FEATURE: The diamond labs failing the industry

HONG KONG - JUNE 20:  A diamond ring is on display, the ring is in a snowflake style with a total weight of 7 karts, at the KTL jewellery stand at the Hong Kong Jewellery and Gem Fair on June 20, 2013 in Hong Kong, Hong Kong. The June Hong Kong Jewellery & Gem Fair runs from June 20 - 23. (Photo by Jessica Hromas/Getty Images)

With diamond grading not only varying from lab to lab, but from person to person, levels of consistency are dangerously low. Stacey Hailes investigates the impact.

If you happened to have been sat in the audience at the CMJ’s UK Jewellery Conference last month, you would have heard Stella Layton describe the over grading of diamonds as “an issue”; a succinct statement from the Assay Office Birmingham (AOB) assay master that perfectly captures the mood of the industry.

“It’s inconsistent – it’s based on subjectivity and there is a wide range of grading happening globally across diamonds, not just lab to lab but person to person,” said Layton at the conference in Nottingham.

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As Layton told the audience, there is as yet no science to tell you the exact grade of a stone – unlike hallmarking, which uses sophisticated machinery to identify the exact content of a piece of fine jewellery – and even standard guides used to unify graders are open to interpretation.

The main problem is that there are no regulations, audits or accreditations for grading diamonds, with even equipment and Master Stones – diamonds used as a guide to match other diamonds to – varying between labs. With no set standards, the industry has been left open to some less credible labs producing over-generous reports that are not true to a stone’s actual worth.

So how did the industry get itself into this predicament in the first place? The question takes us back to the very roots of diamond grading itself. In 1955 the Gemmological Institute of America (GIA) issued its first diamond grading report, which would go on to become accepted as an international standard for diamond grading. The grades were based on comparison of diamonds to a set of Master Stones believed to be great examples of their particular grades that were named based on colour from D through to Z.

While the GIA was at the fore of diamond grading, soon other labs set up their own grading services but with each devising their own methods, the questions consistently arising were about how their grades compared to the GIA’s. In response to this, labs started to give a chart comparing their grading standards to the GIA, and eventually many adopted GIA terminology, but without the GIA standards, something that London Diamond Bourse president Harry Levy says led to a downfall of diamond grading.

“To attract business, some of these labs began to soft grade,” explains Levy. “If a stone was a border-line colour, say on the border of G and H they would give it a G, and similarly for clarity. These attracted clients as they thought they were getting a better grade than from a GIA lab. This whole methodology was abused and eventually some labs were giving two grades better than the GIA. Thus we started to get the term over grading.”

While these issues have been ongoing for many years, they are particularly pertinent now with the rise in sales of diamonds on the internet and also the development of new technologies to treat and improve diamonds. Over grading has huge potential to hurt consumer confidence in diamonds, particularly among those buying online based solely on the Four Cs. It also has the potential to harm jewellery makers and retailers, as those working in the trade need to know what they are selling just as much as consumers need to know what they are buying.

At IJL in September, AOB academy director Marion Wilson led a panel discussion on over grading in diamonds, highlighting how unreliable grading effects the whole industry. To help illustrate her point, she called on Swag head of buying Adam Gillary, F. Hinds director and diamond buyer Andrew Hinds, White Pine UK head of valuation Marie Chalmers and the London Diamond Bourse’s Harry Levy, prompting them to discuss the issues each faces with over grading.

“There is a lot of chat going on at high level, but if the guys on the high street who are selling the stones don’t actually engage with the issue it is never going to be solved,” says Wilson. “It is real a threat. With the rate this is being exposed, people will lose confidence in the jewellery industry. Our industry really needs to root for itself as best it can and having these kinds of consumer issues hanging around is not healthy and not reflective of how we should be treating our customers.”

The aim of the seminar was not to resolve the issue in one hour, but rather to provoke thought and encourage the audience to engage in the problem. Hinds and Gillary both explained how over-graded diamonds have had an effect on them as independent jewellers. Both refuse to over sell stones, tackling this by either refusing to stock a diamond with a certificate they believe to be misleading, or in some cases keeping the diamond and selling it but throwing away the report so that the customer is not misled into thinking they have walked away with a higher graded diamond than they have paid for.

Hinds says that for F. Hinds the major problem is price comparison. “We’ve got what we consider to be reputable certificates, but consumers are comparing them with ones that are softer and therefore are not getting a like-for-like comparison,” he says. “If people are spending a lot of money on something like an engagement ring, they are bound to walk round all the jewellers. Some customers will query and others will never come in the shop because they see what they think is better value.”

Retailers using what are considered to be trustworthy diamond graders are losing out to those stocking stones that look better on paper than in a ring. “If you are trying to have the best certificates and other jewellers you are competing against are quite happy to take a lower graded stone with a more dubious certificate, it is difficult,” says Gillary.

He adds that most stones will be screened by himself or another colleague at Swag. If on the odd occasion a stone from a parcel has an over-generous grade, Swag will still sell the stone but without the certificate.

Levy agrees this is the right thing to do. “Many less experienced members of the trade now refuse to buy an over-graded diamond,” he says. “This implies there is something wrong with the diamond, but this is nonsense. There is nothing wrong with the stone, there is something wrong with the report.”

At White Pine Diamonds, Chalmers often finds herself at the other end of the sales process, explaining to customers that the grade of diamond they paid for is not the grade of diamond they received. “Typically the customer has purchased a piece of diamond jewellery with a diamond report and they are now looking to sell it on through us,” she says. “The majority of reports are not accurate, and it is my job to explain to the customer that the information on the report doesn’t actually represent the diamond they have been sold, and that I will be making them an offer on the diamond based on my accurate diamond grading.”

The ordeal often leaves customers feeling upset and angry, with Chalmers saying that nine out of 10 will tell her that they will not buy a diamond again.

With retailers left locked in a price war they can’t win ethically and consumers losing faith in the industry, it is clear this problem needs solving quickly – but how? “It’s a challenge but it is something that has got to be done centrally,” suggests Hinds. “I know CIBJO have tried before, but I think it’s got to be a case of the trade associations here working together to have another go.”

The problem with this localised strategy is that it is not a local issue. The diamond trade is global, and with the advent of stock market- style tickers on e-tail sites allowing consumers access to global diamond sources where softer certificates aren’t hard to find, it can making it tempting for less reputable jewellers to join in just to compete.

“All we can do is try our best to do our part and keep up our own standards and hope that people who aren’t doing that will be showed up,” says Hinds.

Gillary believes the industry should have a global body that can regulate all diamond grading laboratories, rather than leaving the power with a network of labs of varying quality. “In any other industry there would be a governing body that would be responsible for overseeing such a thing,” he says. “Gem laboratories need to be assessed to make sure they are keeping to the standards that we all agree on. I’m not sure how it could be done but we would certainly be aligned if such a body could be developed.”

Chalmers adds: “It should not be acceptable that we are all aware that there are reports out there being sold to consumers and yet very little is being done to stop it.

The public place trust in our industry, just as we put our trust in other industries when we make purchases. It is disgraceful that we hide, telling ourselves that it is the opinion of the laboratory, when we are aware that this is going on. We need to regulate diamond grading labs worldwide and stop trading with laboratories we know are not telling the truth.”

Wilson believes that as well as dealing with problems at the top, a major part of the issue is education; that people who work in the jewellery industry need to be aware that there are variations between diamond labs. In reaction to this AnchorCert at the AOB will reintroduce its Selling Certificate Diamonds course that teaches retailers how to explain what certificates are all about. The other solution is developing technology that will accurately measure the Four Cs – swapping subjectivity for science. De Beers diamond brand Forevermark uses proprietary automated diamond graders that scan stones to verify authenticity, carat weight and symmetry, as part of a 17-step grading process that combines the expert eyes of its graders with technology. Tiffany & Co is also investing in this field, teaming up with Sarine Technologies to create a machine that can calculate the proportions and symmetry of diamonds to high levels of accuracy.

While big brands are investing heavily in proprietary technology, there are a number of ready-to-buy automated grading machines on the market. While most only focus on one aspect of the Four Cs, the technology is moving forward and a new machine developed by Imagem, called the GL3200, can now grade a diamond based on light behaviour, colour, clarity, fluorescence, proportions, symmetry and digital fingerprinting.

Whether it takes the advance of science to quash the over grading debate or the man power of a single international governing body, the message from the trade is that over grading must be eradicated at any cost before consumers lose trust not just in diamonds, but in the jewellery industry itself.


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