THE ESSENTIAL GUIDE TO THE U.S. TRADE INCOLOR DIAMONDS

THE ESSENTIAL GUIDE TO THE U.S. TRADE IN

COLOR DIAMONDS

THE ESSENTIAL GUIDE TO THE U.S. TRADE IN

COLOR DIAMONDS CONTENTS 2 INTRODUCTION 3

THE GEOLOGY OF NATURAL COLOR DIAMONDS

4

DIAMOND NOMENCLATURE: NATURAL, SYNTHETIC AND SIMULATED

6

TREATMENTS TO ALTER COLOR IN NATURAL DIAMONDS, SYNTHETICS

AND IMITATIONS

8

TREATMENT DISCLOSURES: PROTECTING CONSUMERS

9

FREQUENTLY ASKED QUESTIONS

INTRODUCTION Colored or clear, commerce in diamonds raises important concerns for jewelers. While this Essential Guide focuses on the colored variety, the logic behind the applicable regulations is the same no matter the diamond’s hue. The laws stem from the fact that diamonds are prized as much for their visible beauty as for their hidden secrets. Gradations between color, clarity and cut can be so minute that only a microscope will reveal the important differences that establish value. Even determining whether a stone has been treated, or is a natural diamond at all - as opposed to a man-made creation- often requires a visual aid and specialized knowledge.

For this reason, the law requires honest and timely disclosure about a diamond’s qualities. This is no less important in the realm of color diamonds, where a color might be the result of geological processes that began millions of years ago - or the consequence of a technological treatment that began this morning. This guide addresses these subjects in more detail: the terminology that must be used to describe natural, syn-

thetic and simulated diamonds whether colored or clear; the treatments that enhance the beauty, but affect the value, of diamonds; and, the important laws that govern the disclosure of information that influences price. Diamonds hold a unique place among gemstones; natural-color diamonds are even more singular. Disciplined compliance with the legal standards that govern the sale of these beautiful gemstones is necessary to maintain their pre-eminent position.

This information and guidance is not meant to be any form of legal advice.

THE GEOLOGY OF NATURAL-COLOR DIAMONDS Scientists have long understood that the earth creates diamonds by subjecting carbon to high pressure and extreme temperature, eventually causing the formation of diamond crystals. More recently explained is why that process creates diamonds with colors that span the palette, in shades that range from pale to intense. Diamonds occur naturally in almost every color: red, green, yellow, blue, pink lavender, gray blue, brown and black. The most common “fancy” colors, as they are known in the trade, are brown, yellow, and “canary,” a very bright yellow. Deeply colored blue, red and green diamonds are the rarest - and most valuable of all.

Call it an impurity, or call it a welcome intruder, a foreign

substance will produce a color if it makes its way into the diamond’s crystal lattice. The most common substance is nitrogen, which causes a yellow shade when it manages to aggregate within the lattice or replace a carbon atom in the crystal formation. A blue hue is the result of trace amounts of boron. Hydrogen is associated with violet tones. Tremendous pressure within the earth can also create a color stone if it compresses the diamond’s crystal structure, bringing about a red, pink or brown hue. Green diamonds acquire their color because during formation they are inclose proximity to naturally occurring sources of radiation. Green diamonds are also available in a wide range of shades from light mint greens to teal and vivid grass green.

DIAMOND NOMENCLATURE: NATURAL, SYNTHETIC AND SIMULATED Confusion is the enemy of consumer confidence. Once, if something looked like a natural diamond, it probably was. Now, ith the advent of technology that can create, alter or simulate a diamond, the potential for uncertainty is boundless. For that reason, descriptive words take on great importance and must be used accurately. The Federal Trade Commission addresses diamond nomenclature in its Guides for the Jewelry, Precious Metals and Pewter Industries. Non-compliance with the Guides can result in enforcement action by the Commission.

A. NATURAL-COLOR DIAMONDS A “diamond” is the natural gem produced from carbon deep within our planet’s lithospheric mantle over a period of millions of years. These gems were brought to the earth’s upper crust by volcanic activity. The word “diamond,” alone, can only be used to describe a gemstone created by this natural process.

B. SYNTHETIC OR “LAB-CREATED” COLORED DIAMONDS A “synthetic” diamond, while also made from pure carbon, is manufactured above-ground, in a factory setting. Despite the difference in production methods, the man-made synthetic diamond has essentially the same physical, chemical and optical properties as a natural diamond. It is pure carbon crystallized in an isometric system. Federal regulations allow the use of the terms “laboratory-grown,” “laboratory-created,” “(manufacturer name)-created” or “synthetic” to describe a product of this kind.

C. IMITATION COLORED DIAMONDS An “imitation” diamond does not share the same chemical properties as a natural diamond. It is a manmade simulant that resembles a diamond even though it is not made of carbon. Imitations are typically made of glass, plastic, or cubic zirconium. Imitation diamonds may not be identified as “laboratory-created,” “laboratory-grown,” “(manufacturer name)-created” or “synthetic.”

D. NATURAL, SYNTHETIC OR IMITATION - DISTINCTIONS THAT AFFECT VALUE Whether a color diamond is natural, synthetic or imitation is an important factor that will be reflected in its price; a natural diamond is more valuable than a synthetic with otherwise similar characteristics. Likewise, a synthetic diamond will command a higher price than an imitation with similar characteristics. For this reason, the goal of the FTC Guides is to insure that consumers are not misled when shopping for jewelry. To the extent that every jeweler complies with the Guides the entire industry is benefited, as all diamond sellers can compete on a level field, and no one will lose customers to exaggerated or misleading claims.

AS LONG AS THERE IS A DEMAND FOR SYNTHETIC AND IMITATION DIAMONDS, MANUFACTURERS WILL LIKELY DEVELOP NEW TECHNIQUES, NOT ADDRESSED HERE, TO CREATE BOTH. AS THESE PRODUCTS REACH THE MARKET IT WILL BE IMPORTANT TO CLASSIFY THEM CORRECTLY.

TREATMENTS TO ALTER COLOR IN NATURAL DIAMONDS, SYNTHETICS AND IMITATIONS Ever since an enterprising jeweler in Victorian England first thought to apply colored foil to a pavilion surface, others have tried to alter the natural color of diamonds. Their success is reflected in the range of colors that can now be produced by the treatments they developed. Several of these methods are discussed here.

low, orange, brown or pink. The final color of the diamond is dependent on it composition and the temperature of the subsequent heat treatment. Additionally, the type of particle used - neutron or electron - to irradiate the stone will effect whether the new color infiltrates the entire gem, or only penetrates a shallow distance below the surface.

COLOR ENHANCEMENTS

Diamonds that have been bombarded with high energy radiation may become radioactive. Although the level of radioactivity is typically very low, these newly treated stones are regulated and not released until the radiation subsides. Diamonds treated in this manner are subject to regulation by the Nuclear Regulatory Commission. This is fully discussed in The Essential Guide to the U.S. Trade in Irradiated Gemstones produced by the JVC and AGTA. This publication is available on-line at jvclegal.org.

The color of a diamond can be altered, or removed, by means of several treatments that have become common in the jewelry industry.

• Irradiation

In 1904 Sir William Crookes, working in London, immersed diamonds in radium salt and watched the stones slowly turn green. The color diamonds, no doubt delightful to behold, were also highly radioactive and deadly to wear. Undeterred, later scientists refined the process of irradiation by bombarding diamonds with high-energy neutron or electron particles, knocking carbon atoms out of place and physically altering the crystal lattice of the stones. Despite having their atoms rearranged, diamonds emerged from the process no worse for the wear, other than a different shade of color - typically green, black or blue. Heat treatments following irradiation will further modify the colors, producing bright shades of yel-

Irradiation treatment can usually be detected in a gemological lab with the use of a spectrophotometer. The effects of radiation followed by heat treatment are permanent. However, diamonds in the green/blue range that are irradiated, but not heated, can be altered by re-polishing or jewelry repair, if temperatures get high. Interestingly, the color of natural diamonds in this color range may also change, if subjected to the same processes. Irradiation and heat treatments must be disclosed.

THERE ARE CURRENTLY THREE TYPES OF IRRADIATION TREATMENTS USED TO ALTER THE COLOR OF DIAMONDS: ELECTRON BOMBARDMENT, NEUTRON BOMBARDMENT, AND EXPOSURE TO GAMMA RAYS. DIAMONDS SUBJECTED TO NEUTRON OR ELECTRON BOMBARDMENT ARE RADIOACTIVE AND SUBJECT TO REGULATION BY THE NRC.

• Coatings Violet blue dyes and vacuum-sputtered films are used as coatings to “whiten” yellow-tinted diamonds. When the coated surface is viewed under high magnification, the presence of trapped air bubbles, or worn areas where the coating has been scratched off, may be apparent. This treatment could be difficult to detect, however, if the coating was applied only to the girdle or pavilion region of the stone, which is frequently the case. The treatment is not permanent and must be disclosed.

• High-Pressure/High-Temperature Subjecting natural diamonds to high-pressure, hightempera-

ture treatment (HP/HT) can also alter the color of the stone.

For example, HP/HT is known to significantly lighten some brown stones or turn them yellow. Some synthetic diamonds have been treated with HP/HT to alter their optical properties. HP/HT treatment is rarely detectable under a microscope and detection requires a qualified gemological laboratory. The effect is permanent, but must be disclosed as the treatment has a significant affect on the value of the diamond.

TREATMENT DISCLOSURES: PROTECTING CONSUMERS The fact that a natural diamond has been treated will not always be apparent to the naked eye. When the treatments are not permanent, require special care or have a significant affect on value, they must be disclosed to consumers.

YOU MUST AFFIRMATIVELY DISCLOSE THAT A DIAMOND HAS BEEN TREATED IF THE TREATMENT IS NOT PERMANENT, IF THE DIAMOND REQUIRES SPECIAL CARE OR IF THE TREATMENT SIGNIFICANTLY AFFECTS THE VALUE OF THE GEMSTONE.

In determining whether or not information about a treatment to a diamond must be disclosed, ask the following questions: • Is the treatment non-permanent?

• Does the treated diamond require special care?

• Does the treatment have a significant affect on the diamond’s Although the FTC does not specify how, it does require that value? disclosures be made before the point of sale. The best practice is to affirmatively convey the information to the buyer If the answer to any one of these questions is “yes,” then you before the decision to purchase. The disclosure should also be included on purchase orders, invoices and sales receipts. must disclose the treatment.

This is applicable at all levels of the trade. Sales staff should be Each of the color treatments discussed here must be disclosed. educated about disclosure requirements. When diamonds are Coating is not permanent. Irradiation is not always perma- sold through direct-mail catalogs or online, disclosures about nent. Heating and HP/HT create permanent changes and do treatments should be part of the solicitation or description of not trigger the need for special care, but do have an affect on the product prior to the purchase. the value of the stone.

FREQUENTLY ASKED QUESTIONS Q. I sell jewelry made from cubic zirconium. Can I advertise it as "lab-created?"

A. No. Only synthetic diamonds, which share the same chemical property as a natural diamond, can be

described as "la b-erea ted."

Q. What are the three triggering FTC standards that require affirmative disclosure of treatments to gem

stones?

A. When the treatment is not permanent, when it requires special care or when the treatment significantly

affects the value of the gemstone, you must affirmatively disclose.

Q. Must I disclose that a diamond has been treated with radiation?

A. Yes. This treatment must be disclosed because it has an impact on value.

Q.

A.

I sell diamonds that were treated with HP/HT to remove color, not to create color. I am confident that the treatment is permanent, and that the diamond does not need any special care as a result of the treatment.

Do I need to disclose the treatment?

Yes. The HP/HT treatment affects the value of the diamond.

Q. Is there an approved method to make required disclosures?

A. There is no specific manner that must be used to make required disclosures. Written disclosures in clear

language, easily found, is always best.