RAPAPORT TRADE ALERT - July 27, 2018

RAPAPORT... The United States Federal Trade Commission (FTC) has issuednew Guides for the Jewelry Industry. While these guidelines create confusion byexpanding the definition of the word 'diamond' to include synthetic diamondsthey continue to restrict the use of the word "diamond' to natural diamondsunless the word is immediately preceded by a word or phrase that clearlydiscloses the product is not a mined diamond.All syntheticdiamonds and colored stones must be clearly disclosed. The word diamond cannotbe used for synthetic diamonds without words immediately preceding indicatingit is not a natural diamond. The word diamond alone without a qualifier canonly be used for natural diamonds. Please note that the following selections from the new FTCguides apply to diamonds. ? 23.25 (a) "It is unfair or deceptive to use theunqualified words ''ruby,'' ''sapphire,'' ''emerald,'' ''topaz,'' or the nameof any other precious orsemi-precious stone to describe any product that is not in fact a minedstone of the type described." (b) It is unfair or deceptive to use the word ''ruby,''''sapphire,'' ''emerald,'' ''topaz,'' or the name of any other precious or semi-precious stone,or the word ''stone,'' ''birthstone,'' "gem," ''gemstone,'' or similar term todescribe a laboratory-grown, laboratory created, [manufacturer name]-created,synthetic, imitation, or simulated stone, unless such word or name isimmediately preceded with equal conspicuousness by the word''laboratory-grown,'' ''laboratory-created,'' ''[manufacturer name]-created,''or some other word or phrase of like meaning, or by the word ''imitation'' or''simulated," so as to disclose clearly the nature of the product and the factit is not a mined gemstone. ? 23.27 "Misuse of the words ''real,'' ''genuine,''''natural," ''precious,'' etc. It is unfair or deceptive to use the word''real,'' ''genuine,'' ''natural,'' ''precious,'' ''semi-precious,'' or similarterms to describe any industry product that is manufactured or producedartificially." The Rapaport Group believes that the current FTC guidelinesshould be modified. They have created confusion and misunderstanding as theyredefine the word "diamond" to include synthetic, man-made, non-natural, artificial,imitation diamonds that have "essentially the same optical, physical, andchemical properties as mined diamonds." The FTC guides ignore natural as adefinition of diamond, focusing on physical properties instead of scarcity andvalue differentiation which are key factors in product definition and vital forconsumer protection. We will be communicating a series of questions and requests formodifications to the Guides in the future. The full text of the new FTC Guideswith the FTC Statement of Basis and Purpose is available here: We invite your comments to Martin@Diamonds.net. The FTC may also be contacteddirectly:Reeneh L. Kim, Attorney +1-202-326-2727, Division ofEnforcement, Bureau of Consumer Protection, Federal Trade Commission, 600Pennsylvania Ave. NW, Washington, DC 20580