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Real Deal: The Case of the Second (and Third) Opinion

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[span class=alert]To be eligible for publication in INSTORE, responses must include your name, store name, and the city and state in which your store is located. [/span]

[dropcap cap=A]fter months of research, Jack Meehan finally took the leap. In early January he purchased a 2.06-carat cushion-shaped diamond from The Gem Exchange, with the intention of presenting it to his fiance’e, Kim, as a surprise, and letting her select the mounting for her engagement ring. The diamond came with a GIA Certificate indicating VS2 clarity and D color. The purchase price was $21,271 plus tax — a bit more than he’d planned to spend — but Jack was confident he’d gotten a good value and was comfortable with his purchase.[/dropcap]

While travelling in New York on business in the days following his purchase, Jack spotted an ad for a diamond-district company that offered to laser inscribe a message onto the girdle of the diamond. Being a hopeless romantic, Jack thought that was a great idea. He took the diamond back to New York with him the following week and went to visit the shop in the ad.

While there, he spotted a setting that looked just like the one Kim had pointed out several times in stores and online as her very favorite. The store owner offered him a great combination price on the mounting, labor and inscription, and suggested he also get a new quality evaluation document and an insurance appraisal on the completed piece. He offered to get the evaluation taken care of at another national laboratory that was headquartered in the same building. Jack was delighted when he picked the ring up two days later – until he looked at the paperwork and noticed the diamond was actually found to be an F color.

When he got back home, Jack took the diamond and all the paperwork back to the Gem Exchange. The store owner, Terry Giles, explained to Jack that it was not uncommon for two different people or even two different laboratories to grade the same stone differently. Apparently overlooking the document note referencing the inscription, Terry offered to refund the full purchase price on the diamond, in keeping with the Gem Exchange’s 100 percent customer satisfaction refund guarantee.

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Jack told Terry that he was not interested in getting his money back — that he wanted to keep the diamond, but wanted a refund for the difference in price between an F and a D color stone, which he estimated to be about $3,000. Unwilling to set a precedent with which he was not comfortable and convinced that he was correct in relying on the GIA report to substantiate the quality of the diamond, Terry maintained that he would only stick to the store’s full refund policy — that if Jack was dissatisfied in any way, his only option would be to return the stone for a full refund.

On Feb. 5, Jack sent an e-mail to Terry acknowledging the refund offer but stating, “I invested a great deal of time and effort into the selection of my diamond, and I intend to present my engagement ring on Valentine’s Day. I once again request that you simply send me a check for the confirmed difference in price between what I thought I bought (a D color) and what you actually sold me (an F color) — estimated by Web research and other consumers and retailers to be approximately $3,000.

The next day, a Gem Exchange attorney replied to Jack’s e-mail, rejecting the payment idea and explaining that even though two laboratories had graded the stone an F color, “the body color of a diamond is not the primary factor in determining the ultimate retail price of a diamond”. She added: “The color and clarity grades reported by any laboratory are subjective and are to be taken as an educated opinion. This is not an exact science — therefore, no one can guarantee a specific, completely consistent outcome.”

A lengthy (and costly) response from Jack’s lawyer outlined 24 points supporting his position and concluded with a request for $5,000 (adding legal fees to the previously accumulated total) to be paid within seven days. The Gem Exchange attorney countered by claiming that Jack had in fact received what he had purchased — a diamond with GIA certificate indicating a D color. She reiterated that despite the inscription (which the Gem Exchange would have removed), Jack could simply return the diamond, for a full refund or he could keep it and as a show of good faith, Gem Exchange would pay for the cost of the second certification and appraisal Jack had done by the New York lab.

Jack’s attorney countered, “This goes to the core of the dispute. We agree we were sold a diamond with a GIA certificate stating that the diamond is D color; however, we cannot agree that the diamond ‘is as described in the GIA certificate.’ We assert that we did not get what we paid for, evidenced by two certificates from reputable laboratories that state our diamond is F color. We love this diamond and want to keep it — at the right price for what it is.”

Terry insists he wasn’t trying to dismiss his customer. “Accepting Jack Meehan’s proposed payment of the value differential might have been a more cost effective option for us, but it would also have meant admitting error — or worse — deception on our part — and would demonstrate a lack of confidence in the GIA certification process.”

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[h3][b]The REAL questions:[/b] How might you have handled the situation if you were the owner of the Gem Exchange? How about if you were the customer? Do you think such disputes do great damage to the industry as a whole?[/h3]

Editor’s Note: Real Deal Scenarios are inspired by true stories, but are changed to sharpen the dilemmas involved. The characters should not be confused with real people.

[span class=note]This story is from the October 2010 edition of INSTORE[/span]

[span class=alert]To be eligible for publication in INSTORE, responses must include your name, store name, and the city and state in which your store is located. [/span]

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