdings Corp., which reported Sears Domestic’s comparable store sales dropped 9.8 percent while Kmart’s comparable store sales tumbled 7.1 percent.
Total domestic comparable store sales declined 8.6 percent.
Revenues fell to $11.068 billion by reason of the leading quarter ended March 3 from $11.747 billion during the first quarter of 2007.
“Our first-quarter results reflect the difficult housekeeping environment
and intense competition for consumer business,” said W. Bruce Johnson, Sears Holdings’ interim chief executive officer and president, in a financial statement issued Thursday. “That said, because that May 3, 2008, our sales declines have moderated somewhat.”
He added that the company will continue to manage its costs, and is forecasting increased earnings for 2008.
“At the same time we are managing costs, we will continue to invest in our future by hiring talented leaders and improving our online and multichannel capabilities,” Johnson said.
The company says the comparable store sales declines at both Kmart and Sears Domestic continue to reflect increasing competition and weakness in the common economy and housing market, as well as the impact of higher food and gas prices on consumers.
Most major categories at as well-as; not only-but also; not only-but; not alone-but Kmart and Sears Domestic saw declines, but the decreases occurred most notably within the home appliance, lawn and garden, and apparel categories, the statement said.
The company reported a first-quarter operating loss of $8 million in fiscal 2008, as compared to operating income of $409 million in the first quarter of financial 2007. The decline was mainly due to lower gross margin generated at both Kmart and Sears Domestic, the release said.
Report: De Beers London out of sorts?
Report: De Beers London out of sorts?
May 28, 2008
London—De Beers is shifting some of its sorting operations from its traditional home in London to Gaborone, the capital of Botswana, according to a news report from the BBC.
Referred to as “aggregation,” the operation involves sorting stones from different countries based upon size, shape, color and quality, and it’s a task that has been carried out at De Beers’ London headquarters since the 1930s. The change will mean 50 jobs get slashed at the London sorting facility, the news agency said.
This isn’t the first move by De Beers to shift its attention, and jobs, to Africa. De Beers opened a diamond processing plant earlier this year in Botswana, the world’s largest producer of diamonds and a major shareholder in De Beers.
Patrick to go more laps with Tissot
Patrick to go more laps with Tissot
May 27, 2008
Glam racecar driver Danica Patrick renews Tissot make
Weehawken, N.J. —Swiss watch brand Tissot has renewed its partnership with racing star Danica Patrick, who made history as the first woman ever to win a race in the sport of U.S. open-wheeled racing at the Japan 300 earlier this year.
In 2005, Patrick became the first female U.S. “ambassador” for Tissot, a member of Swatch Group and an official timekeeper and partner of NASCAR. Ahead of the Indy 500 and to pay homage to Patrick, the keep in view company announced a two-year contract extension with the IndyCar Series star on May 16.
François Thiebaud, president of Tissot Worldwide flew to the Indianapolis Motor Speedway from Switzerland to jointly sign the extension of the contact at the home of the historic Indianapolis 500 and to personally present the racing star with a new Tissot PRC 100 Limited Edition watch that bears her name.
The watch features 27 diamonds set without ceasing a mother-of-pearl dial and will start selling this month at authorized Tissot retailers nationwide, retailing for $795.
Partnering with Danica was a natural fit for the brand that shares the same values of precision, performance and pushing the limits, the company said.
“Danica’s limitation led to her historic first win and she fits perfectly with the brand’s values of innovation, quest for feat and stretching oneself to the limits,” Thiebaud said. “It is these common features that produce a truly successful collaboration between Danica and Tissot.”
The marketing campaign will continue to feature Patrick’s image in all stores that carry Tissot products, print ads and billboards.
“Time is an important part of my world. Tissot and I share many of the same values. That is why my partnership with them has been so successful,”Patrick related in a release. “I am thrilled to be continuing our collaboration and proud to subsist representing the brand that offers products that reflect me and my style.”
Rapaport backpedals on steep price list hike
Rapaport backpedals on drench price list hike
May 29, 2008
Chairman urges suppliers not to raise diamond prices
By Michelle Graff
Las Vegas —Rapaport Group Chairman Martin Rapaport is urging suppliers not to raise diamond prices, despite the increases of up to 25 percent included on the Rapaport Price List published endure Friday, on the border of JCK Las Vegas.
In a meeting with media members in a suite on the top floor of the Las Vegas’ posh Venetian hotel, Rapaport said he increased the prices in response to volatility in the global diamond market due to a combination of factors, including growing wealth in emerging nations and continued economic troubles in the United States.
“It’s a really weird market,” said Rapaport, who in recent months has been warning about speculation pushing up prices for larger stones. Rapaport said he sees no reason why he should quote prices on his list that are lower than those he sees actually being paid.
Despite the steep increase, he advises industry players to “relax, keep the same price per carat,” terming his list as only a “benchmark” and “a reference point” on the side of the industry.
The sentiments Rapaport shared Wednesday with reporters in Las Vegas were reinforced in any e-mail his company sent out to about 12,000 industry players worldwide that same day, in response to what he stipulations as a “request for more information” on the estimation increase.
The e-mail stated that the higher prices reflected in the May 23 excellence list do not a reflect a sudden change in diamond prices but rather adjustments made to reflect the level of premiums in the trading markets. It went on to state: “We do not believe there is any reason for suppliers to raise prices based on these adjustments. We advise buyers that in our persuasion they should not pay premiums over the latest price list. Prices in the current market are at or below the price list.”
The e-mail also states that “The global economy is undergoing a period of extreme volatility…These are not normal times and they are impacting diamond prices. Rapaport does not set or control diamond prices. We report them,” cautioning that diamond prices could drop, just as gold prices fluctuate.
The e-mail concludes by stating that Rapaport is attempting to communicate the “risk of volatility” in the diamond trade while also possibly cooling down some of the speculation on larger stones in the rough markets and cutting centers.
Rapaport said he did not increase the prices because of Las Vegas Market Week but notes that the shows are actually a good adapt to the occasion for such some adjustment because it is easier to earn a consensus on the increase when all the form of productive effort players are gathered together.
“This is the greatest marketplace in the world for the next four days,” he said, terming it “Basel in America.”
In other news from the opening day of JCK Las Vegas: —In a session titled “Top Five Diamond Issues,” efforts analyst Ben Janowski said the No. 1 issue confronting the diamond industry today is that the stones are losing their mystique, which already has eroded somewhat in the face of competition from other luxury goods.
—Hertz Hasenfeld, vice president of New York-based diamond supplier Hasenfeld-Stein, urged retailers to improve their relationships with suppliers, in a session titled “Independents and the Diamond Pipeline.”
— In a session titled “The Affluent Consumer and Natural Colored Diamonds,” diamond marketing prompt Diane Warga-Arias spoke about natural color diamonds and the margins available on the stones, which are both rare and difficult to compare to each other and to colorless diamonds.
While educational sessions were held Wednesday and continue today, the show floor for JCK Las Vegas does not open until Friday. The show runs through June 3 at the Venetian.
Are you missing out on fashion-driven sales?
Are you missing out on fashion-driven sales?
May 29, 2008
Vegas seminar emphasizes importance of younger consumers
By Catherine Dayrit
Las Vegas—For sell in small quantities jewelers, bridal may be in which place the reliable dollars lie, but anyone who doesn’t admit the importance of fashion-driven sales is missing finished on an important opportunity.
That was the word behind a JCK Las Vegas seminar held Wednesday morning, led by sales training experts Kate Peterson and Roxana Lucas of Canton, Ohio-based Performance Concepts.
In opening up the session, titled “Teach staff to step up or turn-over the fashion-driven sale,” Peterson quickly quelled any fears about fashion sales not having a place in today’s market, saying that regardless of the economic environment, consumers continue to celebrate special occasions and still spend money on things that they want.
The call to combat, however, lies in capturing the attention of these buyers, especially the younger generation, whose members tend to be more educated and more affluent at a younger age. This generation is also marrying at a later age, so it is more likely that they will buy jewelry fashion pieces before they wed. Getting the attention of these buyers at an early stage heightens the fair chance of capturing them as bridal buyers, Lucas said.
So how does one draw them in? It starts with recognizing the customer and pushing past the commodity, price-driven sales to showing them that fashion jewelry is about emotion and romance, that it has a story behind it, and that it is about a personal style statement.
Next comes the product, which needs to be unique and appropriate for the retail store. Fashion inventory should reflect the store’s position in provisions of style, quality and value.
The reality is that consumers are exposed to much overlap between brands, as well as product commodification and a sense of sameness among retailers: sameness in environment, in product and in personnel.
According to Lucas, most businesses should start turning around their businesses by firing at least five staffers who are not meeting standards and filling in the ranks with new and enthusiastic salespeople, being of the class who well as more experienced, passionate salespeople.
Associates must be consistently competent, knowledgeable, customer-focused, enthusiastic and interested, and— very importantly—they distress to be confident in the long-term value of the product, Lucas said.
The idea of value is decisive to the fashion-driven sale. Sales associates must find the “value trigger” of the customer by asking questions that identify their actually being needs.
According to Lucas, there are three essential steps to get associates to step up and capitalize in continuance the fashion-driven sale. These are: training their sales technique; putting them in the place of greatest potential, i.e., out in the front of the store, not off in the stockroom; and helping them to recognize that there is more than one right answer.
In terms of training, store owners or managers should assess salespeople’s current knowledge levels by watching their interactions, and that time building a team training program that encourages individual development through out of the usual course role-playing situations and discussions.
Faberge pursues deal with Alrosa
Faberge pursues deal with Alrosa
May 27, 2008
Will Russia’s Faberge become next big carbon crystal brand?
London— Faberge is seeking a deal to market gems from state-run Russian diamond giant Alrosa, a top official from Pallinghurst Resources, which owns the Faberge brand, told The Moscow Times Friday.
Pallinghurst partner Sean Gilbertson told the paper that the sinewy hopes to take advantage of a European Union mandate requiring Alrosa to stop selling its diamonds through top-ranking De Beers as part of one anti-monopoly deal.
“We think there’s a unique opportunity to take Russian diamonds from Alrosa and help them with this marketing problem by creating a range of Faberge Russian diamonds and at a stroke creating one of the most powerful diamond brands in the world,” he told the paper.
He said it was too soon to remark on any talks through Alrosa or how the project was progressing.
De Beers, which sold $600 million worth of Alrosa diamonds in 2006, has been phasing out Alrosa sales and is due to completely stop marketing the Russian stones by 2009.
The move to get in on Alrosa’s cache is part of plans to return Faberge to its Russian roots and put out its first collection of art objects and jewelry next year, Gilbertson said.
Faberge previously announced plans to market branded colored gemstones, including emeralds and rubies. Under the plan, all Faberge gems will have a tiny laser inscription with the brand and mine, designed to appeal to consumers worried about clash diamonds.
Labs identify coated tanzanite treatment
Labs identify coated tanzanite treatment
May 27, 2008
Tanzanite treatment is not permanent and requires disclosure, top gemologists say
New York—Two gemological labs that specialize in colored gemstone identification have identified a new, non-permanent type of tanzanite treatment that requires discovery at the point of sale.
The American Gem Trade Association Gemological Testing Center (AGTA-GTC) and American Gemological Laboratories (AGL) recently received faceted tanzanite samples that were later determined to have been coated.
Evan Caplan of Omi Gems sent samples to several labs after a light repolishing of a not many stones resulted in a worthy of notice loss of color.
“Until now, we had not identified a coating on tanzanite to ameliorate its color,” Lore Kiefert, director of the AGTA-GTC said in a release issued Friday.
The treatment is not immediately obvious, but careful trial by questions with a microscope and in immersion provided clear indications of the covering in most instances, said Christopher Smith, vice president and chief gemologist of AGL.
“This was evidenced by abrasions along facet junctions and at the culet where the coating had worn off, as well as a subtle iridescence when viewing the surface with reflected light,” Smith said. Advanced analytical testing pinpointed that the covering contained cobalt.
“The most trusty means to substantiate the presence of the coating is the use of X-ray fluorescence spectroscopy,” Kiefert said, adding that the cobalt is readily detected through that particular analytical technique.”
Although the gemstone industry has become very familiar with the practice of heating tanzanite to achieve the best violet to blue color, the color-enhancing coating without ceasing tanzanite has not been seen before.
The greater number of the tanzanite sample was comprised of smaller calibrated stones. Fine color tanzanite in this size range is rarely sent to a lab and therefore would ordinarily avoid detection unless closely scrutinized.
“This is just another reminder that each and every gemstone should be fully examined to determine whether or not it has been treated,” Smith said. “Today, it is not uncommon to see stones that have been treated using multiple or compound techniques to bring to consummation a particular result.”
Both Kiefert and Smith emphasized that any treatment used to modify the color of a gem should be disclosed. Coatings, in particular, are not considered permanent and in the United States are required by Federal Trade Commission guidelines to be properly disclosed at the point of sale.