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The jewellery industry has been urged to quash the unfair practice of diamond over-grading
The jewellery industry has been urged to quash the unfair practice of diamond over-grading

Industry called to fight diamond over-grading

After banning purportedly misleading grading reports from his online diamond trading platform, the head of Rapaport Group has called on the jewellery industry to take further action against the “over-grading” of diamonds.

Since announcing that RapNet would no longer list European Gemological Laboratories (EGL) diamond grading reports on his website, Martin Rapaport, chairman of the Rapaport Group, has added to the debate by calling on the wider jewellery industry to deal with over-grading.

Click cover to download and read the PDF report.
Click cover to download and read the PDF report.

In an editorial piece titled Honest Grading, Rapaport expanded upon his concerns that EGL was using Gemological Institute of America (GIA) grading terminology while applying alternative standards to overstate the quality of a diamond.

The editorial was sent directly to more than 77,000 members of the global jewellery industry, and in the accompanying email, Rapaport claimed that this “systematic” practice had resulted in the sale of more than 100,000 over-graded diamonds valued at more than US$1 billion (AU$1.1 b) to unwitting consumers.

“The rampant over-grading of diamond quality hurts consumers,” Rapaport said in the email. “It is a significant threat to the integrity and legitimacy of the diamond industry. It must be stopped.”

Over-grading infiltrates local market
The stance has gained local support. Australian Diamond Grading Laboratory (ADGL) director Mike Muller agreed with Rapaport’s sentiments, stating that these issues were relevant for the Australian and New Zealand jewellery markets as well.

“Over the last couple of years we have seen a number of badly graded stones from ‘international’ labs, the worst being EGL,” he said.

Muller added that a valuer had recently approached ADGL to confirm a diamond grading that the valuer believed “didn’t look right”.

“The stone was certified as F SI1 and turned out to be M colour SI1, both on master stones and on a colourimeter. This is not the first time we have seen stones from this lab and other overseas labs that are well outside the ‘one grade up/down’ allowed variation,” he said.

Muller suggested that the matter was so serious that it needed to be dealt with on a local level. “If an Australian lab were to grade like this they would at least be thrown out of the Jewellers Association of Australia (JAA) but more likely laughed out of the industry,” Muller added.

• Click here to download Rapaport "Honest Grading" Report 

Industry must do their part
In both his email and editorial piece, Rapaport urged industry to take action against over-grading, suggesting that jewellery trade organisations implement two rules amongst their members: to recognise that it is an unfair trade practice to sell over-graded diamonds, and to hold diamond suppliers and retailers responsible for the quality of the diamonds they sell.

Martin Rapaport, Rapaport Group chairman
Martin Rapaport, Rapaport Group chairman
Mike Muller, Australian Diamond Grading Laboratory director
Mike Muller, Australian Diamond Grading Laboratory director

He suggested that both diamond suppliers and retailers should be required to provide a full refund to the customer in the event that they sell over-graded diamonds, and that failure to provide the refund – or the continued sale of over-graded diamonds – should result in the member’s suspension from the organisation.

“Consumers must be warned not to trust misleading diamond grading reports and those that sell them. Suppliers must be held responsible for the quality of the diamonds they sell. The diamond trade must prioritise the protection of consumers above profits,” Rapaport concluded.

The JAA has already starting taking action. In September, it announced that its recently formed National Industry Advisory Council (NIAC) was preparing a draft list of recommended diamond grading laboratories – as well as an explanatory note for consumers – to assist retailers in addressing this issue.

JAA Code of Conduct chair Colin Pocklington told Jeweller that this was now nearing completion.

“The NIAC will sign off on the list of diamond grading laboratories later this week and it will be posted on the JAA website,” he said.

Pocklington confirmed that EGL was not on the JAA’s list of recommended diamond grading labs. 

He also explained that the list would be referred to by the Code in paragraph 10 (b) (4) which states: 

“Retailers shall provide a diamond grading certificate from a reputable diamond grading laboratory for loose diamonds or jewellery containing a diamond equal to or greater than 1.00ct in weight and H/SI2 in colour and clarity or over $10,000.00 (incl. GST) at retail value. The cost of the certificate should be borne by the consumer. Whenever a Clarity Grading is used it must be accompanied by the appropriate grading level e.g. VVS1 or VVS2, not VVS.”

More reading
Rapaport Honest Grading Report - download PDF
Diamond grading reports banned
Industry reacts to diamond grading concerns
Can a diamond have two grades? "Court" says yes


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Saturday, 18 January, 2020 06:03am
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