Thursday, February 11, 2010

On Guard Against Fraud

Being Certain about that Cert
Diamond certificates and lab reports are easy to come by—and that could be the problem. Retailers depend more and more on diamond reports to drive sales, and in the flurry of certs, some are just doing a con job.
What good is a Diamond Certificate?
A good diamond certificate verifies the quality of the stone by describing it in detail. The analysis is done by trained gemologists using state-of-the-art equipment. A reliable certifying lab is one that has built a reputation for accuracy and impartiality.
Unfortunately, there are two kinds of fraudulent lab reports that can con you: the outright imposter and the sales tool.
Imposter: Counterfeit Certificate
Counterfeiting diamond certificates is a growing scam that reaches around the world. Last fall the jewelry industry was abuzz over two forged diamond reports from the U.S. that turned up in Europe.
The certificates appeared to be from the Gemological Institute of America, the premier diamond-grading lab, but they turned out to be forgeries. Two valid GIA reports had been altered to match similar, but lower quality, stones. The fraud was only discovered because Gübelin, a prominent European lab, examined the diamonds and found they did not match the description on their “GIA” diamond reports.
These stones, one over 2 carats and the other more than 4 carats, had undergone treatments, but the treatments were not mentioned on the forged reports. As discussed in our last issue, color and clarity treatments greatly lower the value of the stone, and the larger the stone, the greater the value discrepancy.
Certificate forgeries are done primarily to cheat the buyer, but of course they can ultimately cheat the insurer. GIA is such a recognized and respected name that its reports are often accepted without question, making them popular targets for forgery. AGS, GCAL and Gübelin also produce reliable diamond reports.
You can—and should!—verify the authenticity of a diamond report through the appropriate Web site:
GIA Report Check
AGS Report Verification
GCAL Certificate Search
Gübelin Gem Lab
Sales Tool: It Comes with the Stone
There’s nothing so convincing as a piece of paper that says, What you are buying is really valuable! That’s the psychology, anyway. So, any certificate offered by the seller to verify a gem’s quality or value is immediately suspect.
Lab reports with valuations
Be wary of an official-looking lab report (or “gem report” or “diamond description” or “summary of appraisal” or whatever it is called) that carries a valuation. A lab report attests to the quality of the stone, not its value in the marketplace. Valuation is not a lab’s business, but an appraiser’s job. Valuation may change over time, but an accurate description of the stone does not.
“Flexible” grading
Experience shows that lab reports supplied by the retailer often exaggerate the quality of the jewelry (as well as overstate the value). Labs (or appraisers) that inflate a gem’s qualities by a few grades sometimes assert that they are within an acceptable margin of error, but this is not true. Exaggerating by even one grade in color or clarity significantly inflates the valuation, and the larger the stone, the greater the discrepancy.
Bulk purchases of Certificates
Retailers can buy diamond reports in bulk to accompany stones that were never examined by a gemologist. The reports may carry descriptions based only on the supplier’s description. Some retailers never question the description or examine the stones themselves.
“Certified Diamonds” from bogus labs
Disreputable or non-existent labs can say anything on a “report” and never be called to account. You may wind up paying a settlement based on the diamond report, so you want to be sure the report comes from a reliable source.
A chain of victims
Sometimes gem suppliers include lab reports with the gems they sell to retailers. In such cases, the retailers—as well as the subsequent consumers and, potentially, the insurers—are taken in.
Too little information
Be especially careful insuring purchases from shopping networks and internet sites, especially eBay. As we’ve discussed in other issues of JII, these sellers rely a lot on hype and rarely disclose all information about the jewelry (such as treatments). Consumers often buy on impulse or assume they are getting a bargain, rather than carefully comparison shop.
Also be cautious about insuring jewelry purchased while the client is traveling. Scams aimed at vacationers are widespread, and any certificates may be as phony as the “bargains.”
Save your client from a scam
Unless you, the agent, point out the potential for fraud, your client may not see the need to have such purchases appraised by a disinterested appraiser or examined by a reputable lab. You can do your client a good turn by passing on the above links so the client can educate him/herself about the dangers of unreliable lab reports.
GIA (Gemological Institute of America) GIA Report Check

AGS Laboratories AGS Report Verification

GCAL (Gem Certification and Assurance Lab) GCAL Certificate Search

Gübelin Gem Lab (based in Switzerland) Gübelin Gem Lab

These are the ONLY labs we can recommend for reliable diamond certificates. For high-value stones, insist on a report from one of these reputable labs. And verify the authenticity of the report on the lab’s Web site, using the links.


Roy Cohen
Marketing Director

Diamond Certification Laboratory of Australia
Suite 1, Level 1, Piccadilly Tower, 133 Castlereagh Street, Sydney NSW 2000
Tel: 02 9261 2104. Fax: 02 9261 4263.

Wednesday, February 10, 2010

CIBJO Diamond Commission calls for clear diamond nomenclature easily understood by the end-consumer

It almost seems like déjà vu, but at the
2010 CIBJO Congress that will take place
this month in Munich, Germany, the CIBJO
Diamond Commission will face similar
challenges to those addressed at last year's
congress in Istanbul, Turkey.
Nomenclature of diamonds
In Istanbul it was resolved not to change
the nomenclature for gem-quality synthetic
diamonds, allowing only for the use of the
descriptor "synthetic" and not for any of the
additional terms that were proposed, such
as “man-made,” "laboratory-grown,"
“laboratory-created” or “[company name]-
created.” One could conclude, therefore,
that the discussions on the nomenclature of
synthetic diamonds have not led to any
changes in the status quo.
The apparent rift between the nomenclature
allowed by CIBJO and by the International
Diamond Council (IDC) has indeed not been
bridged. However, in contrast to years gone
by, since the congress in Istanbul
representatives of CIBJO’s Diamond
Commission and the IDC have been
engaged in talks. The purpose is to reach
agreement on a joint set of nomenclature
for natural and synthetic diamonds.
The recent economic crisis had driven home
to all parties involved that to reinsure
consumers buying diamonds, unambiguous
nomenclature is required.
On February 10, a meeting will take place
in London, and hopefully all participating
parties will concur that the lack of an
agreed to nomenclature for diamonds –
natural and synthetic – ultimately will affect
consumer confidence negatively across the
In Munich, the CIBJO Diamond Commission
will report on the talks with IDC and also
hear a report on the February 10 meeting.

Misrepresentation of diamonds
The need for clear, unambiguous
nomenclature will also driven home by
another issue on the Commission’s agenda
in Munich and that is the misrepresentation
of diamonds in the mass media.
The number of advertisements that
misrepresent jewellery products and its
components—diamonds, gemstones, pearls,
etc.—seems to be on the rise. The Diamond
Commission has noted, as have members
of other Sector III commissions, that the
misrepresentation of jewellery products is
especially rife in in-flight magazines and
sales catalogues. On e-commerce websites,
the phenomenon of misrepresentation
needs to be properly researched.
At the CIBJO Congress, a special panel
discussion will be held on CIBJO's
commitment to the struggle against the
misrepresentation of jewellery industry
products in promotions and advertising. The
panel discussion will be moderated by
Cecilia Gardner, president of the Jewellers
Vigilance Committee and vice president of
the CIBJO Ethic Commission, and will take
place on Saturday, February 20, 8:00 A.M.-
9:30 A.M.
The question we will need to discuss at the
congress is how do we convince producers,
wholesalers, and retailers to follow the
rules? Surely, without a common, joint
directive from the major umbrella
organisations, such as the WFDB, IDMA,
IDC and CIBJO, they will continue to get
away with arguments that the
nomenclature is not clear-cut and therefore
ineffective. It is clear that as long as a
single set of nomenclature is not used, the
practice of misrepresentation only will
grow. Diamond Commission President Udi
Sheintal, with the assistance of the CIBJO
communications team, will showcase
examples of how these issues may be
The Impact of lighting
One of the issues that was on the agenda
but was not discussed in Turkey last year is
that of lighting. We do not expect that this
year we will be able to deal with it at
length, but it is important that we keep
track of other, important issues that affect
or potentially can affect consumer
confidence in diamonds.
In Istanbul, we heard a detailed report by
Michael Allchin, Assay Master of the Assay
Office in Birmingham, UK, who is also
president of the CIBJO Precious Metals
Commission. Michael has been a member of
a Task Force instituted in June 2008 by the
Accredited Gemologists Association (AGA)
to research lighting and its impact on colorgrading
colorless diamonds.
The Task Force was established in response
to allegations in recent years from
gemmologists and appraisers that colorless
diamonds exhibiting blue fluorescence were
being over-graded by gem-testing
laboratories. Several gemmologists who are
closely associated with CIBJO were invited
to participate in the AGA Task Force.
It is expected that updates on this issue,
including a report on the Task Force
meeting held this month in Tucson, Arizona,
will be presented at the Diamond
Commission meeting in Munich.

Monday, February 8, 2010

GIA seeks counterfeit diamond report culprits

Carlsbad, Calif.--The Gemological Institute of America (GIA) has identified and taken out of circulation a counterfeit diamond grading report that surfaced recently in Hong Kong, and now the institute's lab is seeking information on the culprits.

According to a news release issued Wednesday, GIA traced the bogus document back to the diamond trading center of Antwerp, Belgium. In investigating the case, the lab was able to determine that the report's number did not correspond to the stone that accompanied it but that it did match the report number for another, higher-quality stone.

According to GIA, it appears a diamond of lower quality was cut to match the original GIA report but the diamond's measurements, color and clarity did not match the specifications of the diamond that actually went with the original report. A closer examination of the rogue report revealed that the font, color and background used in the blue shaded area did not match up to the same characteristics found in authentic GIA certificates, among other discrepancies.

According to the release, GIA is working behind the scenes to obtain more information about the report and its origin, and, as always, is working with law enforcement authorities worldwide to help prevent, detect and prosecute such illegal activities. Anyone with information about this case or any other fraudulent activity is asked to bring it to the lab's attention.

To help the industry or the public identify counterfeit reports, GIA had instituted a free online service called GIA Report Check that allows clients to go online and enter a diamond's GIA report number and carat weight to receive all of the information on the stone. It is available only for diamonds graded from Jan. 1, 2000 to the present.

Report Check would not have helped with the bogus report found in Hong Kong, however, because the report number would have sent users to the original report for the better-quality diamond. GIA also offers GIA Report Verification Service to confirm the authenticity of a GIA Diamond Grading Report and Diamond Dossier, but the service requires sending the diamond and its original report to be re-assessed. Another option is having an original grading report updated for a reduced fee, to include full grading and screening steps for treatments.

Thursday, February 4, 2010

GIA Responds to Counterfeit Grading Report

The Gemological Institute of America (GIA) reported that a counterfeit GIA report found in Hong Kong has been tracked back to Antwerp, the institute revealed on Wednesday. GIA said it is diligently working behind the scenes to gather more information about the report and its origin.

“A close examination of the document in question proved it was a counterfeit when it was compared to an authentic GIA report. It was clear that the font, color and background used in the blue shaded area did not match, among other discrepancies,” GIA stated.

The lab warned that it is “actively engaged with law enforcement agencies worldwide” to prevent, detect and prosecute such illegal activities.

In a step to ensure authenticity, it said that Report Check is the most effective way to identify counterfeit reports.

The counterfeit report number did not correspond to the stone that accompanied it, although it is an actual report number for a different stone. “It appears that a diamond of lower quality was cut to match the original GIA information. A review of the diamond’s measurements, color and clarity clearly showed that the diamond did not match the GIA report,” the GIA stated.

The GIA Report Verification Service can also be used to confirm the authenticity of a GIA Diamond Grading Report and Diamond Dossier, or the information it contains, by simply requesting a Verification Service from GIA.

GIA asked that anyone with information is encouraged to bring it to the Institute’s attention. Please contact GIA Laboratory Customer Service with any questions or concerns at 760-603-4500, ext. 7590 in California, or 212-221-5858, ext. 3725 in New York; or email

(February 3, '10, 12:00 IDEX Online Staff Reporter)