FTC ruling on the term “Cultured”July 29, 2008
In its ruling, FTC said, "There is insufficient evidence to establish that the qualified use of the term 'cultured diamonds' is deceptive or unfair." It did however state that "marketers use specific qualifying language to make clear that the gemstones are created in a laboratory."
It concluded that FTC staff "will continue to evaluate advertising using the term 'cultured diamonds' on a case-by-case basis and recommend enforcement action when appropriate."
The Jewelers Vigilance Committee which led the filing of the petition explained the FTC decision. "In its response, the FTC stated that although the use of the word 'cultured' to describe man-made gemstones is not in itself deceptive, if a marketer were to use that term, it would be required to also use the term 'laboratory-created,' 'laboratory-grown,' '[manufacturer name]-created' or 'synthetic'."
Cecilia Gardner, president and CEO and general counsel of the Jewelers Vigilance Committee continued "… their ruling that marketers be required to include one of the four clear terms already obligatory under the Guides that disclose the true nature of the product will go far to protect against consumer deception."
Florida-based Gemesis Corp, a leading manufacturer of lab-created diamonds, issued the following statement regarding the decision of the US Federal Trade Commission (FTC) to deny the petition filed by the 11 industry associations:
"We are pleased with the FTC ruling as it condones the way that we use the term 'cultured.' Gemesis has always used the term in conjunction with other disclosure language such as 'diamonds grown by man' and will continue to do so. We also applaud the JVC in its efforts to protect the consumer from misleading and misunderstood terminology and would be more than happy to band with them in a petition to the FTC against misleading terms such as 'synthetic,' which is clearly viewed by the consumer to mean fake. Gemesis continues to be committed to ensuring that the consumer understands the origin of the diamonds that they are purchasing."
While US FTC rulings on this issue have no direct influence on the marketing of lab-created stones in NZ, it does give insight to the competing views over how synthetic stones are described. The FTC focuses on the likelihood of the consumer being deceived by the marketing language, and the Commerce Commission has previously taken a similar view to terminology used by jewellery marketers in New Zealand. It is our view that marketers should be given the chance to be creative with their terminology, providing the consumer fully understands what they are buying.
For valuations from The Jewellery Valuation Centre, we only use the correct gemmological terms for describing lab-created gemstones and diamonds, by using the word synthetic. This is because our documents are not marketing material, but offer clear and accurate descriptions should the jewellery need to be replaced. For Insurance valuations we will also report any other factor that may influence the value of the synthetic stone, or it’s ability to be replaced. So we may use in conjunction with the term synthetic either the method of creating the synthetic, or the brand name of the synthetic manufacturer.
The statement from Gemesis also "stirs the pot" with it's claim that the word synthetic is in itself misleading, stating that it's viewed by consumers to mean fake. We are sure any attempt to seek a ruling against the use of the term synthetic would be vigorously defended by the jewellery industry.