THE ESSENTIAL GUIDE TO THE U.S. TRADE IN

COLOR DIAMONDS

CONTENTS2 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

THE ESSENTIAL GUIDE TO THE U.S. TRADE IN

COLOR DIAMONDS

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 regula-tions is the same no matter the diamond’s hue. The laws stem from the fact that diamonds are prized as much for their vis-ible beauty as for their hidden secrets. Gradations between color, clarity and cut can be so minute that only a microscopewill 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 disclo-sure 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.

INTRODUCTION

Scientists have long understood that the earth creates dia-monds 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 al-most 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 dia-monds 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 natu-rally 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.

THE GEOLOGY OF NATURAL-COLOR DIAMONDS

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.

DIAMOND NOMENCLATURE: NATURAL, SYNTHETIC AND SIMULATED

A. NATURAL-COLOR DIAMONDS

A “diamond” is the natural gem produced from carbon deep within our planet’s lithospheric mantle over a peri-od of millions of years. These gems were brought to the earth’s upper crust by volcanic activity. The word “dia-mond,” 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. De-spite 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 prop-erties as a natural diamond. It is a manmade simulant that resem-bles 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,” “labora-tory-grown,” “(manufacturer name)-created” or “synthetic.”

D. NATURAL, SYNTHETIC OR IMITATION - DIS-TINCTIONS 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 dia-mond 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 consum-ers 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, MANUFACTURERSWILL LIKELY DEVELOP NEW TECHNIQUES, NOT ADDRESSED HERE, TO CREATE BOTH.

AS THESE PRODUCTS REACH THE MARKET IT WILL BE IMPORTANT TO CLASSIFY THEM CORRECTLY.

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.

COLOR ENHANCEMENTSThe color of a diamond can be altered, or removed, by means of several treatments that have become common in the jew-elry industry.

• IrradiationIn 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 bombard-ing 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-

low, orange, brown or pink. The final color of the diamond is dependent on it composition and the temperature of the sub-sequent 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.

Diamonds that have been bombarded with high energy radia-tion may become radioactive. Although the level of radioactiv-ity is typically very low, these newly treated stones are regu-lated 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 Essen-tial Guide to the U.S. Trade in Irradiated Gemstones produced by the JVC and AGTA. This publication is available on-line at jvclegal.org.

Irradiation treatment can usually be detected in a gemologi-cal lab with the use of a spectrophotometer. The effects of ra-diation 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.

TREATMENTS TO ALTER COLOR IN NATURAL DIAMONDS, SYNTHETICS

AND IMITATIONS

THERE ARE CURRENTLY THREE TYPES OF IRRADIATION TREATMENTS USED TO ALTER THE COLOR OFDIAMONDS: ELECTRON BOMBARDMENT, NEUTRON BOMBARDMENT, AND EXPOSURE

TO GAMMA RAYS. DIAMONDS SUBJECTED TO NEUTRON OR ELECTRON BOMBARDMENTARE RADIOACTIVE AND SUBJECT TO REGULATION BY THE NRC.

• CoatingsViolet blue dyes and vacuum-sputtered films are used as coat-ings 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 dif-ficult 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-TemperatureSubjecting 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 proper-ties. HP/HT treatment is rarely detectable under a micro-scope and detection requires a qualified gemological labora-tory. The effect is permanent, but must be disclosed as the treatment has a significant affect on the value of the diamond.

The fact that a natural diamond has been treated will not al-ways 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.

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 value?

If the answer to any one of these questions is “yes,” then you must disclose the treatment.

Each of the color treatments discussed here must be disclosed. Coating is not permanent. Irradiation is not always perma-nent. Heating and HP/HT create permanent changes and do not trigger the need for special care, but do have an affect on the value of the stone.

Although the FTC does not specify how, it does require that disclosures be made before the point of sale. The best prac-tice is to affirmatively convey the information to the buyer before the decision to purchase. The disclosure should also be included on purchase orders, invoices and sales receipts. This is applicable at all levels of the trade. Sales staff should be educated about disclosure requirements. When diamonds are sold through direct-mail catalogs or online, disclosures about treatments should be part of the solicitation or description of the product prior to the purchase.

TREATMENT DISCLOSURES: PROTECTING CONSUMERS

YOU MUST AFFIRMATIVELY DISCLOSETHAT A DIAMOND HAS BEEN TREATED

IF THE TREATMENT IS NOT PERMANENT,IF THE DIAMOND REQUIRES SPECIAL CARE ORIF THE TREATMENT SIGNIFICANTLY AFFECTS

THE VALUE OF THE GEMSTONE.

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. 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?A. 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.

FREQUENTLY ASKED QUESTIONS