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The Case of the Pink Phony

When a client’s diamond changes colors while the ring 
is in for sizing, she demands reimbursement.

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KATIE SHERING HAD seen a lot in her eight years as the staff gemologist and appraiser at Karl J. Cobb Fine Jewelers. With Cobb’s affluent Northeastern client base, she’d witnessed amazing finds from grandma’s closet, and she’d seen absolute disasters bought by unsuspecting customers from scam artists around the world. Diligent, accurate and highly regarded by her peers and by the Cobbs themselves, Katie always took her job seriously, showing her genuine passion for gemstones and diamonds, as well as real concern for their owners.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at kate@performanceconcepts.net

Sybil and Leland Wilshire were longtime Cobb clients, and since they sold their business 10 years ago, serious world travelers. Katie had long since stopped trying to convince the Wilshires that buying jewelry during their excursions was ill advised.

The truth was that despite the often-large price tags, the pieces the Wilshires bought when they traveled were usually as much “souvenir” as anything. Besides, Sybil Wilshire had a good eye, and there had been occasions when Katie was actually impressed with the value she had gotten on pieces she brought in for appraisal.

Such was the case back in the fall when Sybil brought in a pink diamond ring she and Leland had purchased while on their first post-pandemic adventure, a cruise to several small Mediterranean ports. She handed Katie the paperwork from the selling store (a store sales receipt and “authenticity certificate”) that said the center diamond in the ring was an SI1, fancy pink (color-enhanced) pear shape weighing 0.77 carats, and that the ring contained 1.05 TCW in non-enhanced white diamond accents. The “sell-for” price was listed at $9,870. Sybil needed to have the ring sized and accurately appraised for her insurance. Though it was not noted on the receipt, Katie assumed that the center diamond was HPHT treated or irradiated. She examined the ring, made her notes, took a picture and sent the ring to the shop for sizing.

A week later, when Katie looked at the resized ring before calling Sybil to let her know it was ready, the diamond was no longer the “fancy pink” described in the original paperwork. In fact, it didn’t look anything like it did when it left her hands to go to the shop. She estimated the stone as a C-4 champagne, with absolutely no hint of pink. In a panic, Katie began to look for possible explanations for what had happened. Referring back to a lesson from her own study of diamonds, she determined that the diamond was most likely coated to give it a pink color and that the jeweler’s torch probably melted the coating off. Once she knew what she was looking for, with careful examination under the microscope, Katie was able to see some remnants of the coating in a small area of the diamond’s pavilion. She went back to the original documentation Sybil had gotten with the ring and verified that there was no mention of coating or note that the treatment was not permanent. Further research indicated that disclosure requirements were quite different in the area where Sybil had purchased the diamond than they were in the U.S.

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Katie called the Wilshires to tell them there was a problem with the ring and asked them to come in to discuss the issues and options. When Sybil saw the ring, she reacted with anger, questioning whether the Cobbs’ jeweler might have switched her diamond. Once Katie explained the coating process, however, showing Sybil both her research and the remnants of the coating on the stone, Sybil calmed a bit but was still disappointed, and she was unhappy with Katie’s only suggestion — that she send the ring back to the store where she had bought it and request a refund. She took her ring home and said she’d be back in touch.

Two days later, Sybil came back to the store and asked to meet with Katie and Jon Cobb, the store’s owner. She said she’d been in touch with the store where the ring was bought, and they had told her that all of their fancy colored diamonds were coated and that there were signs in the store to that effect. They told her that if she would send the ring back to them (at her expense), they would re-coat it at no charge. She complained that she did not know about the coating and that she wanted them to give her the “real” pink diamond she thought she had bought. They said no, and also refused to refund her money.

Sybil told Katie and Jon that she’d contacted her attorney, who told her that she had little recourse with the foreign business, but that Cobb’s should assume responsibility for the replacement, since Katie should have known the diamond was coated before sending it to her jeweler. She said she was not looking to take advantage of the store, but she felt that some level of compensation for professional responsibility was called for.

Sybil Wilshire wants a pink diamond. The one she had was clearly created using a poor quality, temporary process, but Jon has no interest whatsoever in replacing it with a coated diamond through his store.

The Big Questions

  • What should Jon Cobb do for Sybil Wilshire?
  • Is the long-term value of the customer worth the investment in fixing this mess?
  • More importantly, what should he do with Katie — who, in fact, should have spotted the coating before the ring went to the shop?
Jennifer P.
Alexandria, VA

Although it would be painful, I would give the ticket value of the item to the customer in store credit or cash, and then claim it on insurance. The store has a longstanding relationship with the customer, and they should stand behind their process. The damage to the store’s reputation from a seriously bad review would be very detrimental. I don’t perform tons of repairs, but I would NEVER heat a pink diamond or sapphire without thoroughly checking it out.

David B.
Calgary, AB

I have been in a similar situation. First, the lawyer is being litigious and wrong. The store should only be obligated to recoat the diamond and return it to its original condition. Appraisers beware is the second point. And lastly, even natural colored diamonds can change color with heat. Be careful and remove or heat sink them. Why a store has to take responsibility for another’s misleading sale or the client’s ignorance is a mystery of our industry. I know so many industries that have offered me services that would tell me to shove off in a similar type of situation. Go ask Ford to warranty someone selling a Ford kit car. Ask your furnace guy to warranty someone else’s work a year later. I could go on. Why our industry has this expectation thrown on is very odd.

Peter T.
Show Low, AZ

The attorney was correct in that Katie should have seen that the diamond was coated. That said, the store holds NO responsibility to supply a diamond the customer thought they were buying. The store can offer to pay for the shipping costs, but that’s it.

Kyle B.
Roswell, NM

Treated diamonds are tricky in the shop, and issues like this can sneak past even the best of us jewelers. I would offer to have the diamond retreated with the same treatment it came in with to make the customer whole. It’s not expensive and would stop a legal suit from happening. It’s our job to fix our mistakes, but not other people’s mistakes. If this offer doesn’t appease the customer, then I’d leave it as an option for the customer, shrug my shoulders, and politely tell them not to buy jewelry on cruise ships.

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Brian M.
Shrewsbury, NJ

I would explain the differences between the treating processes of colored diamonds and the different values that go with this. Once the customer understands this, I would offer to find her a better quality treated pink diamond. Once found, I would offer it to the customer at a small percentage above cost. This would, I think, keep the customer happy and supply her with a better quality treated diamond while making the store look good in the process.

Richard S.
Seattle, WA

The store should offer to replace the diamond with a lab-grown pink diamond. It would be a permanent color, inexpensive to buy and save the client and the store’s reputation.

The store then has what appears to be a natural off-colored diamond that can be polished and used to create an in-store pendant or ring design. Once that is sold, they will have recovered the money they laid out for the replacement diamond, and all’s well that ends well. And as a side note, maybe the client will think twice about buying jewelry elsewhere.

Debra K.
Lafayette Hill, PA

There’s a line of negligence that begins with the buyers’ failure to see the disclosure to the shop and the Cobbs’ failure to notice the coating. Assignment of blame to a customer, though, even if well-deserved, never enhances a sales relationship. The Wilshires have historically been good customers. Preservation of the good store/client relationship should be the Cobbs’ primary motivation. They probably do not approve of a coated diamond, but that is the hand their customers have been dealt. The store owners can look like heroes and offer to help their longtime clients by communication with the overseas store, shipment and payment for the coating. This is an opportunity for the Cobbs to show support and strengthen the relationship they have with the Wilshires.

Steve W.
Poplar Bluff, MO

Find another source to pink coat the diamond. The foreign store is like those TV hucksters that sell coins (layered) in .9999 PURE SILVER! Only do that to continue to secure future business. It’s a mistake most jewelers would make. No obligation whatsoever to compensate, but a good way to continue a great relationship. Also take care of a bitter lesson learned.

Ralph H.
Connersville, IN

OK, so half past time to have had “the talk” with your attorneys. On the other hand, how many of these possibilities can you expect to anticipate in disclaimers on take in? At some point, you would just not take in anything! Call your attorney (yesterday would be good) and hope for reasonable advice. Call someone like Max Schuster, who might be aware of a lab to re-coat the stone. Your customer deserves what she brought in (at most), and it could be argued that she was given notice of coating and did not reveal it to you. Unfortunately, as “the expert”, you may be held responsible and lose in court. From now on, any overseas purchase brought for work or appraisal gets a disclaimer regarding unknown treatments! Good luck with it!

Michael J.
Port Charlotte, FL

Jon needs to check his ego at the door and send the diamond to be re-coated or at the VERY least pay for the diamond to be sent back and re-coated by the store that sold it (this should be a no-brainer). I understand the client wants a “real” pink, so Jon and Katie should take this opportunity to sell one! Of course, a natural will be magnitudes more expensive than the coated one, but maybe an HPHT-treated diamond will convert this into a sale and they set the coated one into a pendant where it will be a nice complement to the ring. As for noticing the coating, it’s not always easy to see, and now Katie knows to look for it or at least ask about the treatment. This is a relatively low-cost lesson for everyone except the client who will HOPEFULLY heed the warning about buying expensive jewels on vacation.

Stan G.
Charlotte, NC

Mr. Cobb should return the treated stone back to the overseas jewelry store to have them restore the pink color coating. Keeping the customer happy for the cost of a shipping charge is a no-brainer. Lesson learned on how to handle color diamonds by everyone that handled that ring. Especially the craftsman. When in doubt, take it out!!

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Marcus M.
Midland, TX

This situations stinks. At the end of the day, I don’t think Jon owes Sybil squat. Yes, Katie should have found the coating first, but she is human and allowed to make mistakes. Sybil seems to have a real knack for spending money on garbage while she travels, and that’s her fault. Maybe Jon can offer to re-coat the diamond and charge her cost for it, but he does not owe her a new pink diamond. This customer sounds like a brat, and I’d debate firing her as a customer instead of worrying about how to appease her.

Patrisha C.
Lowell, MA

When you see the term “color enhanced,” beware. The original store was at fault for not listing it correctly as coated and should replace the stone. Sybil was misled in thinking it was a “pink,” but price should have been a telltale sign that it might be something it wasn’t. Coatings are difficult to detect, but being “color enhanced,” precautions should have been taken. As for the attorney saying that Cobb’s should replace the diamond, replacing it with a like item sounds like an easy way out for Sybil to get a stone that she really didn’t buy. Good lesson for all parties, especially Sybil. Too good a deal isn’t a true deal.

Megan C.
Poulsbo, WA

I’m wondering what disclaimer is written on the repair intake or other form to protect the store from certain responsibilities. It’s definitely sticky when dealing with verbal understanding versus written descriptions. The situation is unfortunate with no real winners. I might suggest that the price of a replacement diamond could be a small price to pay to preserve a relationship. See if the cost can be shared. If not, be very clear that a replacement diamond is being offered as an acknowledgment of the history with the clients but not as a concession of fault or mistakes. Put what you can’t fix behind you and show your integrity and pride in your service through your solution.

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