Thursday, January 5, 2012
20 Most Common Diamond Scams
How do I buy a diamond and avoid all the scams at the jewelry stores?
A jeweler tells you, "This is a blue-white diamond."
This is a very old term that is now carefully controlled by the FTC because of misuse and scams in the past. The dealer will probably tell you that it is a better diamond, but actually it is just the opposite. Blue-white refers to the fluorescence that results in natural light, which contains ultraviolet wavelengths. This blue fluorescence actually makes a colorless diamond look a little oily or milky in sunlight and decreases its value. However, for stones with a faint yellow color, a moderate amount of fluorescence can make it look whiter because it cancels some of the yellow.
Solution: Avoid any jeweler who still uses this term and walk out, since he may have old habits established by scam artists of the past.
Carat Total Weight (ctw)
The tag only states the CTW
Many jewelry tags only list the "carat total weight" of diamonds in a ring and do not list the center stone separately. You can't compare prices with another ring if you don't know the weight and quality of the main diamond. This is crucial because one large diamond is worth much more than 6 small ones that total the same weight. For instance, if you have one G/VS2 diamond weighing 1.00 carat, it might be worth about $5,500. But 10 smaller G/VS2 diamonds totalling 1.00 carats might only be worth about $1,800. Big difference! And normally, smaller diamonds at such stores are much lower quality than this example, so the actual ring would be worth still less.
Solution: Ask for the weight and quality of the center stone by itself, in writing. Leave the store if they can't or won't do this. They don't have your interests in mind.
The 50% Off Sale
Huge Sales at Jewelry Stores
If you see a sale price in the newspaper, don't fall for it. You will probably pay much more than the regular price at an honest dealer. We know of a major store in Florida that marked gold chains up from $100 cost to $500 regular price, then marked them half-price during a sale. That means the customer paid $250, thinking it was a great price. This same thing happens with diamonds on sale. Liquidation and "going out of business" sales are usually no different. We heard of one store in New York City that has been going out of business for 15 years.
Solution: Don't fall for sales of any kind. If a dealer can afford to mark it down, then he marked it up too high at the start.
The advertised diamond is sold when you get there
This is an old trick still used by many stores. Although outlawed by the FTC, it still happens because it is hard to monitor 25,000 stores in the U.S. Bait-and-Switch is when a store advertises a diamond at a great price, but when you arrive to buy it, it's already sold. They usually offer to show you something much more expensive. They bait you with the fake item, then switch you to something at a high profit.
Solution: If the advertised item is not in stock, don't settle for anything else. If the store can't locate another diamond just like it and offer you the same price, then leave.
Light Makes White
Bright lights make every diamond look better
Of course, every jeweler wants to show his or her diamonds in the best light, but there are some lighting tricks you should avoid. Some bulbs have a strong blue component, which makes yellow stones look whiter. Special bulbs are often used with strong ultraviolet wavelengths, which make most diamonds fluoresce blue. This also has a whitening effect for stones in the lower color ranges.
Solution: In any case, ask if the diamond has fluorescence, and ask to see it without the bright lights in another part of the store before you agree to buy. And always ask for a certificate from an independent lab to verify the grade if you are looking for a fine color. The labs always mention any fluorescence. If the store agrees, continue. If not, walk out.
When a jeweler exaggerates the grade even a little
The FTC says that a jeweler must be accurate within one grade of color and one grade of clarity on a diamond. So many jewelers bump the color and clarity just one grade. Unfortunately, this can mean a great deal of money if you are talking about a fine-quality, 1-carat diamond. For instance, you might find a stone that the jeweler quotes as a 1.00 carat F color / VS1 clarity for $6,500. However, if you sent it to a reputable gem lab like GIA, it would come back as a G color / VS2 clarity, which is only worth about $5,500. This means you lose (and they profit) about $1,000.
Solution: If you are looking for a fine-quality diamond, insist on a recent certificate from a respected gemological lab, such as GIA, AGS, or EGL. And only compare prices of other stones with like certificates.
The Fraction Scam
The tag says 3/4 carat
The FTC allows jewelers to round off diamond weights. So a diamond labeled as 3/4 carat in weight might actually weigh anywhere between .69 and .81 carat. This could mean a significant amount of money, since diamond prices leap at certain popular sizes. In this example, you might be buying a .69 carat round G/VS2 worth about $2,100... but paying for what you thought was a 0.75 carat worth $3,000. You lose $900.
Solution: If the store will not give you the exact weight of the center diamond, leave the store. No chance for any deals here.
The appraiser says your diamond is worthless
After you buy your diamond and take it to an appraiser for an insurance valuation, the appraiser tells you the stone is not what you thought. He might say it's worthless or not the quality you were promised. In either case, he tells you where to buy one, or tells you to buy it from him. Beware. He may well be lowballing or downgrading a fine stone to persuade you to buy from him (or from some store that gives him a kickback).
Solution: Always use a truly independent appraiser who is not connected with any seller of diamonds. Make sure the appraiser is well known in the community, has been in business for at least 5 years and has no outstanding complaints with the Better Business Bureau. If you follow all the precautions and guidelines in this site, you will not run into this problem.
Dealers drill holes to burn out black carbon spots
About 1 in 3 diamonds in this country is laser drilled, according to Fred Cuellar, a leading diamond expert. Dealers use lasers to drill a tiny hole into the depths of a diamond to burn and evaporate large black inclusions to make them disappear. The trouble with this little trick is that laser drilling can make the diamond a little more fragile to breaking with a good knock. Most dealers trade laser-drilled stones for much less.
Solution: Ask your jeweler if the stone has been laser drilled. We suggest always insisting on a certificate, since a certificate from any respected gemological lab will clearly note that a stone has been laser drilled. Some labs will not even accept diamonds for grading if they have been drilled.
The Old Switcheroo
You pay for one stone, get another
When you leave your new diamond purchase at the store to be set in your chosen ring, the jeweler might switch it and set a cheaper stone. You don't find out until you take it to an appraiser later. The original jeweler will claim that you must have switched it yourself, or accuse the appraiser. You have no recourse here.
Solution: The only cure for this scam is prevention. Follow the precautions in this site and this should not happen. In short, tell the jeweler to put the weight, color, clarity and measurements in writing on your receipt to give you proof in the event of a switch.
Avoid the diamond districts in New York
You may have heard that the major diamond trading center in the U.S. is located on 47th Street in New York. No jeweler buys on the street level. All the actual trading at wholesale prices takes place in high-security buildings hidden from the public. The vendors on the street level are more skilled at taking your money than anyone we have seen anywhere else. They are so slick that you won't know you are being taken for a ride until it is too late.
Solution: It's simple. Never buy from anyone in the Diamond District in New York...unless you go with a jeweler who will take you up to the real dealers in the trading centers. The dealers on the street are no deal. You will most likely get ripped off, by the very best, if you shop on the street level.
Dealers supply a retail appraisal with a diamond
You would not hire a fox to guard the hen house, no matter how nice he might be. In the same way, don't accept an in-house appraisal from a jeweler. Certainly you can find good prices at honest stores, but any retailer will appraise each diamond in the showcase for more than its selling price to make you feel good about his prices.
Solution: Seek an appraisal by an independent, unbiased, certified gemologist / appraiser who does not sell diamonds and is not connected to anyone who sells diamonds (kickbacks).
Hiding the Flaws
Every jeweler hides flaws under the prongs if he can
Although you will probably choose to do the same after you have examined and purchased your diamond, you should be aware that all jewelers will place any flaws under a prong in the ring if possible. In many cases, this can make an I1 clarity appear like a VS2 if you look at it in a ring setting. Rings are not your friend when it comes to taking an honest look at a diamond. But if you choose a clarity with some visible inclusions, we do suggest "pronging" the flaws if they are not structural in nature. (Structural flaws like feathers and cleavages can be damaged by the high pressure exerted by the prong on the diamond to hold it snug in the ring.)
Solution: Always look at a stone loose, out of any kind of ring or setting if you want to examine it properly. The stone can turn in the ring some day and you could be very surprised to see suddenly a huge "new" black spot that was actually there along.
The grade of the diamond is altered on the certificate
This can happen, although it is difficult to do because all reputable gem labs laminate their certificates to prevent alterations.
Solution: You can usually tell an altered certificate by examining the lamination. If the lamination looks torn at the corners, or if the front of the certificate is not laminated, it is not valid and should not be used. Leave such a store on the spot.
Bogus Lab Certificates
Certificates from non-existent "sound-alike" labs
Don't be fooled by official-looking certificates from local "certified gemologist" gem labs. They are probably owned by the store and exaggerate the grades to make the prices look good. Don't accept certificates from labs with familiar-sounding names like "Gemological Institutions of America" (instead of Gemological Institute of America), or American Gemological Services (instead of American Gemological Society). If it is not from the true GIA, AGS or EGL gem labs as described on other pages of our site, don't believe it. These respected institutions have spent millions of dollars toward advanced equipment and staff training to produce the most reliable and consistent (though not totally infallible) grading reports.
Solution: Ask any dealer who shows certificates from other labs if he has any authentic certificates from the big labs. If not, leave the store. Smaller labs can do good work, but you have no way to know if they are qualified, legitimate and unbiased.
They suggest you leave a deposit and take it for an appraisal
If you leave a deposit on a diamond, you should be very careful that the deposit is refundable. In many cases, this is just a way to steal your money, which later turns out to be non-refundable. You will only receive a credit toward another diamond.
Solution: Never leave a deposit on a diamond unless you have it in writing that the deposit is completely refundable if the appraisal is not favorable. And always insist that the store write down the exact measurements (WxWxD), shape, weight, color and clarity of the diamond on your agreement form.
Inflated List Prices
Artificially inflated "list" prices on the tags
Many stores will try to lure you into thinking their prices are great by listing inflated retail prices on the price tag s. They might call these "list" prices or "compare at" prices. This practice is very common, so watch out for it.
Solution: The honest jeweler will tell the truth about the savings he offers, but the dishonest will inflate the prices. How can you tell the difference? Ignore such comparison information and learn how to judge for yourself about the prices. The most accurate way to determine diamond prices these days is to use the huge online diamond databases. But don't try it alone. First take our easy, fast, step-by-step Diamond Price Tutorial.
Diamond, CZ or Moissanite?
Diamond lookalikes can fool you
This does not happen too much in the U.S., but when you go overseas or to the Caribbean isles, there are no laws protecting the consumer. Some diamond lookalikes can fool you. You might come home from Mexico with a $2 cubic zirconia that cost you $2,000. In our opinion, you will not get any deals in Cozumel or Jamaica or anywhere else, and you are quite likely to pay too much or not receive a diamond at all. Diamonds are a world market and trade at essentially the same price everywhere. There is no such thing as a better place to buy diamonds.
Solution: Never buy a diamond on a trip. You have no recourse if something goes wrong.
New treatments to make flaws invisible
There is a new process patented a few years ago that melts a kind of crystal into surface-breaking fractures in a diamond. This technique went unnoticed for a short time, but now is better understood and more easily detected by most of the better dealers. The treatment is considered slightly fragile because it can be damaged under the extreme heat of a torch when the diamond is set into a ring. We feel it is unethical for fracture-filled diamonds to be sold without full disclosure of this fact to the consumer. Fracture-filled diamonds should trade for much less than diamonds without this treatment, but in reality they often sell for as much or more because they look like a higher, more expensive clarity grade. Any gem lab certificate will note this treatment, and some labs will not give a certificate for fracture-filled diamonds.
Solution: Ask for a written statement from your jeweler regarding any color or clarity enhancements used. We recommend a certificate from one of the three most respected labs...GIA, AGS or EGL.
A little paint goes a long way
This very deceptive practice involves a little point of blue or purple paint on the lowest tip of the diamond, called the culet. This is small enough that you might not detect it, but the location spreads the color throughout the stone. This counters the yellow tint in lower color grades, making a diamond look like a more expensive, colorless grade. Very sneaky.
Solution: If you are suspicious about this possibility (the diamond looks better than any other diamond with this color grade that you have seen so far), the only way to guard against this little trick is to have the diamond washed before your eyes in an ultrasonic cleaner. If they will not do this for you, it might not be the best place to buy a diamond.
Robert Hensley President diamondhelpers