The ‘cert circus’
In the first decade of the 21st century, many people in the industry denounced the ‘commoditization’ of diamonds and feared the increased presence of the Internet diamond market would cause the downfall of the retail jeweller. One of the unforeseen results of the increased demand for diamonds with ‘certs’ was greater competition among the various trade laboratories and what was perceived by some as the ‘loosening’ of standards to meet the rise in demand for the more saleable diamond qualities. The various labs each defined their grades differently, while continuing to use the nomenclature developed and promulgated by Gemological Institute of America (GIA).
While some in the jewellery trade decried the situation, many others were making a very handsome profit from it. Meanwhile, consumers were oblivious or at least befuddled by what I like to call the ‘cert circus,’ although some were happy to buy diamonds that appeared to be amazing bargains. The worst offenders in the grading laboratory industry seemed to have standards that bore virtually no resemblance to the GIA grade designations the public believed they were buying. It was the trade’s dirty little secret for many years, as thousands of certs were printed for a market that increasingly focused on paper, rather than the actual stones. Traditional and Internet retailers played along with the game that brought increased profits for everyone willing to turn a blind eye.
Maybe this will change now that the secret has been exposed, or maybe it won’t. A series of lawsuits filed against a U.S. jewellery retailer appears to have forced a reaction within the trade. Martin Rapaport announced dealers using his trading network to buy and sell diamonds would not be allowed to list stones from certain laboratories that have been shown to have loose standards. Another large trade-only online trading platform made a similar announcement, although it focused its sanction on diamonds graded by specific labs. These are positive steps, but it remains to be seen whether it will make any difference in either the practice of ‘optimistic’ grading or the demand for cheaper diamonds with ‘wishful-thinking paperwork.’
For the appraiser, it will be even more imperative to track the markets to see if values for diamonds with certain paperwork will be affected. It will continue to be important that we disclose any differences of opinion when faced with ‘generously graded’ diamonds, keeping in mind minor differences of opinion can be expected with stones near grade boundaries. It should be noted the initial lawsuit against the retailer was settled out of court. Other suits against the same store are pending, but if there appears to be sufficient blood in the water, we can be sure more legal action against others in the trade will follow. While the current court settlement may diminish the amount of publicity, it doesn’t reduce the need for concrete changes in the way the labs, and those who have been complicit, behave. Perhaps some of the labs would be more comfortable returning to pre-GIA grading terminology, such as ‘Wesselton,’ ‘River,’ ‘Top Silver Cape,’ etc., as a means of marketing their reports with a more romantic flair.