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Sellers of Lab-Grown and Simulated Diamonds Get FTC Warning

It says their ads may be deceptive.

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The Federal Trade Commission has sent eight letters to marketers of simulated or lab-grown diamonds warning that their online advertisements may deceive consumers.

In the letters, FTC staff point out 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. They also note examples where required disclosures about the source of the diamonds are not near the individual product descriptions.

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To help educate the companies, the letters caution them not to use the name of any precious stone, including diamonds, to describe a simulated or lab-created stone, unless the name is immediately proceeded by a clear and conspicuous disclosure that the product is not a mined stone.

The staff also encourages companies selling simulated diamonds to avoid describing their products in a way that may falsely imply that they have the same optical, physical and chemical properties of mined diamonds.

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

Several letters also note that the companies have advertised their jewelry as “eco-friendly,” “eco-conscious” or “sustainable,” and that such terms can be interpreted to imply certain specific environmental benefits.

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Sellers must have a reasonable basis for making such claims for any products, and the claims should be adequately qualified to avoid deception. The letters admonish the companies not to use unqualified claims such as “eco-friendly,” “eco-conscious” or “sustainable,” as it is unlikely that they can substantiate all reasonable interpretations of these claims.

The letters note that in July 2018, the FTC issued updated guides for the Jewelry, Precious Metals, and Pewter Industries that provide marketers with information on how to make non-deceptive representations about jewelry and related products, including mined, lab-created and simulated diamonds.

Failure to follow the guides, the staff warn, may result in enforcement actions if the FTC determines the companies engaged in unfair or deceptive acts or practices. Such actions could result in civil penalties if the company engaged in practices knowing that the commission has already deemed them deceptive in earlier litigation.

In each letter, FTC staff ask the companies to advise them within 10 days within receipt of steps they plan to take to revise their marketing so that it follows the Jewelry Guides and therefore complies with the FTC Act.

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