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federalregister 27177 Thursday May 30, 1996 Part V Federal Trade Commission 16 CFR Parts 19 and 23 Guides for the Metallic Watch Band Industry and the Jewelry Industry, Final Rules; and Guides for the Jewelry, Precious Metals, and Pewter Industries, Proposed Rule

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Page 1: May 30, 1996 federal register - Federal Trade Commission · 2013-07-05 · 27178 Federal Register/Vol. 61, No. 105/Thursday, May 30, 1996/Rules and Regulations 1 57 FR 24996 (June

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ThursdayMay 30, 1996

Part V

Federal TradeCommission16 CFR Parts 19 and 23Guides for the Metallic Watch BandIndustry and the Jewelry Industry, FinalRules; and Guides for the Jewelry,Precious Metals, and Pewter Industries,Proposed Rule

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27178 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

1 57 FR 24996 (June 12, 1992). The JVC, locatedat 401 East 34th Street, NY, NY 10016, is a tradeassociation that was formed in 1912 to promoteethical practices in the jewelry industry. Its initialpetition is dated April 15, 1986; additionalproposed revisions were submitted on February 20,1989.

2 57 FR 34532 (Aug. 5, 1992).3 Because of its 71-page length, the JVC proposal

was not published. But, the proposal, and adocument showing how the current Guides wouldbe changed by the JVC proposal, was placed on thepublic record for inspection and is available in thePublic Reference Room of the Commission.

4 In summary, the comments are from 19 tradeassociations, 85 diamond dealers, 53 colored stonedealers, 37 retail jewelers, 10 synthetic gemstonemanufacturers, 12 pewter manufacturers, 10 watchmanufacturers, 9 general manufacturers, 5gemologist/appraisers, 7 precious metals firms, 3catalog houses, 2 manufacturer representatives, 2writing implement manufacturers, 3 pearl dealers,and one each from: The Canadian Government, theU.S. Postal Service, the National Association ofConsumer Agency Administrators, a scientist whoworks with laser technology and crystal growth, aneconomics professor, an importer, a retired tradeassociation executive, and an editor of JewelersCircular-Keystone, and a trade magazine.

5 Various sections of the Guides that pertain toparticular subject areas are referred to as‘‘categories,’’ in the Appendix to the currentGuides, i.e., Category I: Jewelry industry productsin general; Category II: precious metals; Category III:diamonds, genuine and imitation; Category IV:pearls, genuine, cultured and imitation; Category V:gemstones, genuine, synthetic and imitation.

6 E.g., Fasnacht (4) p.1 (the Guides have a positiveeconomic impact by creating a level playing field);Schwartz (52) (the Guides have a positive impacton the industry by establishing standards that offerconsumers protection without undue cost); JMC (1);Thorpe (7); King (11); Gold Institute (13); Honora(15); Argo (17); AGS (18); AGTA (49); Estate (23);G&B (30); Jabel (47); Skalet (61); Handy (62);Lannyte (65); Newhouse (76); GIA (81); Nowlin(109); McGee (112); ArtCarved (155); Bales (156);Bridge (163); LaPrad (181); IJA (192); CPAA (193);Mark (207); Canada (209); Bedford (210); JVC (212);Matthey (213); Bruce (218); Service (222); MJSA(226); Preston (229); Timex (239); and Sheaffer(249).

Service (222) agreed with regard to the currentGuides, but thought that the compliance costsassociated with the proposed revisions outweighedthe benefits.

7 The commenters are the same as in footnote 6supra, with the addition of Eisen (91). With regardto the current Guides, Best (225) stated, at p.2, thatthe Guides ‘‘are well developed and provideprotection to consumers and to reputable jewelersagainst otherwise false and deceptive practices. TheGuides offer a great measure of certainty to jewelers’

FEDERAL TRADE COMMISSION

16 CFR Part 23

Guides for the Metallic Watch BandIndustry and Guides for the JewelryIndustry

AGENCY: Federal Trade Commission.ACTION: Final guides.

SUMMARY: The Federal TradeCommission (‘‘Commission’’)announces that it has concluded areview of its Guides for the MetallicWatch Band Industry (‘‘Watch BandGuides’’) and Guides for the JewelryIndustry (‘‘Jewelry Guides’’). TheCommission rescinds the Watch BandGuides in a document publishedelsewhere in this issue of the FederalRegister. The Commission isconsolidating certain provisions of theWatch Band Guides with the JewelryGuides. The Commission is renamingthe Guides for the Jewelry Industry theGuides for the Jewelry, Precious Metalsand Pewter Industries. The Commissionalso revises the Jewelry Guides bydefining the scope and application ofthe Guides and adding new provisionsregarding the use of the terms ‘‘vermeil’’and ‘‘pewter.’’ The Commission is alsomaking substantive changes to theexisting provisions of the JewelryGuides, as discussed in detail herein.The Commission is not making anychanges to the provisions regarding theuse of the word ‘‘platinum’’ at this timeand will request additional comment onpossible revisions to this section in aseparate Federal Register notice.EFFECTIVE DATE: May 30, 1996.ADDRESSES: Requests for copies of thisdocument should be sent to the PublicReference Branch, Room 130, FederalTrade Commission, Washington, DC20580.FOR FURTHER INFORMATION CONTACT:Constance M. Vecellio, Attorney, 202–326–2966, or Laura J. DeMartino,Attorney, 202–326–3030, Division ofEnforcement, Federal TradeCommission, Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Commission revises the Guidesfor the Jewelry Industry and the Guidesfor the Metallic Watch Band Industry(‘‘Guides’’), 16 CFR Parts 23 and 19,respectively, as described in detailbelow. The Commission will announcethe results of its review of the Guides forthe Watch Industry, 16 CFR Part 245,which was conducted at the same timeas the review of the other Guides, in aseparate notice. The Commission

published a Federal Register Notice(‘‘FRN’’) soliciting public comment onamendments to the Guides on June 12,1992, in response to a petition from theJewelers Vigilance Committee, Inc.(‘‘JVC’’).1 The comment period, asextended, ended on September 25,1992.2

The FRN solicited comment on theJVC’s proposal to revise the Guides.3The FRN summarized the majoramendments proposed by the JVC, aswell as revisions that Commission staffwas proposing. In addition to requestingcomment on the proposed revisionsgenerally, the FRN asked for commenton 34 questions.

The Commission received 263comments. In the remainder of thisnotice, the comments are cited to by anabbreviation of the commenter’s nameand the document number assigned tothe comment on the public record. A listof the commenters, including theabbreviations and document numbersused to identify each commenter, isattached as an Appendix.4

The revisions are discussed section-by-section by category.5 Below, Part IIaddresses the standard regulatoryreview questions that were included inthe FRN. Part III discusses generalissues regarding the proposed revisionsto the Guides. Part IV analyzes theproposed revisions to the JewelryGuides section-by-section (including the

Watch Band Guides, now consolidatedwith the Jewelry Guides).

II. Regulatory Review and RelatedQuestions

As part of the Commission’s ongoingprogram to review all of its rules andguides periodically, the FRN includedquestions about the Guides’ economicimpact and continuing relevance, anycompliance burdens, changes needed tominimize their economic impact, theirrelation to other federal or state laws orregulations, and the effect of anychanged conditions since the Guideswere issued. The Commission alsosolicited comment on general issuesregarding the Guides, such as whetherthe JVC’s proposed provisionsaccurately reflect accepted practices,technology or nomenclature used in thetrade; whether proposed changes wouldresult in a lessening of competition orincreased prices; and whether the JVC’spetition to revise should be rejected andthe current Guides retained. Becausethese questions concern fundamentalissues about whether the Guides shouldbe retained, deleted or revised, theCommission addresses them first.

A. Summary of the CommentsAll but one of the 37 comments

specifically addressing the economicimpact of the Guides stated that anycompliance costs are far outweighed bythe benefits to the industry and toconsumers.6 None of the commentsprovided any figures or estimates of themonetary costs incurred in complyingwith the Guides.

Thirty-eight comments specificallyaddressed the continuing need for theGuides and all agreed that there is acontinuing need, with most stating thatthe Guides protect consumers andindustry.7 One comment stated,

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business practices as historical application andinterpretation have better defined the parameters ofacceptable conduct. This certainty has valuebecause it contributes to an efficient and free flowof information to consumers in the marketplace.’’AGTA (49), at p.2, stated: ‘‘If consumers cannot beconfident that what they are paying for is what theyhave been told it is, our trade cannot survive. TheFTC guides provide a structure upon which ourindustry has built regulations for the consumer’sprotection, which is ultimately our own as a trade.Therefore, AGTA endorses their continuedexistence, timely revision, and a strongenforcement.’’

8 Skalet (61) p.1.9 Fasnacht (4); Honora (15); G&B (30); Lannyte

(65); Newhouse (76); CPAA (193); and Bedford(210).

10 Honora (15); G&B (30); and Newhouse (76).11 JMC (1); King (11); AGS (18); Estate (23);

Schwartz (52); Handy (62); Nowlin (109); Bridge(163); MJSA (226); and Preston (229).

12 Argo (17); AGTA (49); Bales (156); LaPrad(181); Mark (207); and Matthey (213).

13 Jabel (47); Skalet (61); McGee (112); ArtCarved(155); IJA (192); Canada (209); and MJSA (226).

14 JMC (1); Fasnacht (4); Thorpe (7); Honora (15);Argo (17); Estate (23); G&B (30); Jabel (47); Schwartz(52); Skalet (61); Handy (62); McGee (112); LaPrad(181); IJA (192); and Mark (207).

15 AGTA (49); GIA (81); Bridge (163); Bedford(210); JVC (212); and Preston (229).

16 ArtCarved (155) and Matthey (213).

17 Comment 209, p.1.18 JMC (1); Fasnacht (4); Thorpe (7); King (11);

Honora (15); Argo (17); Handy (62); Lannyte (65);GIA (81); NACAA (90); McGee (112); ArtCarved(155); Bridge (163); IJA (192); Phillips (204);Bedford (210); JVC (212); Matthey (213); Best (225);MJSA (226); and Preston (229).

19 Estate (23); G&B (30); Jabel (47); AGTA (49);LaPrad (181); and CPAA (193).

20 Comment 244, p.1. The Postal Service enforces39 U.S.C. 3005, which prohibits persons fromobtaining mail or property through the mail bymeans of false representation. The Postal Servicealso brings actions under the criminal mail andwire fraud statutes, 18 U.S.C. 1341, 1342 & 1345.Id.

21 Comment 244, pp.1–3.22 JMC (1); Handy (62); and McGee (112).23 JMC (1); Fasnacht (4); Thorpe (7); King (11);

Honora (15); Argo (17); AGS (18); Estate (23); AGTA(49); Lannyte (65); Newhouse (76); GIA (81); Eisen(91); McGee (112); ArtCarved (155); Bales (156);Bridge (163); LaPrad (181); IJA (192); CPAA (193);Mark (207); Canada (209); Bedford (210); Matthey(213); MJSA (226); Preston (229); Timex (239); andSheaffer (249).

24 AGS (18); AGTA (49); GIA (81); Eisen (91);ArtCarved (155); LaPrad (181); and IJA (192).

25 Fasnacht (4); Thorpe (7); Honora (15);ArtCarved (155); and Preston (229).

26 Thorpe (7); Estate (23); ArtCarved (155); IJA(192); and Preston (229).

27 Newhouse (76); ArtCarved (155); Canada (209);and Preston (229).

28 Thorpe (7); Honora (15); and Preston (229).29 ArtCarved (155); LaPrad (181); and Preston

(229).30 Honora (15) and ArtCarved (155).31 ArtCarved (155).32 Comment 207, p.2. In 1957, when the Guides

were last revised, gold cost $35 an ounce. Thecurrent price fluctuates between $350 and $400 perounce.

33 Matthey (213) p.1 (stating that ‘‘Competition ona global as well as a national basis make theestablishment of standards and clear definitions ofterminology even more critical’’).

34 JMC (1); Fasnacht (4); Argo (17); Capital (19);Estate (23); Jabel (47); Skalet (61); Handy (62);Newhouse (76); GIA (81); McGee (112); ArtCarved(155); IJA (192); and Bedford (210).

35 Best (225) p.4 and pp.7–8 and Service (222) p.1and 5 of letter and p.3 of comment. See also MJSA(226) p.7 (opposing proposed diamond weighttolerances as contrary to industry practice).

36 For example, AGTA (49) suggested banningcertain terms in use that relate to syntheticgemstones and plated gold jewelry. See alsoLannyte (65); Eisen (91); CPAA (193); and Matthey(213). (Their proposals are discussed under theappropriate categories infra.)

‘‘Without the guides to serve as areference manual, every manufacturer orproducer would have their owninterpretation [of what constitutes fairindustry practices].’’ 8

Twenty-nine comments specificallyaddressed the burdens of complyingwith the Guides. Seven comments statedthere are no compliance burdens.9Three also stated that, if everyonecomplies, the burdens of compliance areevenly distributed and will not benefitone business at the expense ofanother.10 Ten comments stated that theburdens are minimal 11 and six thoughtthe burdens were ‘‘worth it.’’ 12 Theseven comments that itemized theburdens (‘‘testing and planning,’’‘‘monitoring suppliers,’’ ‘‘controls,’’‘‘measurements,’’ ‘‘record keeping,’’‘‘time,’’ and ‘‘personnel’’), concludedthat the costs are acceptable because ofthe benefits received.13 None of thecomments identified the extent of thecosts in money or in time.

Although 29 comments responded tothe question regarding changes neededto minimize the economic effect of theGuides, they did not offer detailedexplanations or suggestions. Fifteencomments stated that no changes arenecessary.14 Six comments stated thatthe changes proposed by the JVC aresufficient to minimize their economiceffects.15 Two comments recommendedsimplifying the Guides to avoidmisunderstandings (e.g., about theproper use of terminology).16 Canadastated that harmonizing standards withCanada would minimize the economic

effect on entities subject to the Guides’requirements, reduce costs and promoteinternational trade, by not requiringmanufacturers to mark products fordomestic use differently than thosemade for foreign use.17

Twenty-seven comments addressedthe relation of the Guides to federal,state or local laws or regulations.Twenty-one comments specificallystated either that there is no conflict oroverlapping or that they are unaware ofany.18 Six stated that if there was anyduplication, it should not deter theCommission from approvingcomprehensive guidelines.19 (Noexamples of duplication were provided.)However, the Postal Service stated thatthe Guides ‘‘overlap with Postalauthority, sometimes undermining ourposition in false representation andfraud actions.’’ 20 The Postal Servicestated that the Guides do not adequatelyaddress the situation where theconsumer purchases jewelry beforeactually seeing it. The Postal Serviceproposed changes to the Guides to helpremedy this problem.21 As discussedbelow, the Commission has revised theGuides to mitigate this problem.

Thirty-one comments discussedeconomic or technological changessince the Guides were issued and theeffect on the Guides. Three comments 22

stated that economic and technologicalchanges have had no effect on theGuides and 28 comments stated thatsuch changes have had an effect on theGuides.23 The changes the commentersspecified, which they thought should bereflected in the Guides, are newgemstone enhancement techniques,24

laser treatment of diamonds,25 fracture-

filling of diamonds,26 new methods ofmetal plating,27 diffusion-treatedsapphires,28 advanced testingtechniques,29 new syntheticgemstones,30 and possible new platinumproducts.31

On the economic side, Richard C.Mark commented on the dramaticincrease in the price of gold since theGuides were most recently revised,which, he stated, increases thesignificance of any rules dealing withgold.32 Another comment stated thatgreater economic advantage to the tradewould occur if national andinternational standards are uniform.33

Twenty-four comments addressedwhether proposed provisions accuratelyreflect accepted practices, technology ornomenclature used in the trade.Fourteen comments stated that there areno requirements in the JVC proposalthat do not fairly and accurately reflecttrade practices.34 Some comments,however, identified parts of theproposed Guides that they contendedare contrary to accepted industrypractices. Specifically, Best and ServiceMerchandise stated that the JVC’sproposed diamond weight tolerances,restrictions on the use of the term‘‘point,’’ and proposed disclosuresregarding gemstone enhancement do notconform with accepted trade practices.35

Other responses to this question werenot directly responsive because they didnot contend the JVC’s proposals wereout of step with current trade practices,but instead proposed adding new termsand standards to the Guides.36

Thirty-one comments directlyresponded to the question regarding

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37 JMC (1); Fasnacht (4); Sibbing (5); Thorpe (7);King (11); Honora (15); Argo (17); AGS (18); Estate(23); G&B (30); AGTA (49); Schwartz (52); Skalet(61); Handy (62); Lannyte (65); GIA (81); Nowlin(109); McGee (112); ArtCarved (155); IJA (192);CPAA (193); Mark (207); Canada (209); Bedford(210); and Matthey (213). In addition, most of the72 comments supporting a different tolerance fordiamond weights indicated that requiring themerchant to state more accurately the weight orweights of diamonds would result in increasedcosts to consumers.

38 E.g., Service (222) and Best (225)(implementation of the JVC proposal would resultin lessened competition and higher prices,particularly for low margin jewelry retailers, whichwould be passed on to consumers). The commentsopposing the proposed diamond weight toleranceand alleging consequential costs are listed andexamined in detail in the discussion of diamondsbelow.

39 Comment 47, p.2.40 Comment 229.41 Comment 7, p.2.42 Bales (156) suggested that a quality mark be

permitted on a product called Balesium that is 41⁄2karat gold. See discussion below regarding the 10karat minimum standard for karat gold.

43 Service (222) p.1 and p.4; Best (225) p.3; AGL(230) p.3; NRF (238) pp.1–2; Kyocera (242) p.1;River (254) p.1. Dealers in synthetics, which arematerials made in a laboratory that have the samechemical, physical and optical properties as anatural gemstone, contend they should be able todescribe their products as gemstones with

appropriate qualification to indicate that they arelaboratory made.

44 E.g., JMC (1); Fasnacht (4); Thorpe (7); King(11); Gold Institute (13); Argo (17); AGS (18);Capital (19); Estate (23); G&B (30); Jabel (47); AGTA(49); Schwartz (52); Skalet (61); Handy (62); GIA(81); Nowlin (105); McGee (112); ArtCarved (155);Bales (156); LaPrad (181); IJA (192); CPAA (193);Mark (207); Canada (209); Bedford (210); Matthey(213); and Preston (229).

45 JMC (1); Littman (2); JA (3); Overstreet (8);Kennedy (9); Collins (12); Von’s (16); Jeffery (21);Stanley (83); General (88); APG (89); NACAA (90);Eisen (91); Alie (106); AWI (116); USWC (118);Krementz (208); JVC (212); WGC (223); MJSA (226);Swiss Federation (232); AWA (236); and ISA(237A).

46 Comment 222 and Comment 225.47 Comment 222, p.1.48 These 72 comments, mostly using one of four

form letters, also urged that all proposed changesbe rejected. One writer from this group indicatedthat he had a change he would like to suggest butstated ‘‘my understanding is that it [the JVCproposal] must be accepted in whole or rejected intotal.’’ Comment 60, p.1. Staff contacted thiscommenter, Richard Goldman, president ofFrederick Goldman, Inc., who indicated that thegroup to which he belongs was advised, by a personhe did not identify, that the JVC proposal had tobe accepted or rejected in its entirety. Thus, thisgroup’s opposition to all other proposed revisionsappears to be based on a false premise.

These 72 commenters are: London Star (20); Luria(28); Armel (32); Mendelson (33); Fashion (35);Courtship (36); MAR (37); NY Gold (39); Aviv (40)and (41); TransAmerican (43); Saturn (46); Faleck(50); Alarama (51); Fabrikant (53); Light Touch (54);Disons (55); Astoria (56); PanAmerican (57) and(101); Odi-Famor (58); Black Hills (59); Goldman(60); Almond (63); Brilliance (68); Oroco (69);Fargotstein (70); Simmons (71); Mikimoto (72);Evvco (73); Renaissance (74); Harvey (75); JGL (77);Raphael (78); AMG (79); Vijaydimon (80); Philnor(93); Orion (94); Flyer (95); Classique (96); Vardi(97); K’s (98); Diastar (99); Foster (100); Fame (102);Cheviot (104); M&L (105); Kurgan (107); Rosy Blue

(108); NEI (110); Leer (114); Majestic (115); Imperial(117); Schneider (119); Precision (121); New Castle(122); Stern (157); Consumers (158); Ultra Blue(160); DeMarco (161); Little (164); Golden West(179); Stanley (180); Mastro (190); Capitol Ring(191); Bogo (201); Schaeffer (211); Suberi (214);Impex (220); Landstrom’s (241); Ultimate (243); andMurrays (264).

49 Statement on Deception, appendix to CliffdaleAssocs., Inc., 103 F.T.C. 110, 1734–84 (1984) andStatement on Unfairness, appendix to InternationalHarvester Co., 104 F.T.C. 949, 1072 (1984).

50 JMC (1); Fasnacht (4); Gold Institute (13);Benrus (22); Estate (23); G&B (30); Jabel (47); Skalet(61); Lannyte (65); Newhouse (76); Nowlin (109);McGee (112); ArtCarved (155); Bales (156); Bedford(210); Bridge (163); IJA (192); Canada (209); Matthey(213); Bedford (210); MJSA (226); and Leach (258).

whether any proposed changes to theGuides would result in a lessening ofcompetition, barriers to entering theindustry or increased prices toconsumers. Twenty-five answered ‘‘no’’or ‘‘probably not.’’ 37 But, numerouscomments regarding the JVC’s proposedweight tolerances for diamonds believeda narrow tolerance requirement (as theJVC proposed) would increase costs toconsumers.38 Jabel stated thatpaperwork and the printing ofdefinitions and descriptions the JVCproposed as new requirements mayincrease consumer prices.39

Preston commented that, although hewas not specifically aware of anyproposals that would lessencompetition, produce barriers to entryor increase prices to consumers, hethought these results could occur on amodest scale.40 Thorpe stated, on theother hand, but without giving anyreasons, that the JVC proposal wouldincrease competition based on quality,value and service, and that the proposalwould lower prices to consumers byallowing them to shop and compare ‘‘ona level playing field.’’ 41 Balesrecommended that the Guides allowproducts of less than 10 karat gold to besold as a karat gold product because itwould increase competition in theindustry.42 Other comments, while notspecifically responding to this question,stated that the JVC’s proposal to prohibitthe use of the term ‘‘gemstone’’ todescribe synthetic or imitation productswould be anticompetitive.43

One hundred eighty-one commentsresponded to the question of whetherthe JVC’s petition to revise should berejected and the current Guidesretained. Many comments stated thatthe petition to revise should not berejected.44 For example, AGTAaffirmatively favored revising theGuides and 56 AGTA members filedindividual comments endorsing theAGTA position. Twenty three othercomments did not respond specificallyto Question 34, but endorsed revision ofthe Guides.45

Service Merchandise and Bestrecommended rejecting the petition torevise in favor of retaining the currentGuides.46 Service Merchandise statedthat the proposed revisions are anti-competitive and offer insufficientbenefit to the affected industries or theirconsumers to justify the additionalefforts and costs that they allege willresult.47 Additionally, 72 commentsrecommended rejecting the JVCproposal and retaining the currentGuides, apparently because of theirobjection to the JVC’s proposalregarding diamond weight tolerances.48

B. ConclusionThe comments largely favor retention

of the Guides and state that there is acontinuing need for the Guides. Thecomments indicate that the benefits ofthe Guides outweigh the costs, andpresent no persuasive evidence that theGuides have outlived their usefulness orimpose substantial economic burdens.Accordingly, the Commission isretaining the Guides.

Many comments recommended thatthe Guides be revised to reflect changedtechnologies, and the Commission hasconsidered these comments inamending the specific provisions of theGuides, discussed below. The commentsthat favored rejecting the JVC proposaland retaining the Guides as they existnow usually did so because of aparticular JVC recommendation. Theobjections to those proposals also areaddressed as they occur in the differentGuide categories.

III. Changes to the Form of the Guides

A. Legal Language Used in the GuidesThe legal language in the Guides has

been revised to conform to theCommission’s view on deception andunfairness as expressed in its PolicyStatements on Deception andUnfairness.49 Specifically, the phrase ‘‘itis an unfair trade practice,’’ generallyhas been revised to state ‘‘it is unfair ordeceptive to * * *.’’

B. Consolidation of the GuidesDetachable metallic watch bands are

the subject of the Guides for the MetallicWatch Band Industry (‘‘Watch BandGuides’’), 16 CFR Part 19. Metallicwatch bands that are permanentlyattached to the watch are included inthe Guides for the Watch Industry, 16CFR Part 245. The JVC proposedcombining the Watch and MetallicWatch Band Guides with the JewelryGuides and the FRN solicited commenton this proposal. Thirty commentsaddressed this issue, and 22 stated theGuides should be consolidated.50 Most

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51 E.g., Bedford (210) commented, at p.3, that ‘‘aswatch bands are mostly sold and fitted by jewelers,it would seem appropriate * * * that they becombined with the jewelry guidelines.’’ However,no commenters identified themselves as watchbandmanufacturers.

52 USWC (118); JCWA (216); NACSM (219); Best(225); Citizen (228); Swiss Federation (232); AWA(236); and Timex (239). Only one comment from theaffected industry, Benrus (22), favoredconsolidation of the Watch Guides.

53 Comment 236, p.1. See also Swiss Federation(232) p.1 (the industries are separate andconsolidating the Guides would make use of theGuides difficult) and Citizen (228) p.5 (watches andjewelry are dissimilar and should not be combined).

54 See also JCWA (216) p.4 (favoring separateGuides because the application of materials andquality demands differ for watches and jewelry);Timex (239) pp.9–10 (opposing consolidation ifdoing so would create any additional complianceobligations); Swiss Federation (232) p.38 (statingthat jewelry, watch and watch band companies areseparate industries, with separate tradeassociations).

55 JCWA (216), Citizen (228), and AWA (236)stated that all three Guides should be kept separate,but none of these provide reasons for keeping theWatch Band Guides separate.

56 ‘‘Fineness’’ refers to the amount of preciousmetal in an article.

57 For example, the provisions for goldelectroplated metal watch bands in the Watch BandGuides are the same as those for gold electroplatedmetal products included in the Guides for theJewelry Industry.

58 More than half of the material in the MetallicWatch Band Guides duplicates material in theJewelry Guides.

59 Fasnacht (4); Gold Institute (13); Estate (23);Korbelak (27); G&B (30); Jabel (47); Schwartz (52);Skalet (61) p.3 (stating that the items are typicallysold in jewelry, department and gift stores, and thusshould be subject to the same standards as jewelrysold in the same store); Handy (62); Lannyte (65);Newhouse (76); McGee (112); Bales (156); Bridge(163) p.2 (stating that the metallic content of the

items is more likely to be misrepresented if they arenot included in the Guides); Cross (165) p.1(favoring inclusion, because the mislabeling ofthese products, ‘‘especially by counterfeiters, hascaused confusion by customers and harmed thebusiness of legitimate manufacturers’’); IJA (192);Tru-Kay (196) p.1 (stating that the public wouldfind different standards for the metal content ofthese items as opposed to jewelry confusing); Mark(207) p.3 (same as Tru-Kay); Canada (209); Bedford(210); MJSA (226) p.3 (stating that withoutinclusion in the Guides, there may be moremisrepresentation of metallic content); Preston(229); Sheaffer (249) p.2 (favoring inclusion, butobjecting to ‘‘unnecessary and arbitrary limitations’’on the use of the term ‘Plate’ to describe goldelectroplated articles); Franklin (250); and Knight(256).

Although no current manufacturers of eyeglassframes commented, Knight (256) stated, at p.2, that‘‘We at one time owned the largest manufacturer ofgold filled and rolled gold plate frames in theU.S.A. and they followed the jewelry guides.’’

60 LaPrad (181); Nowlin (109); ArtCarved (155);Service (222); Franklin (250); and NACSM (219).

61 See infra for a discussion of the inclusion ofitems made from pewter.

62 Comment 250, p.3. The Franklin Mint statedthat ‘‘industry products’’ should be limited tojewelry, which it defined as an ornamental itemworn on or about one’s person for personaladornment. (The Franklin Mint primarily marketsobjects that are not used for personal adornment,but which incorporate or are made of preciousmetals or gemstones, so that its proposal wouldexempt most of the products it carries from theapplication of the Guides.)

of those who gave reasons for favoringconsolidation mentioned the WatchBand Guides rather than the WatchGuides.51

Six of the eight comments opposingconsolidating the Guides were fromwatch manufacturers or tradeassociations.52 The reasons given foropposition were primarily related to theconsolidation of the Watch Guides, notthe Watch Band Guides. The AmericanWatch Association stated that theGuides correctly reflect the fact thatwatches and jewelry are differentproducts, ‘‘by imposing substantiallydifferent definitions and standards forwatches and jewelry.’’ 53 For example,the minimum thickness in the WatchGuides for gold electroplated watches isabout 100 times thicker than theminimum thickness for goldelectroplated jewelry in the JewelryGuides.54

Based on the comments, theCommission has determined not tocombine the Guides for the WatchIndustry with the other two Guides. TheGuides for the Watch Industry willremain as separate Guides and arediscussed in another Federal Registernotice. However, the Commission hasdetermined to consolidate the Guidesfor the Metallic Watch Band Industrywith the Jewelry Guides.55 The WatchBand Guides primarily concern‘‘fineness’’ standards for preciousmetals, which are the same as thosecontained in the Jewelry Guides.56 Thus,unlike the Guides for the WatchIndustry, the Watch Band Guides sharemany common elements with the

Jewelry Guides.57 Therefore,consolidation of these two Guideseliminates unnecessary duplication.58

IV. Category-By-Category Explanationof Revisions

This section discusses specificproposed revisions on which theCommission sought comment in theFRN and additional issues raised by thecomments. This discussion includes asummary and analysis of the commentson each issue and a discussion of therevisions that the Commission hasmade. (In some instances there were nocomments on particular proposals.)

A. Pre-Category I—Scope andApplication: § 23.0

Section 23.0 in the current Guides iscaptioned ‘‘Definitions,’’ and givesdefinitions for: ‘‘diamond,’’ ‘‘pearl,’’‘‘cultured pearl’’ and ‘‘imitation pearl.’’In the JVC proposal, section 23.0 istitled ‘‘Scope and Application,’’ and thedefinitions appear in the sections thatspecifically address these products. TheCommission has determined that thisorganizes the Guides in a more helpfulfashion and adopts these changes.

Part (a) of section 23.0, as proposed bythe JVC, lists industry products towhich the Guides apply and part (b)defines industry members. The term‘‘industry products’’ is used throughoutthe Guides, but it is not explicitlydefined. To avoid any uncertainty abouttheir intended coverage, the revisedGuides include a definition of ‘‘industryproducts.’’

The JVC petition specificallysuggested that the term ‘‘industryproducts’’ include pens, pencils andoptical frames containing gold or silver.The FRN sought comment on whetherprovisions applying to the gold or silvercontent of pens, pencils and opticalproducts should be included in theGuides, and whether they should be thesame as the current provisions forjewelry. Thirty-one commentsaddressed this issue, and 25 favoredincluding these products, including twomajor manufacturers of writingimplements, Sheaffer and A.T. Cross.59

The six commenters that opposed theinclusion of these products simplystated that they saw no need for theinclusion of these products or that theywere not ‘‘really’’ jewelry products.60

The comments generally indicate thatpens, pencils, and opticals made ofprecious metals are viewed byconsumers as similar to jewelry becauseof their metallic content and where theyare sold. Thus, consumers would tendto expect that claims about suchproducts would be guided by the samestandards that apply to other industryproducts. Because consumers’expectations about the meaning of termssuch as ‘‘gold’’ are likely to be the samefor any product, the Commission isincluding these items in the Guides.These products and detachable metallicwatch bands are now specifically listedin § 23.0(a) of the revised Guides. Thetitle of the Guides is now the Guides forthe Jewelry, Precious Metals, andPewter Industries to reflect the coverageof the Guides.61

Although the JVC petition did not listhollowware or flatware as ‘‘coveredproducts,’’ section 23.6A of the JVCpetition addresses sterling hollowwareand flatware. The Franklin Mintobjected to this because these items arenot jewelry.62 However, these items arecommonly sold in jewelry stores, and atleast one of the commenters simplypresumed that these items were covered

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63 See Gold Institute (13).64 ISA (237) p.12 (stating further that the Guides

should ‘‘address all issues of intended disclosure toresellers of jewelry products so that thisinformation can accurately and completely bepassed on to the ultimate consumer’’).

65 E.g., AGS (18); AGTA (49); GIA (81); IJA (192);and ISA (237 and 237A).

66 An ‘‘independent’’ appraisal is one done by aperson who has no commercial relationship to theseller and does not sell competitive merchandise.In other words, the person who does the appraisaldoes not stand to benefit beyond his appraisal fee.

67 The Commission is omitting from the list thosewho promote the sale, or counsel the purchase orbarter, of industry products, because this languageis unnecessarily specific, and because such personsare already covered by the language of the Guides(e.g., persons who sell or offer for sale industryproducts).

68 JMC (1); Sibbing (5); Thorpe (7) p.2 (stating thatappraisals are sometimes used to make a sale byshowing the consumer ‘‘a signed document statingan inflated value’’); King (11); Estate (23); G&B (30)p.7 (noting that ‘‘you are going to have tounderstand appraisals are subjective’’); Jabel (47);Skalet (61) p.3 (suggesting that ‘‘appraisers shouldbe certified or licensed and should have noconnection with those who are making the sale’’);Lannyte (65) p.4 (proposing that the Guides statethat ‘‘an appraisal has to be qualified as to thepurpose of appraisal and the market level of thevalue quoted’’); Eisen (91) p.1 (suggesting that theGuides should provide for ‘‘a statement on noconflict of interest, disallowance of a percentagefee, and a resume with the appraiser’squalifications’’); McGee (112); ArtCarved (155);LaPrad (181); AGL (230) pp.4–6 (proposing that theGuides state that it is unfair for a seller to providean appraisal to a consumer when the appraiser isalso the supplier of the item being appraised, andrecommending that the Guides specify certainrequired content of appraisals of diamonds orcolored stones (e.g., ‘‘appropriate toleranceinformation for each element that impacts on thevalue of the gemstone’’); and ISA (237) and (237A)p.5 (stating that important problems aremisrepresentation of qualifications and overstatingof value to justify the selling price). Only onecomment, LaPrad (181), proposed standards to use(those of the Appraisal Foundation).

69 ISA (237A) noted, at p.18, that a New York Cityordinance requires that appraisals state that ‘‘theopinions of appraisers can vary up to 25%.’’ ISAstated that the opinions of appraisers, ‘‘dependingon marketplace, variances in grading, andgeographical market locations, as well as variouspurposes and functions and the method of valueconclusion can cause appraisers to vary in theiropinions of value for amounts potentially greaterthan 25%.’’ Id.

70 AGS (18); AGTA (49); GIA (81); IJA (192);Fasnacht (4); Honora (15); Bridge (163); Mark (207);Bedford (210); Matthey (213); MJSA (226); andPreston (229) p.6 (stating that there are differentformats and standards used for jewelry appraisalsand that ‘‘[t]here is no overall agreement within theindustry on precisely what does or does notconstitute the ultimate desirable appraisal’’).

71 ISA (237) noted, at p.2, that its members areappraisers in more than ‘‘130 subspecialty areas ofthe major personal property disciplines * * *.’’ Itstated, at p.7, that while it prefers to have its ownindustry guide, it favors the inclusion of appraisalsin the Guides, because ‘‘many times we serve asexpert witnesses in court and rely on the contentof the guides to inform the court as to what is oris not acceptable.’’ The Commission believes ISA’sconcerns will be satisfied by the language added tothe Guides.

72 Comment 238, p.1.

by the Guides.63 As with pens andpencils made of precious metal, theCommission believes that consumerswould tend to expect that claims aboutsilver or gold hollowware or flatwarewould be guided by the same standardsthat apply to other industry products.Therefore, these products also areincluded in the list of industry productscovered by the Guides.

The Guides also refer to ‘‘industrymembers,’’ but do not define this termor give examples. The JVC proposed thatthe Guides state they apply to ‘‘everyfirm (a person, group of persons, orcorporation) engaged in the business ofselling’’ industry products. Onecommenter noted that the Guides needto clarify that purchasers at all levels ofthe industry are protected by theGuides, since it is commonly assumedby courts that merchants are expertswho should know better than to rely onsuppliers’ representations as beingaccurate.64

The Commission agrees that it wouldbe useful to clarify that retailers, as wellas consumers, are meant to be protectedfrom deceptive practices addressed bythe Guides. Therefore, the revisedGuides state that they apply to persons,partnerships, or corporations at everylevel of the trade.

The JVC also proposed, in section23.0(b), including in the description ofindustry members (in addition tosellers) those who are engaged in‘‘identifying, grading, appraising,promoting the sale of or counseling thepurchase or barter of industryproducts.’’ The FRN specificallyrequested comment on whether theGuides should be expanded to includeappraisals of jewelry in addition to salesand offers to sell jewelry.

Thirty-five comments addressed thisquestion.65 The comments generallyfavored including appraisers of jewelryindustry products among those subjectto the Guides. The main effect ofincluding appraisers (or those‘‘identifying’’ and ‘‘grading’’ industryproducts) among those covered by theGuides would be to ensure that theywould be guided by the samedefinitions and standards as thoseselling the products. To confirm thevalue of an intended purchase,consumers often seek an appraisalbecause they rarely independently havethe knowledge to determine the quality

or value of jewelry.66 The Commissionhas concluded that it would be unfair ordeceptive for appraisers to ascribemeanings to standard terms that areused in the jewelry industry that aredifferent from the meanings attached tothose terms by the sellers of theproducts. Thus, appraisers and those‘‘identifying’’ and ‘‘grading’’ industryproducts are advised to follow theadmonitions of the Guides.67

However, 29 of the comments alsorecommended that the content ofappraisals be covered by the Guides.Fifteen of these stated this changeshould be effective with this revision.68

However, if the Guides were toregulate the content of appraisals,standards for establishing a value wouldbe needed.69 Fourteen comments,including those of the American GemSociety, the American Gem TradeAssociation, and the GemologicalInstitute of America, recommendedincluding appraisals in the Guides when

there is adequate agreement on what thestandards for appraisals should be.70

Although the Commission hasdetermined that for the sake ofconsistency for consumers purchasingindustry products, the Guides will statethat those who appraise, identify orgrade industry products should followthe Guides, they do not otherwisepurport to guide these industries.71

The JVC proposal included, in section23.0(c), a description of the behavior(claims and representations) to whichthe Guides apply. It is similar to§ 23.1(b) of the current Guides, but doesnot list the specific forms of advertising(periodicals, radio, television) that aredescribed in § 23.1(b). TheCommission’s authority, however, isbroader than the items currently listedas advertising in the Guides, andtherefore the specific list unnecessarilylimits the scope of the Guides. TheNational Retail Federation commentstated that such specifically enumeratedlimitations are helpful as they mayprevent other representations, such asin-store signs or flyers, from beingtreated as advertising.72 However, that isnot the intent of that section.Accordingly, § 23.0(c) of the revisedGuides encompasses express andimplied claims in all types ofadvertising and promotion.

B. Category I: §§ 23.1–23.4

Guides in this part apply to allindustry products regardless of theircomposition.

Section 23.1(a) of the current Guidescontains a list of attributes, such asorigin and durability, which industrymembers are advised not tomisrepresent. The JVC proposal omits‘‘manufacture’’ from the list (possibly inerror). The Commission has found nobasis in the record for deleting‘‘manufacture’’ from the list of items notto be misrepresented.

The JVC proposed adding thefollowing attributes to the list of

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73 The JVC also proposed expanding this sectionby adding ‘‘investment broker’’ and ‘‘independenttesting laboratory’’ to the list of examples of tradedesignations that firms are not to use falsely. ISA(237) recommended adding ‘‘gemologicallaboratory’’ and ‘‘appraisal facility’’ to the list.

74 Comment 90, p.2.

75 The JVC also proposed requiring the disclosureof any business relationship between the certifierand the seller.

76 JMC (1); Fasnacht (4); Thorpe (7); King (11);Honora (15); Argo (17); AGS (18); Capital (19);Estate (23); G&B (30); Jabel (47); AGTA (49);Schwartz (52); Skalet (61); Lannyte (65); Newhouse(76); GIA (81); NACAA (90); Nowlin (109); McGee(112); ArtCarved (155); Bridge (163); LaPrad (181);IJA (192); Matlins (205); Bedford (210); Matthey(213); Bruce (218); MJSA (226); Preston (229); ISA(237A); and Leach (257).

Opposed to this provision are: Bales (156) p.5(stating that it would raise costs and eliminatemany smaller jewelers); NACSM (219); Service(222); and Franklin (250).

With respect to the issue of whether there shouldbe a disclosure that there is subjectivity in thegrading and appraising of diamonds and coloredstones, a comment form AGTA (49) and 56individual AGTA members opposed disclosure,stating at p.6, that the degree of subjectivity is‘‘better addressed by those in the business ofoperating laboratories for certificates * * * and tothose associations governing appraisers.’’ However,ISA (237A) stated at p.21, that appraisal reportsshould disclose that diamond and colored stonegradings are subjective in nature. Thorpe (7), AGS(18), Schwartz (52), Skalet (61), NACAA (90), Bruce(218), and Preston (229) were also in favor of thedisclosure of the degree of subjectivity in grading.

77 Certificates have no accepted meaning in theindustry and are not defined in the standarddictionary for the industry [‘‘Jewelers’ Dictionary’’(3d ed. 1976)]. See AGTA (49) p.5 (favoring theproposal, but stating that since ‘‘there are nonationally accepted standards for certification,’’ therequirement that a certificate state the name of thecertifier ‘‘is no assurance of either expertise orquality’’); NACSM (219) p.24 (stating that the

proposed section was ‘‘vague and broad in that itcould be construed to make any sales slipidentifying the product a certification’’); Service(222) p.2 (stating that the current Guides ‘‘aresufficient to prevent deception with certificationsand appraisals’’).

78 Rapaport (233) p.1 (stating that misuse of GIAcolor and clarity terminology by sellers (as opposedto appraisers or graders) is a major problem andsuggesting that the Guides state that it is unfair tomisuse GIA grading terminology); Thorpe (7) p.2(stating that an identification of the grading systemused ‘‘is necessary to make accurate qualitycomparisons’’); Shor (257) p.1 (suggesting that theGuides state that it is unfair to describe diamondsby color and clarity grades developed by GIA orother recognized gem labs ‘‘unless they conformexactly to the standards set forth by thoseinstitutions’’).

79 Richard T. Liddicoat, Jr. & Lawrence L.Copeland, ‘‘The Jewelers’ Manual’’ 29–32 (1967);AGL (230); Rapaport (233) p.1. The GemologicalInstitute of America (GIA) and the American GemSociety (AGS) employ different grading systems,and some diamond graders have their own ‘‘in-house’’ grading systems. The letter ‘‘D’’ designatesthe best color in the GIA grading system. Some in-house grading systems have grades that start with‘‘A,’’ ‘‘AA,’’ or ‘‘AAA’’ and consequently ‘‘D’’ intheir systems stands for a much poorer color grade.

80 JMC (1); Fasnacht (4); Sibbing (5); Thorpe (7);King (11); Honora (15); Argo (17); AGS (18); Capital(19); G&B (30); Jabel (47); Schwartz (52); Skalet (61);Lannyte (65); GIA (81); Eisen (91); Nowlin (109);McGee (112); ArtCarved (155); Bales (156); Bridge(163); IJA (192); Bedford (210); Matthey (213); Bruce(218); Shire (221); MJSA (226); Preston (229); Limon(235); ISA (237A); Leach (257); and AGTA (49)

Continued

characteristics that should not bemisrepresented: ‘‘clarity,’’‘‘enhancement,’’ ‘‘future value,’’ and‘‘prospects of resale.’’ The Commissionbelieves that the term ‘‘clarity’’ isunnecessarily specific, as it is alreadycovered by the current Guides under‘‘grade’’ and ‘‘quality.’’ Therefore, thisterm has not been included.‘‘Enhancement’’ is the term used by thetrade to describe the treatment ofgemstones to improve their color orotherwise improve their appearance.However, the Commission hasdetermined that a more accurate term is‘‘treatment’’ and has added this term, inlieu of ‘‘enhancement,’’ to the list ofattributes that should not bemisrepresented. The Commission hasdetermined that the third term, ‘‘futurevalue’’ should not be added to theGuides, because the Guides already list‘‘value,’’ and ‘‘future value’’ issubsumed in value. The Commissionalso has determined that ‘‘prospects ofresale’’ should not be added to theGuides. Representations regarding theprospects of resale go to the investmentof gems, and the Commission hasconcluded that the sale of investmentgems is unsuitable for treatment inguides.

The JVC proposed adding fiveadditional parts to § 23.1, which wouldbe designated as follows:Misrepresentation of the character oridentity of business; Misuse of the term‘‘certified,’’ etc.; Deception (as togemstone investments); Misuse of theterm ‘‘investment quality’’; andDeception as to warranties on gemstoneinvestments. Discussion of each of theseproposed additions follows.

Misrepresentation of the character oridentity of business was the caption ofa section of the Jewelry Guides that wasin effect from 1957 to 1979. This sectionadmonished sellers from, for example,misrepresenting themselves aswholesalers or as offering wholesaleprices.73 NACAA commented that it isimportant to prohibit such amisrepresentation, noting that ‘‘retailersuse phrases such as ‘factory direct’ toimply that items are less expensive,when in fact they obtain theirmerchandise through jobbers and otheroutside sources.’’ 74 However, § 23.1warns against misrepresentation as tothe ‘‘manufacture’’ or ‘‘distribution’’ ofindustry products and this provision

would encompass misrepresentationsabout the nature of the seller’s business.

Misuse of the term ‘‘certified,’’ etc.was the caption of a section in theGuides that were in effect between 1957and 1979 and which the JVC proposedreinstating. This section stated that itwas an unfair trade practice to refer toan industry product as ‘‘certified’’unless the identity of the certifier andthe specific matter to be certified isdisclosed; the certifier examines theproduct, makes the certification, and isqualified to certify; and the certifiermakes available a certificate thatincludes certain information about thecertifier and the certification.75

Thirty-two comments favoredrequiring the seller to make available tothe purchaser a certificate disclosing thename of the certifier and the matters andqualities certified.76 The term‘‘certified’’ or certificates of authenticityare likely to be used as a way of givingcredence to a quality claim. If, in fact,the product is not ‘‘certified’’ in a validmanner or a certificate misrepresentsthe qualities of the item, the seller is notcomplying with the Guides’ admonitionin § 23.1 not to misrepresent importantqualities or otherwise deceivepurchasers. For this reason, theCommission is not including aprovision relating to certificates in theGuides.77

However, some commenters suggestedthat the Guides addressmisrepresentation of the system ofgrading that was used in any certificateor grading report.78 There are severaldifferent diamond color grading systemsin general use, each having its ownstandards and terminology, and severalgrading systems for colored stones.79

The Commission is persuaded that arepresentation that a stone is a specificgrade could be deceptive if the identityof the grading system used is notdisclosed. Section 23.1 states that it isunfair or deceptive to misrepresent thegrade of an industry product. TheCommission has added a Note to § 23.1that states that, if any representation ismade regarding the grade assigned to anindustry product, the identity of thegrading system used should bedisclosed.

The FRN solicited comment on theJVC’s proposed subsections 23.1(d)through (f), which address deceptioninvolving gemstone investments.Section 23.1(d) would require, in thesale of gemstones as investments, adisclosure that profit or appreciationcannot be assured, that no organizedmarket exists for the resale of gemstonesby private owners, and that the seller isin compliance with all applicable lawsand regulations governing securitiesdealers. In general, the commentsfavored these disclosures.80

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(favoring the proposal for sales to consumers butopposing the proposal for inter-trade transactions(e.g., a sale by a dealer to a retailer).

Opposed to this provision: Onyx (162) andRapaport (233) p.4 (stating that ‘‘there are regularongoing markets for the resale of diamonds andcolored stones by private owners’’ such as auctionhouses, jewelry stores, estate jewelry shows, andpawnshops). But see Shire (221) p.3 (stating thatthese examples do not constitute a ready market,since auction houses, for example, only wantspecific items and do not take everything for sale).The Commission believes that most consumersknow that they, as individuals, would not haveaccess to a market comparable to the stock market;hence, a disclosure would not be necessary toprevent deception in the absence of an affirmativemisrepresentation as to the nature of the market.

There is no evidence indicating that consumersbelieve that sellers of investment gemstones aregoverned by laws and regulations coveringsecurities dealers.

81 See comments cited in note 80, and NACAA(90) and LaPrad (181). These comments are mostlyfrom retail jewelers who would not usually sellgemstones as investments. Ethical sellers ofgemstones for investment purposes may providegemstones that are a higher grade then thosecommonly sold as jewelry.

82 See comments cited in note 80. Rapaport (233)stated, at p.4, that it would be acceptable to deliverthe product in a sealed container with a warrantythat becomes void if the seal is broken, if the sealingagency allows the re-sealing of the product at areasonable cost and discloses this at the time ofsale.

83 King (11); Argo (17); Jabel (47); Schwartz (52);Skalet (61); GIA (81); Nowlin (109); McGee (112);ArtCarved (155); IJA (192); Matthey (213); Shire(221); and Leach (257).

84 Fasnacht (4); AGTA (49); Bales (156); LaPrad(181); Bedford (210); and ISA (237A).

85 Sibbing (5); Thorpe (7); Honora (15); Bridge(163); and MJSA (226).

86 The Postal Service (244) stated that mail orderpurveyors of jewelry sometimes use deceptivephotographs to sell their wares. This section notesthat such a practice is unfair or deceptive, and afollowing Note specifically states diamonds shouldnot be depicted in greater than actual size withouta disclosure that the depiction is an enlargement.The JVC proposed expanding the Note to includedepictions of gemstones other than diamonds, andthe Commission has made this change. In addition,because television shopping programs or computerimages also may contain misleading images ofjewelry, the Commission has added ‘‘televised orcomputer image’’ to the list of covered ‘‘visualdepictions’’ in this section.

87 See The Tariff Act of 1930, as amended, 19U.S.C. 1304, and Customs’ implementingregulations, 19 CFR 134.11.

88 The Watch Band Guides contain very detailedinstructions as to the labeling of watchbandsassembled in the U.S. of foreign components. 16CFR 19.4(b), note 2. Several Commission orders,from the 1960’s or earlier, require similar detaileddisclosures. However, the Commission recentlyissued a ‘‘Sunset Rule’’ that terminatesadministrative orders automatically after 20 years.60 FR 58514 (Nov. 28, 1995).

89 More specific guidance on when industryproducts can be marked ‘‘Made in the U.S.A.’’ islikely to be addressed further by the Commissionlater this year.

The comments favoring thesedisclosures also generally favored theproposed sections 23.1(e) and (f).Proposed part (e) would prohibit theseller from implying that a gemstonesold for investment purposes is moredesirable or different than gemstonesmarketed for use in jewelry.81 Proposedpart (f) states that it is an unfair practiceto limit a purchaser’s opportunity for anindependent examination of an industryproduct by delivering a product in asealed container with a warranty thatbecomes void if the seal is broken.82

This practice makes it impossible for theconsumer to examine the product orretain an independent expert to examineor appraise the product to determinewhether the seller has fairly representedit. On the other hand, a consumer canrefuse to buy a product sold under theseconditions.

The FRN asked if there would bevoluntary compliance with theproposed guidelines for sellers ofinvestment gemstones. Thirteencomments stated that voluntarycompliance could not be expected.83 Sixcomments stated that compliance couldbe expected only from legitimateoperators.84 Five comments anticipated

voluntary compliance by allconcerned.85

An industry guide is not appropriateif there is an indication that theviolations are willful or wanton and willnot be voluntarily abandoned. Theexperience of the Commission inbringing cases against sellers ofinvestment gemstones indicates thatmost of the sellers have been engaged infraud. Thus, they are unlikely to complywith practices that would be likely toput them out of business. TheCommission has concluded that a case-by-case approach is a more appropriateway to address the problem of gemstoneinvestment claims than inclusion in theGuides.

The JVC did not propose anysubstantive changes in the last threesections in Category I (23.2, 23.3, 23.4),and there were no comments pertainingto these sections. The Commission hasdecided to retain sections 23.2 and 23.4.Section 23.2 states that it would bedeceptive to use depictions that wouldmaterially mislead consumers about theproduct shown.86 Section 23.4 statesthat it would be deceptive to use theterm ‘‘handmade’’ unless the item isentirely handmade or made by manuallycontrolled methods consistent withconsumer expectations.

However, the Commission hasdetermined to delete section 23.3. Theadmonition in section 23.3(a) againstmisrepresenting the origin of a productrepeats the general guidance providedin section 23.1 (which provides a list ofcharacteristics, including origin, whichshould not be misrepresented). Section23.3(b) states that a disclosure of foreignorigin should be made only when it isdeceptive not to do so. A Note followingthis section explains that it is notnecessary to disclose the foreign originof small and functional parts, or otheritems (such as diamonds) which areprimarily obtained from sources outsidethe United States. U.S. Customs requiresproducts being imported into the U.S. tobe marked with the country of originunless they will be substantially

transformed in the United States.87

Thus, the Commission has concludedthat this section of the Guides isunnecessary.

The Commission also has deleted§ 19.4(b) of the Watch Band Guides,which states that it is unfair to fail todisclose that a metallic watchband, or asubstantial part thereof, is of foreignorigin.88 No commenters identifiedthemselves as watchband manufacturersor marketers, and very few commenterseven addressed the existence of theWatch Band Guides. It is unclearwhether the fact that a watchband ismade abroad is material to consumers,or whether consumers currently expectthat any unmarked metallic watchbandwas made in the U.S.A. However, asnoted, U.S. Customs requires importedwatchbands (and other items ofcommerce) to be marked with thecountry of origin. Therefore, theCommission has concluded that thissection is unnecessary.89

C. Metals (Category II): §§ 23.5–23.8Guides in Category II, in both the

current Guides and the JVC petition,apply to industry products composed inwhole or in part of precious metal. Inthe JVC petition, this category alsoincludes a proposed standard forpewter.

1. Inclusion of Metallic WatchbandsAs noted previously, the Guides for

the Metallic Watchband Industry havebeen combined with the Jewelry Guides.The Commission believes that, in mostrespects in which the Watch BandGuides differ from the Jewelry Guides,the Watch Band Guides areunnecessarily restrictive or no longerrepresent the Commission’s views ofhow the law should be applied. Forexample, unlike the Jewelry Guides, theWatch Band Guides state that it is unfairto fail to disclose the metalliccomposition of a product which has theappearance of gold but is not gold(§ 19.2(A)(2)). There is no evidence thatsuggests that consumers today will inferthat a gold-colored metal watch band isgold. The prices for gold-colored

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90 To the extent that sellers purposely inflate theprice of their gold-colored products to leadconsumers to believe they are purchasing a golditem, they are probably engaging in fraud and arelikely to misrepresent the item as gold when it isnot, which would be a deceptive practice under§ 23.5(a).

91 Only one comment specifically addressed theproposed definitions. Finlay (253) stated at p.1 thatit did not object to the proposed definitions of‘‘gold.’’

92 For example, the JVC proposed defining ‘‘finegold’’ as ‘‘gold of 24 karat quality.’’ However,§ 23.5(b)(1) of the current Guides simply refers to‘‘fine (24 karat) gold.’’ Similarly, although the JVCproposed a new definition for ‘‘quality mark’’specifically for gold, the more general definition in§ 23.8 of the current Guides (defining the term‘‘mark’’ in conjunction with precious metalsgenerally) is clearer and more accurate. Seediscussion regarding quality marks below.

93 Lee (153); NRF (238) p.1.94 For example, the phrase ‘‘solid 10 karat gold’’

is not likely to lead consumers to believe the itemis 24 karat gold. See Advisory Opinion, ‘‘Solid’’ and‘‘karat’’ used together, 71 F.T.C. 1739 (1967).

95 This safe harbor provision simply states that anindustry product composed throughout of an alloyof gold of not less than 10 karat fineness, may bedescribed as ‘‘Gold’’ when the word ‘‘Gold’’ isimmediately preceded by a correct designation ofthe karat fineness. The JVC suggested following thewords ‘‘an alloy of gold of not less than 10 karatfineness’’ with ‘‘less tolerance set out in 15 U.S.C.294, et seq.’’ [the National Stamping Act] andfootnoting that statement with a detailedexplanation of the tolerance. The tolerances are setforth in § 23.5(d) of the current Guides and are moreeasily understood in the current format.

96 Comment 253, p.1 (stating that this ‘‘will notmislead consumers where all other requirements ofthe guidelines have been met and whereinformation as to karat fineness is given at the pointof sale’’). See NRF (238) p.1 and discussion infra,regarding the scope and application of the Guides.

97 A Note following this section providesguidance for the use of the word ‘‘gold’’ as appliedto certain words (Duragold, Diragold, Noblegold,Goldine). The JVC proposed adding ‘‘Layered Gold’’to this list, and the Commission has done so.

98 Comment 156, pp.5–8. LaPrad (181) stated atp.2 that ‘‘gold plated items should include any itemthat is not at least 10 karat solid gold in finenessthroughout the item.’’ This suggests that an alloythat contained less than 10 karat gold could bedescribed as ‘‘plated.’’ However, ‘‘plated’’ has beenused for many years to refer to a base metal productwith a coating of gold. Extending the meaning ofthe term to low-karat alloys would be confusing.

99 The 10 karat minimum standard has been usedat least since 1933, when it first appeared inCommercial Standard CS 67–38, promulgated bythe then Bureau of Standards of the U.S.Department of Commerce. It was incorporated intothe Trade Practice Rules for the Jewelry Industry,16 CFR Part 23, in 1957. In 1977, the Commissionproposed permitting sellers to market gold of lessthan 10 karat and silver of less than 92.5% if thequality was accurately disclosed. This proposal waspublished for public comment. Over 1200comments were received, many from consumers,and over 98% of the comments opposed loweringthe 10K standard. The Commission found, based onarticles and test reports, that articles of less than 10

Continued

metallic watch bands compared to whatgold watch bands (or other gold jewelry)would sell for is at least one wayconsumers are alerted that a gold-colored band is not gold.90 Thus, theCommission has omitted this provisionfrom the Guides.

Other differences between the WatchBand Guides and the Jewelry Guides arenoted at appropriate portions below.

2. Misrepresentation as to Gold Content:§ 23.5

Section 23.5(a) of the current Guidesstates that it is an unfair trade practiceto sell or offer for sale any industryproduct by means of any representationthat would deceive purchasers as to thegold content. Section 23.5(b) identifiesspecific practices that may bemisleading and section 23.5(c) listsmarkings and descriptions that areconsistent with the principles describedin the section. These latter provisionsare ‘‘safe harbors’’ (i.e., examples ofways of avoiding misrepresentations).

a. General provision as tomisrepresentation: § 23.5(a). As noted,§ 23.5(a) of the current Guides containsa general provision admonishing againstmisrepresenting the gold content ofindustry products. The JVC proposedadding definitions of ‘‘karat,’’ ‘‘gold,’’‘‘karat gold,’’ ‘‘fine gold,’’ ‘‘mark,’’ and‘‘apply or applied’’ to this section.91 Noevidence indicating confusion as to themeaning of the terms was presented. Insome cases, the terms are alreadydefined very succinctly in the currentGuides.92 For these reasons, theCommission has not included theproposed definitions in the Guides.

The JVC also proposed including astatement that no mark other than thequality mark (e.g., 14 K) shall be appliedto an article indicating that it containsgold or as to the quality, fineness,quantity, weight, or kind of gold in anarticle. The Commission found nojustification or need for such a broadstatement. Section 23.5(a) already states

that misrepresentations about the goldcontent of an article are unfair ordeceptive.

b. Specific provisions and ‘‘safeharbors’’: § 23.5(b)-(c). Section 23.5(b) inthe current Guides identifies specificpractices that may be misleading.Subsection (1) states that theunqualified use of the word ‘‘gold’’ islimited to 24 karat gold. The JVCproposed adding that the unqualifieduse of ‘‘solid gold’’ is limited to 24 karatgold. There were two comments on thisissue, one favoring the JVC proposalbecause ‘‘solid gold should mean thatthe product is 100% gold,’’ and oneagainst the proposal, since finenessmust be disclosed for all gold other than24 karat gold.93 The Commissionbelieves that the term ‘‘solid gold’’ is notinherently deceptive or unfair.94

Accordingly, the Commission hasrejected this proposal.

Subsection (2) in the current Guidesadvise that (except for 24 karat gold),the karat fineness be stated when theword ‘‘gold’’ is used. The JVC did notsuggest any changes in this section, andonly suggested minor changes in thecorresponding ‘‘safe harbor’’ provisionin § 23.5(c)(1).95 However, Finlay arguedthat the word ‘‘gold’’ should be allowedin product advertising without adesignation as to karat fineness.96

Including karat fineness in advertising,however, helps consumers make basiccomparisons among competing productsoffered by different retailers. Therefore,the Commission has not changed thisprovision.

A Note following the first ‘‘safeharbor’’ provision, § 23.5(c)(1) in thecurrent Guides, deals with hollowproducts and advises that there be adisclosure that these products, whatevertheir gold content, have hollow centers,when the failure to make such adisclosure would be deceptive. It also

states that these products should not bereferred to as solid gold. The JVCproposed revising the note to drop theguidance that there be a disclosure thatthe product is hollow. However, theCommission has determined that thisdisclosure is useful because, otherwise,consumers would be unaware that theproduct is only hollow. Thus, theCommission has not deleted thisprovision. The JVC also suggested thatthe note be changed to state thatproducts that are filled with cement orsome other filler may not bear a qualitymark. However, such products areessentially ‘‘gold plated’’ products, andas long as they conform with theGuides’ provisions about how to marksuch products, consumers are not likelyto be deceived. Thus, the Commissionhas decided not to adopt this proposal.

Subsections (3)–(5) advise againstparticular uses of the word ‘‘gold’’ (e.g.,plated, filled, rolled, overlay) unlessthey are so qualified as to be non-deceptive. Subsection (6) advisesagainst representing that one goldproduct is superior to another unless therepresentation is true.97

Subsection (7) advises against the useof the word ‘‘gold’’ on any product ofless than 10 karat fineness. Balesproposed in its comment that theGuides be amended to permit goldalloys containing less than 10 karats ofgold (less than .416 percent gold) to bemarketed as containing gold. Bales hasa patent on a product in which the goldcontent varies from four to six karatsand which is alleged to have goodcorrosion resistance.98 This issue wasaddressed comprehensively by theCommission in 1977.99 Thus, the

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karat fineness tend to tarnish and corrode. TheCommission ultimately retained the 10 karatminimum fineness for gold and the 92.5% standardfor silver. 42 FR 29916, 29917 (1977).

100 Canada (209) suggested, at p.4, that gold platedarticles ‘‘be prohibited from using the quality mark‘karat’* * *’’ because such use confuses theconsumer as to the value of the article. In fact, thecurrent Guides (in §§ 23.5(b)(5) and (c)(3)) appearto prohibit a quality mark on gold electroplateditems. However, a designation of karat fineness hasbeen recommended in the Guides for mechanicallyplated articles for many years, and Commissionstaff is not aware of complaints from consumerswho were deceived by this representation. No othercommenters suggested that the Guides adviseagainst the use of a quality mark on mechanicallyplated items. Hence, the revised Guides, in§§ 23.4(b)(5) and (c)(3), continue to recommend thatitems identified as mechanically plated containquality marks.

101 The Watch Band Guides contain almostidentical provisions for mechanically plated watchbands, but they contain a section (§ 19.2(e)(2))entitled ‘‘Examples of Proper Markings forExpansion Bands of Specified Composition andConstruction.’’ The main point made by the‘‘Examples’’ is that quality marks on gold-filledportions of a watchband should not imply that basemetal portions of the band are gold. TheCommission believes the section of the currentJewelry Guides dealing with quality marks (§ 23.8)adequately addresses this issue. See discussion ofquality marks, infra. Therefore, the Commission isnot including the ‘‘Examples’’ in the revisedGuides.

102 NACSM (219) p.24; Leach (258) p.9 (statingthat the tolerance is ‘‘by far too liberal’’); Korbelak(27) p.4 of attached letter of April 23, 1982 toSusanne S. Patch (stating that the proposal is‘‘unsupportable’’ and ‘‘contrary to the spirit of therecent amendment of the Marking Act whichtightened tolerances on karat goods’’). [The NationalStamping Act was amended in 1976.]

103 A ten percent tolerance is found in VoluntaryProduct Standard PS 67–76, ‘‘Marking of GoldFilled and Rolled Gold Plate Articles Other thanWatchcases.’’ The tolerance is apparently meant toapply to weight claims, such as ‘‘10% 14 karatgold’’.

This standard is referred to in the current Guides[§§ 23.5(d) and 23.5(f) (as ‘‘Commercial Standard CS

47–34’’)] with respect to the exemptions applicableto the tolerance when a test for metal content isbeing performed (e.g., excluding ‘‘joints, catches,screws’’ etc.) Other Voluntary Product Standardsare also referred to in the current Guides for thesame reason (i.e., a list of parts of jewelry exemptfrom assay.) The JVC recommended including inthe Guides the full text of all five Voluntary ProductStandards for precious metals that are referred to inthe current Guides as ‘‘Commercial Standards.’’Commercial Standards were promulgated by theU.S. Department of Commerce and administered bythe National Bureau of Standards (‘‘NBS’’). Laterrenamed by the NBS as Voluntary ProductStandards (‘‘VPS’’), they had the same legalsignificance as FTC guides. The Department ofCommerce and the NBS, which is now called theNational Institute of Standards and Technology(‘‘NIST’’), withdrew these and all other VPS, as aneconomy measure, on January 20, 1984. The JVCproposed preserving the material in the VPS byincorporating it into the Jewelry Guides.

Only one comment addressed the issue ofwhether to include the VPS in the Guides. The GoldInstitute (13) agreed that the VPS should beincorporated, but gave no reasons. The Commissionhas included the material pertaining to exemptionsfrom assay (with some changes, discussed infra) inthe Appendix. However, the Commission hasconcluded that it is not necessary to include otherportions of the VPS. The VPS state the standardsthat must be met for each product, if the productis represented to be in compliance with the VPS.However, the VPS have been withdrawn so such arepresentation is obsolete.

104 The Postal Service (244) p.2, commented thatthe use of ‘‘gold flashed’’ or ‘‘gold washed’’ ismisleading to consumers, particularly where itemsare ordered by mail and not seen by the consumeruntil after purchase. However, the terms ‘‘goldflashed’’ and ‘‘gold washed’’ have been in commonuse for many years. The Commission does not havesufficient evidence at this time to advise against theuse of these terms in all circumstances.

Commission has not changed thisprovision.

The JVC petition also included anadmonition against applying a qualitymark (e.g., 9 karats) to any article of lessthan 10 karat fineness regardless ofwhether the word ‘‘gold’’ is used.Because the word ‘‘karat’’ is so clearlyassociated with gold content (evenwithout the use of the word ‘‘gold’’), theuse of the term ‘‘9 karat’’ is likely torepresent that the item is 9 karat gold.The Commission has determined thatadvising against this use is consistentwith and clarifies the Guides.

On the basis of comments received inresponse to questions in the FRN, theCommission has revised current§§ 23.5(b)(3), (4), and (5). These changesare explained in detail below, alongwith the changes to the corresponding‘‘safe harbor’’ provisions in subsection23.5(c) of the current Guides.

i. Mechanically or electrolytically‘‘plated’’ products. There are two basickinds of ‘‘plated’’ gold. Mechanicallyplated gold has a layer of gold alloybonded to a base metal by heat andpressure. Gold electroplate has a layer ofgold alloy electrolytically deposited ona base metal. Section 23.5(b)(3) of thecurrent Guides states that a surface-plated or coated article can only bereferred to as ‘‘gold’’ when the term isadequately qualified so as to disclosethat the product or part is only surface-plated or coated with an alloy of gold.However, for mechanically platedarticles, it adds that the word ‘‘gold’’should be preceded by a designation ofthe karat fineness.100

Section 23.5(b)(4) states that certainterms (‘‘gold-filled,’’ ‘‘rolled gold plate,’’‘‘rolled gold plated,’’ ‘‘gold overlay,’’‘‘gold plated,’’ or ‘‘gold plate’’) shouldonly be used for mechanically-plateditems (i.e., not gold electroplate) andthat the gold on these items should beof ‘‘such thickness and extent ofcoverage that the terms will not bedeceptive.’’ It also states that the karat

fineness should be included with theseterms. The safe harbor provision in§ 23.5(c)(2) states that these terms arenot deceptive when used formechanically-plated items if the karatfineness is stated and the gold is of‘‘substantial thickness’’ and constitutes5% of the weight of the item. Section23.5(c)(2) also creates a safe harbor forall these terms except ‘‘gold filled’’when the gold weight is less than 5% ifthey are preceded by a fractionindicating the gold weight (e.g., 1⁄40 12Kt. Rolled Gold Plate). ‘‘Gold filled’’ isreserved for items with a gold weight of5% or more.101

The JVC proposed adding a note to§ 23.5(c)(2) of the current Guides, stating‘‘The actual gold content of gold-filledand rolled gold plate articles shall notbe less than the gold content indicatedby the quality mark by more than tenpercent.’’ Only three commentsaddressed this issue, all opposing theprovision.102 Section 23.5(d) of thecurrent Guides provide that ‘‘therequirements of this section relating tomarkings and descriptions of industryproducts and parts thereof are subject tothe tolerances applicable thereto underthe National Stamping Act (15 U.S.C.294, et seq.) * * *.’’ The NationalStamping Act provides that, for articlesmade of gold, ‘‘the actualfineness * * * shall not be less bymore than three one-thousandths partsthan the fineness indicated by themark * * *.’’ 15 U.S.C. 295 (1993). Noreason was offered for the much larger,proposed tolerance. Accordingly, theCommission has not adopted thischange.103

Section 23.5(b)(5) states that the terms‘‘gold electroplate’’ or ‘‘goldelectroplated’’ can only be used whenthe plating ‘‘is of such karat fineness,thickness, and extent of surfacecoverage that the use of the term willnot be deceptive.’’ The safe harborprovision in § 23.5(c)(3) states that theseterms are not unfair or deceptive whenused for items with a coating of sevenmillionths of an inch of fine (24 karat)gold, or the equivalent. [If the goldcoating is, for example, 12K (half asfine), the coating should be 14millionths of an inch thick (twice asthick).] ‘‘Heavy gold electroplate’’ maybe used for a coating equivalent to 100millionths of an inch of fine gold. Thissubsection also states that the terms‘‘gold flashed’’ or ‘‘gold washed’’ may beused to describe an electroplatedcoating that is thinner than sevenmillionths of an inch of fine gold or itsequivalent (the minimum thickness forthe use of the term ‘‘goldelectroplate’’).104

The FRN sought comment on how‘‘gold plate’’ should be defined in theGuides. (As noted, current § 23.5(b)(4)allows ‘‘gold plate’’ to be used todescribe only mechanically plateditems.) Six comments opposed allowing

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105 Gold Institute (13) p.2 (defining ‘‘gold plate’’as an optional term to describe a mechanicallyplated article); Handy (62); Newhouse (76); Mark(207); MJSA (226) p.4 (limiting ‘‘gold plate’’ tomechanically plated articles is ‘‘generally consistentwith terminology used in the trade’’); and Knight(256) p.2 (stating that consumers know electroplateis inferior to mechanically plated gold).

106 Fasnacht (4) p.1 (stating that ‘‘gold plate’’ hashistorically been used in the trade ‘‘for anyapplication of a karat gold to a base’’); Benrus (22);Estate (23); Korbelak (27) p.3 (stating that the tradenow uses ‘‘gold plate’’ to mean gold appliedelectrolytically); G&B (30); ArtCarved (155); LaPrad(181); Matthey (213); Bruce (218) p.7 (stating thatthe trade now uses the term ‘‘gold plate’’ to meangold applied electrolytically); Citizen (228) p.3(stating that the term should not ‘‘be restricted toany particular method of applying the goldcovering’’ and noting that ‘‘the vast majority of goldcoverings are applied electrolytically’’); Sheaffer(249); and Leach (257). Four of these (Fasnacht,G&B, Matthey, and Estate) stated that the methodshould be disclosed.

107 Comment 249, p.2. Section 23.5(c)(2) statesthat ‘‘adequate abbreviations’’ are not unfair ordeceptive for mechanically plated gold, which isalso referred to as ‘‘gold filled’’ and abbreviated asG. F. Section 23.5(c)(3) makes no such provision forelectrolytically plated gold. Moreover, in anadvisory opinion issued in 1971, the Commissionstated that ‘‘gold electroplate’’ could not beabbreviated. Advisory Opinion, Designation of goldcontent on ball point pens, 79 F.T.C. 1052 (1971).However, the Commission currently has noinformation that consumers would understandabbreviations for mechanically plated gold but notfor electrolytically plated gold. Thus, theCommission has revised the Guides to state thatadequate abbreviations are not unfair or deceptivefor electrolytically plated gold (e.g., 12 Kt. G. E. P.).Therefore, the advisory opinion is withdrawn.

108 Matthew Runci from MJSA.

109 Comment 249, p.3 (noting that ‘‘silverplate’’ isallowed under the current Guides regardless of themethod of application and that this has not misledconsumers).

110 Comment 209, p.4.111 Benrus (22) p.2 (stating that ‘‘The science of

gold plating has improved greatly in the past 15years and the requirements in the current Guides. . . are simply not in tune with today’s technologyor market practices’’); Alan Foster,‘‘Electrodeposited and Rolled Gold,’’ Gold Bulletin64 (1982), attached to comment 27 (indicating thatthe electroplating of gold was greatly improvedabout 30 years ago). Korbelak (27) (attached letterof April 23, 1982 to Susanne S. Patch) states thatthe current Guides ‘‘perpetuate an economicadvantage to one method of manufacturing[mechanical] over another.’’

112 Catholyte (34) p.1 (stating that when corrosionis the quality criterion, ‘‘mechanically claddedmaterial is not the present day choice becausemachining processes which produce the desireddesigns will destroy the starting clad stock andyield ‘raw’ or cut edges which will have little or noclad matter present. (This procedure necessitatesthe use of electroplate to ‘cover’ those edges whichare exposed.)’’). Other comments indicate thatmechanically plated gold normally has a surfacecoating of electroplate. Korbelak (27) (see articlesattached to comment); Tru-Kay (196) p.1 (statingthat its major product was mechanically-platedjewelry, and noting the existence of ‘‘the surfacecoating of gold electroplate’’ on gold filled items);Mark (207) p.3 (owned and operated a gold-filledmanufacturer and distributor for 25 years andreferred to the ‘‘surface coating of gold electroplate’’on gold filled (i.e., mechanically-plated) items).

113 Matthew Runci, Executive Director, MJSA(226); George Knight, former president of the GoldFilled Manufacturers Association (256); IrvingOrnstein, Vice President, Leach & Garner (258);

Howard Solomon, Vice President, Donald Bruce &Co. (218); I.L. Wein, President, Benrus (22); BarrySullivan, President, ArtCarved (155); KennethGenender, U.S. Watch Council (118). Only Mr.Knight stated that gold electroplate is inherentlyinferior to mechanically plated gold.

114 Consumers can determine for themselveswhether they like the appearance of the product,but the consumer has no way of determiningdurability.

115 Although the evidence indicates that the term‘‘gold plate’’ has not been frequently used, becauseplating generally has been in use for many years,consumers reasonably would expect a certainminimum level of durability from an item solabeled. The Commission believes it is appropriateto create a safe harbor with a numerical standardfor a specific term such as ‘‘gold plate’’ whenconsumers would expect certain qualities fromproducts described by the term and products at orabove the standard would have such qualities.

electroplated items to be described as‘‘gold plate.’’ 105 Most gave no reasonother than stating that there should bea distinction between products that aremechanically plated and those that areelectroplated.

Twelve commenters favored lettingelectroplated items be designated as‘‘plate.’’ 106 Sheaffer noted that ‘‘goldelectroplate,’’ the designation currentlyadvised by the Guides, is too lengthy formany of its products and is unknown toconsumers in foreign countries, who arefamiliar with the term ‘‘plate.’’ 107

Sheaffer stated that most foreigncountries permit ‘‘plate’’ or ‘‘plated’’ tobe used to describe an article coatedwith gold, regardless of the method ofapplication, and that a change in U.S.requirements would allow them to stockinventory of items marked as ‘‘goldplate.’’ Further, one commenterinterviewed by Commission staff statedthat some manufacturers would like tomarket items that are the product ofboth mechanical plating and electrolyticplating, that could be labeled ‘‘goldplate.’’ 108

Some comments stated that therelevant issue for consumers isdurability, and not the method ofplating. Sheaffer stated that ‘‘[t]henormal consumer is totally unconcerned

about the process which a manufacturermight use to apply gold or silver plateto an article so long as the preciousmetal plate meets all appropriaterequired standards.’’ 109 Canadacommented that ‘‘gold plate’’ is ‘‘simplya layer of gold placed over a basesubstance’’ and that the ‘‘importantreference should inform the consumerof the thickness of the plate.’’ 110

Although the comments indicate thatthere are differences of opinion in theindustry regarding industry custom andusage of the term ‘‘plate,’’ under thecurrent Guides the term ‘‘gold plate’’can only be used for mechanicallyplated gold. Historically, mechanicallyplated gold has contained a thickercoating of gold and has been moredurable than gold electroplate, bothbecause it was thicker and because itwas less porous.

However, the comments indicate thatelectroplating has been significantlyimproved in recent years.111 Othercomments indicate that goldelectroplate could now be as desirable,or more desirable, than mechanicallyplated gold.112 Commission staffconducted telephone interviews ofseven commenters, who, with oneexception, indicated that goldelectroplate can be made as thick and asdurable as mechanically plated gold.113

Furthermore, all of the commenterswhom Commission staff interviewedstated that mechanically plated gold hasusually been marketed as ‘‘filled gold,’’‘‘rolled gold,’’ or ‘‘gold overlay’’ (insteadof ‘‘gold plate’’).

Based on the comments, theCommission has determined that thecurrent Guides reflect the now-outdatedbelief that gold electroplate is inherentlyinferior to mechanically plated gold.The Guides may thus unfairly givemechanical plating a competitiveadvantage and may make internationaltrade more difficult. Further, thecomments indicate that the term ‘‘goldplate’’ has not been used extensively formechanically plated items, andtherefore, consumers may not expect anitem labeled as ‘‘gold plate’’ to havebeen mechanically plated. Moreover,the Commission agrees with thecomments that state that consumers areunlikely to distinguish betweenproducts on the basis of the method ofplating used and are more concernedwith the durability.114 Thus, thedistinction between mechanicallyplated and electroplated products nolonger serves a useful purpose.Therefore, the Commission hasconcluded that the term ‘‘gold plate’’would not be inherently deceptive whenapplied to electroplated items with asufficient layer of gold that assuresreasonable durability. This will allowproducts composed of a combination oftypes of plating, or newer methods ofplating that are developed, to be called‘‘gold plate.’’

For these reasons, the Commissionhas created a safe harbor that wouldallow ‘‘gold plate’’ to be used for goldapplied by any process so long as thecoating is sufficiently durable to satisfyconsumer expectations that the platedproduct would retain its appearance fora reasonable period of time.115 TheCommission believes that a standardbased on thickness, rather than weightof the gold coating, is more relevant to

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116 Sheaffer (249) p.4 (stating that a standardbased on a weight ratio (e.g., 1/20th) can‘‘encourage the production of inferior articleslacking strength and rigidity as the thickness, andthus, the cost of the plate can readily be reducedby use of a very thin base material’’). But cf. AWA(236) p.2 (in discussing ‘‘gold flashed’’ watches,stating that thickness ‘‘is only one factor indetermining the esthetic qualities and durability ofthe electroplating process,’’ that differenttechnologies produce varying thicknesses, all ofwhich provide durable coverage, and thatestablishing a threshold standard for ‘‘gold flashed’’or other similar terms creates an arbitrary standardthat distorts the marketplace); and NAW (251).However, because of the other comments discussedin the text, the Commission believes thatidentifying a minimum thickness and fineness isappropriate for a safe harbor for ‘‘gold plate’’ claimsfor jewelry.

117 The Trade Agreements Act of 1979 states thatfederal agencies must, in developing standards,‘‘take into consideration international standardsand shall, if appropriate, base the standards oninternational standards.’’ 19 U.S.C. 2532(2)(A)(1980). A ‘‘standard’’ is defined as ‘‘a documentapproved by a recognized body that provides, forcommon and repeated use, rules, guidelines, orcharacteristics for products or related processes andproduction methods, with which compliance is notmandatory.’’ 19 U.S.C. 2571(13) (1995). Aninternational standard is defined as a standardpromulgated by an organization engaged ininternational standards-related activities, themembership of which is open to representatives,whether public or private, of the United States andall members of the World Trade Organization(‘‘WTO’’). 19 U.S.C. 2571(5), (6), and (8) (1995). AWTO member is ‘‘a state or separate customsterritory (within the meaning of Article XII of theWTO Agreement), with respect to which the UnitedStates applies the WTO Agreement. 19 U.S.C.3501(10) (1995).

ISO is, according to the ‘‘foreword’’ sections inseveral ISO standards attached to the SwissFederation comment (232), ‘‘a worldwide federationof national standards bodies. The work of preparingInternational Standards is normally carried outthrough ISO technical committees.’’ ISO is open torepresentatives from the United States and torepresentatives from members of the WTO, andqualifies as an international standards organization.

However, the Trade Agreements Act alsoexplicitly states several reasons why basing astandard on an international standard may not beappropriate, including the prevention of deceptivepractices and fundamental technological problems.19 U.S.C. 2532(2)(B)(i).

118 This is reflected in the current Guides.Watches marked ‘‘gold electroplate’’ should beplated with at least three-fourths one thousandthsof an inch of 10 karat gold (or 750 millionths of aninch) whereas jewelry should be plated with at least7 millionths of an inch of 24 karat gold or theequivalent.

The American Watch Association (236) stated atp.1, that standards for gold plating should besimilar for watches and jewelry because‘‘consumers can be confused when faced withjewelry and watch products subject to entirelydifferent definitions and standards.’’ However,watches may be subjected to more wear than mostjewelry (because they are usually worn daily), and,based on past practice, consumers may expectwatches to have a thicker coating of gold plate thanjewelry. Moreover, there are different ISO standardsfor plated jewelry and plated watches.

119 Other commenters interviewed by Commissionstaff stated that 1⁄2 micron was not very durable[Irving Ornstein from Leach (257); KennethGenender from U.S.W.C. (118)]. Catholyte, (34) p.1(a ‘‘quality’’ product would contain 5 microns).

120 Benrus (22); USWC (118).121 Telephone interview with I. L. Wein,

President, Benrus. Bruce (218), in discussingvermeil (which is gold plate over sterling silver),

stated that one micron of plating would besufficient for some items such as earrings, twomicrons for other such as necklaces, but that anitem like a ring would require three microns.

122 ‘‘Substantial thickness’’ is defined in afootnote which is similar to the present footnote 1in the current Guides.

consumer expectations.116 For thereasons discussed below, theCommission has established a safeharbor for products with a minimumthickness of one half micron of goldcoating.

In developing this safe harbor, theCommission has considered thestandard for gold plated jewelryestablished by the InternationalOrganization for Standardization(‘‘ISO’’): ‘‘ISO International Standard10713 Jewellery [sic]—Gold alloycoatings.’’ 117 This standard sets aminimum thickness of half a micron offine gold (or its equivalent) for bothmechanically plated and electrolyticallyplated gold jewelry.

The Commission also considered theISO standard for gold plated watches,which sets a minimum thickness

standard of 5 microns, and commentssubmitted as to the current standard inthe Watch Guides, to determine asufficiently durable coating of gold forplated jewelry. Watches havehistorically been assumed to besubjected to more wear than otherarticles of jewelry.118 The commentsthat address gold-plated watchesindicate that a one micron thicknessmay be durable. Benrus commented thatthicknesses of up to 1⁄2 micron ‘‘areunsubstantial and wear very quickly’’but that there is ‘‘a new industry‘standard’ of a minimum of 1 micron ofgold plating (40 millionths of an inch)which has substantial durability andreliability and gives years of satisfactoryservice.’’ 119 The U.S. Watch Councilalso noted that the watch industry hasadopted 1 micron of thickness(described as 40 millionths of an inch of23 karat gold) as a standard for goldplating.120 Two commenters interviewedby Commission staff, Benrus and U.S.Watch Council, stated that watches witha one micron coating of gold, if wornevery day, could be expected to lastbetween two and four years.

Because most jewelry gets less wearthan watches, the Commission believesthat the ISO standard of half a micronof fine (24 karat) gold plating for jewelryconstitutes a ‘‘floor’’ of sufficientdurability, so that consumers areunlikely to be misled about thedurability of an item marked ‘‘goldplate.’’ However, the Commissionrecognizes that some commentersindicated that half a micron is not verydurable. Also, certain items of jewelryreceive more wear than others, andsome items, such as rings, mightactually receive more wear (and morefriction with skin) than watches.121

Therefore, to ensure that consumersare not deceived by the implied claimsof durability arising from the term ‘‘goldplate,’’ the ‘‘safe harbor’’ in the revisedGuides (§ 23.4(c)(2)) reflects theCommission’s view that the term ‘‘goldplate’’ is not inherently deceptive orunfair when used for gold applied to anindustry product (excluding watches) byany process so long as the following twoconditions are met: (1) The productcontains a coating of half a micron, or20 millionths of an inch, of fine gold orthe equivalent; and (2) The coating is‘‘of substantial thickness,’’ 122 which foritems that are subject to a great amountof wear, such as rings, should be morethan half a micron of fine gold or theequivalent. This second provisionensures that products that are subject togreater wear should have a coating ofgreater thickness than the minimum halfmicron. Moreover, it ensures thatproducts that are subject to a greatamount of wear in certain areas wouldhave a more substantial coating in thoseareas.

The Commission has indicated thatthe thickness of the gold plating may bemarked in microns on the item itself ifit is followed in close proximity by agold quality mark (e.g., 2 microns 12 K.G. P.). A note following this sectionrecommends that if a product has athicker coating in some areas thanothers, the area of least thickness shouldbe marked. This allows manufacturersto inform consumers of the minimumthickness of the plating, and consumersmay therefore shop for items with moreor less plating depending on their needsand budget.

The ISO standard, in section 5.4,prohibits quality marks on gold plateditems. However, the Commission doesnot believe it is appropriate to includethis portion of the internationalstandard in the revised Guides. Thequality mark in combination with anindication of the thickness of the goldplate, can communicate importantinformation to consumers. The ISOstandard also sets up a system wherebygold plated products can be labeled‘‘A,’’ ‘‘B,’’ or ‘‘C,’’ with A indicatingproducts that have a minimum of 5microns of 14 karat gold (or theequivalent), B indicating a minimum of3 microns of 14 karat gold (or theequivalent), and C indicating a halfmicron of 24 karat gold (or theequivalent). However, American

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123 ISO standard 17013 also provides a similarsystem of marking mechanically plated gold items(e.g., ‘‘A’’ indicates a thickness of 5 microns), basedon the thickness of the gold plate. However, theGuides allow marking of mechanically plated items(e.g., gold-filled or rolled gold plate), based on theweight of the gold in the item. The current systemin the Guides has been used for many years and theISO system of marking may be confusing toconsumers. Thus, the Commission has not includedthe ISO system in the revised Guides. TheCommission believes that omitting the ISO systemof marking mechanically plated gold from theGuides will not pose a barrier to international trade,because manufacturers can mark the product ‘‘goldplate’’ according to the new provisions for goldplated items, discussed above.

124 The JVC petition suggests revising the sectionspertaining to electroplate by substituting the word‘‘electroplate’’ for the word ‘‘plate’’ and‘‘electroplating’’ for ‘‘plating.’’ This revisionclarifies that products coated with gold by a processother than electroplating should not be sold as‘‘gold electroplate.’’

125 Gold Institute (13); Estate (23); Korbelak (27);G&B (30); Handy (62); Newhouse (76); Eisen (91);ArtCarved (155); Bales (156); LaPrad (181); Mark(207); Canada (209); Matthey (213); Bruce (218);WGC (223); MJSA (226); Citizen (228); Sheaffer(249); and Leach (257). Leon Newhouse (76), aformer executive in the watch industry who statedthat he has been retired since 1971, said he was notaware of any new techniques. Handy, Mark,Matthey and MJSA stated the techniques can beadequately dealt with by the existing provisions inthe Guides.

126 Bruce (218) (stating that it produces this typeof jewelry); Bales (156) p.8 (stating that suchjewelry is often sold by weight and that ‘‘[m]anytimes, the manufacturer leaves a measurableamount of residue inside the shell and weighs it,

and actually sells [it] as gold or silver’’); Canada(209) (stating that the problem of foreign substancesleft inside plated articles deserves review). Section23.5(a) of the Guides makes clear that overstatementof the quantity of gold in a product is unfair anddeceptive.

127 Comment 249, p.3; ArtCarved (155) (statingthat ‘‘gold plate’’ should be allowed for allmethods). Two comments, Estate (23) and G&B (30),stated that the method of application should berevealed, but gave no reasons.

128 The JVC proposed this provision to prevent‘‘the occasional expediency, in the manufacturingof finished products, to ‘hot nickel’ or use someother non-precious electroplating over themechanical precious metal surface and then merelyto apply a flash of precious metal electroplating.’’Petition Section 23.5 C(2), Footnote 2. ArtCarved(155) suggested, at p.3, that ‘‘on some surfacesnickel serves as a leveling agent.’’ Korbelak (27)stated, at p.4, that ‘‘nickel is apparently used toprevent corrosion of the unavoidably exposedcopper alloy base of the mechanically coatedstock.’’

129 Fasnacht (4); Gold Institute (13); Estate (23);Korbelak (27); Newhouse (76); Tru-Kay (196);Phillips (204); Mark (207); Matthey (213); Bruce(218); WGC (223); MJSA (226); and Leach (257).Two commenters, G&B (30) and Jabel (47), favoredallowing the insertion of nickel with a disclosure,but G&B noted that there may be a need to ‘‘havea new term.’’

130 Tru-Kay (196) p.1.131 Handy (62); ArtCarved (155); and Sheaffer

(249).132 Mark (207) p.4.133 Id.134 The Commission rendered an advisory opinion

on this issue in 1966, stating that ‘‘a purchaser ofsuch an article would not get the type ofperformance expected from gold filled articlesbecause points of wear would expose the coating ofwhite nickel at a very early stage and theornamental value would be seriously reduced.’’Advisory Opinion, Improper Use of terms such as‘‘gold filled’’ or ‘‘rolled gold plate’’, 69 F.T.C. 1234(1966).

135 The Gold Institute stated, that ‘‘Nickel is arecognized skin irritant,’’ and urged that the use ofnickel in gold jewelry be prohibited. Comment 13,p.2. Several other commenters took this position.However, the fact that nickel is a skin irritant would

Continued

consumers are not familiar with thissystem, and the Commission does notbelieve it is appropriate to include it inthe Guides at this time.123

The safe harbor for ‘‘gold plate’’(§§ 23.4 (b)(4) and (c)(2)) will be inaddition to those already contained inthe Guides. Thus, §§ 23.4 (b)(5) and(c)(3) of the revised Guides indicate thatmechanically plated gold can be called‘‘gold filled,’’ ‘‘rolled gold plate,’’ or‘‘gold overlay.’’ However, itemsmechanically plated with gold also canbe referred to as ‘‘gold plate,’’ inaccordance with the guidance of § 23.4(c)(2) of the revised Guides.Electroplated items can be marked as‘‘gold electroplate’’ or ‘‘GEP,’’ inaccordance with the guidance of§§ 23.4(b)() and (c)(4) of the revisedGuides,124 or as ‘‘gold plate,’’ inaccordance with § 23.4(c)(2).

c. New methods of plating. The FRNsolicited comment on whether newermethods of plating should be includedin the guides and how they should beaddressed. Nineteen commentsaddressed this issue, and of this group,only one commenter stated that he wasunaware of new techniques.125 The mostfrequently mentioned new method was‘‘electroforming,’’ a process in whichgold is deposited over materials that areremoved, leaving a hollow item.126 (If all

of the foreign material is removed, theproduct is not actually plated.) CitizenWatch (228) described a process called‘‘ion plating,’’ and Sheaffer (249)described ‘‘vapor deposition,’’‘‘sputtering,’’ and ‘‘electrolessimmersion.’’ However, Sheaffer statedthat these processes could be handled inthe same basic manner as mechanicalplating and electroplating and notedthat the terms ‘‘plate’’ or ‘‘plated’’should be available to describe productscoated by any of these methods.127 Asdiscussed supra, the Commission hasrevised the Guides to indicate that it isnot misleading to describe an item asgold plate, whatever method is used toapply the gold, so long as it meets thesuggested minimum thickness andfineness standards. The Commissiondoes not have enough information atthis time to provide more detailedguidance regarding the newer methodsof plating.

d. Nickel in gold-filled jewelry. TheFRN solicited comment on whether theGuides should advise against the use ofthe term ‘‘gold-filled’’ to describe aproduct in which nickel is insertedbetween the gold-filled item and asurface coating of gold electroplate. TheFRN also asked if it would be acceptableto permit the insertion of nickel so longas the lessened durability of such anitem is disclosed, and asked what typeof disclosure should be made.128

Most of those who commentedbelieved that jewelry made in this wayshould not be called ‘‘gold-filled.’’ 129

Tru-Kay (which stated that gold-filledjewelry is its major product line) notedthat the insertion of nickel would

adversely affect durability andquality.130 Three comments contendedthat nickel should not lessendurability.131

Mark stated that if a layer of nickel‘‘has covered the basic material, it willshow up as soon as any gold surfacecoloration has worn through* * *.’’ 132

This is particularly important since themetal color would change from yellowto white. Mark also stated that ‘‘[t]ocover the mechanically bonded layer ofgold [with nickel] which is the essenceof the gold-filled product defeats thepurpose of the gold-filled standard tothe consumer.’’ 133

The Commission agrees with theargument of the majority of thecommenters that a thin wash of goldcould wear away and reveal the nickel.Thus, the use of the term ‘‘gold-filled’’to describe such a product does notcomport with § 23.4(b)(5) of the revisedGuides, which states that the productshould contain ‘‘a surface-plating ofgold alloy applied by a mechanicalprocess which is of such thickness andextent of surface coverage thatreasonable durability is assured.’’ TheCommission has concluded that the useof ‘‘gold-filled’’ or other terms todescribe mechanically plated goldcovered with nickel that is washed withgold involves a misleading use of theword ‘‘gold’’ because it does notdisclose that this product has only athin wash of gold over a surface layerof nickel.134 To clarify this point in therevised Guides, the Commission hasadded a provision, § 23.4(b)(6), thatstates that such a product should not bedescribed as ‘‘gold plate’’ or ‘‘gold-filled’’ unless it contains a disclosurethat the primary gold coating is coveredwith a base metal, which is goldwashed. Such a product comports withthe guidance in the current and revisedGuides for ‘‘gold washed’’ or ‘‘goldflashed’’ and, if the seller wished to doso, the seller could so describe it.135

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require the disclosure of its presence in all jewelry,not just rolled gold jewelry. This was not proposedin the FRN and there is not an adequate basis atthis time for adding such a provision.

136 ‘‘Tiffany’s Sterling: History and Status,’’National Jeweler (undated) (attached to Korbelak(22)) (stating that vermeil is a unique product witha ‘‘silver-gold’’ glow, which has been on the marketfor a long time). However, no provisions pertainingto vermeil have ever been included in the JewelryGuides.

137 Fasnacht (4); Gold Institute (13); Korbelak (27);G&B (30); Jabel (47); Handy (62); Newhouse (76);ArtCarved (155); IJA (192); Tru-Kay (196); Mark(207); Canada (209); Bruce (218); Impex (219); MJSA(226); Sheaffer (249); Knight (256) and Leach (257).

138 Newhouse (76) and Impex (219).139 Korbelak (27) p.4 (stating that ‘‘a floor of 100

millionths of an inch was established by the trademany years ago’’); Tru-Kay (196) p.2 (stating thatthe proposed standard was ‘‘quite excessive’’ andnot necessary ‘‘in order to give the consumer aquality product’’); Bruce (218) p.8 (stating that theproposed standard was ‘‘very heavy’’ and noted that‘‘the nature of the product and the wear it issubjected to would be a more appropriate guide forplating thickness’’). Bruce (218) suggested that theproposed standard was appropriate for items suchas rings (which receive a lot of wear) but suggested40 millionths of an inch for earrings and pendantsand 80 millionths of an inch for bracelets and neckchains.

140 MJSA (226) pp.4–5 (stating that the JVCrecommended 120 millionths of an inch simplybecause it is higher than the 100 millionths of aninch required for heavy gold electroplate); G&B (30)p.8 (indicating that the point was simply to setsome standard); ArtCarved (155) p.4 (stating that ‘‘ifvermeil is the standard word used for 120millionths of an inch, this would be okay’’); Canada(209) p.4 (noting that it has a quality mark forvermeil but has yet to establish a minimumstandard for plating).

141 Comment 226, pp.4–5.

142 ‘‘Jewelers’ Dictionary’’ 253 (3d ed. 1976).143 The JVC recommended the addition of a note

that states that a diffusion barrier (typically ofnickel) may be electrolytically applied, in athickness of no more than 50/1,000,000ths of aninch, under the layer of gold.

144 The comments indicate that the sterling silverbase is part of the common understanding of theterm ‘‘vermeil.’’

145 See also Advisory Opinion, Impropriety ofdescription ‘‘14K’’ for item not entirely gold, 69F.T.C. 1212 (1966) (stating that an earring post witha 14K gold base, electroplated with copper, nickeland then karat gold, could not be described as 14karat gold, because it would ‘‘contains substantialelectroplatings of base metals’’).

146 Franklin Mint (250) p.4 (objecting to theproposal and stating that their own tarnish testingindicates the need for a barrier of 150/1,000,000thsof an inch).

e. Provisions relating to vermeil.Vermeil, a product made of sterlingsilver with a coating of gold, is a specialform of gold plate.136 The JVC proposedincluding provisions for vermeil in theGuides and the FRN solicited commenton whether a recommended minimumplating of 120 millionths of an inch offine gold, or its equivalent, over sterling,was appropriate.

Eighteen comments addressed thisissue.137 Two comments stated theproposed standard was not appropriate;one offered no reason and the otherstated that the standard should be up tothe manufacturers.138 Three commentsstated that the proposed standard wasthicker than necessary.139 Othercommenters offered various opinions onthe proposed standard.140 Most of theother comments simply said theproposed standard was appropriate butoffered no reasons.

MJSA supported the proposedstandard stating that it ‘‘assures anextremely high level of durability andlow porosity.’’ However, MJSA statedthat ‘‘it is possible to establish a highlydurable coating of gold over silver atsubstantially lesser thicknesses,’’ andnoted that many manufacturerscurrently produce such a product.141 In

the Jeweler’s Dictionary, modern usageof ‘‘vermeil’’ is defined as ‘‘Heavy goldelectroplate over sterling silver * * * ora substantial layer of karat goldmechanically applied over sterlingsilver.’’ 142 The current Guides identifythe minimum thickness for heavy goldelectroplate as the equivalent to 100/1,000,000ths of an inch of fine gold.

The JVC petition indicates thatvermeil is susceptible to discoloration,presumably because the silver mighttarnish.143 Because gold itself deterstarnishing, the thicker the coating ofgold, the less likely the underlyingsilver will tarnish. However, Korbelak(27) p.4, stated that ‘‘gold coatings arepermeated by sulfides in the averageatmosphere up to thicknesses of 10microns (0.0004 inch).’’ Thus, even agold coating of 120 millionths of an inch(or 0.00012 inch), or about 3 micronswould not completely solve thisproblem.

The Commission believes it isappropriate to reference a numericalthickness in the Guides whenconsumers have come to expect certainqualities from products described by theterm and products below the standardwould not have such qualities. Thecomments indicate that there are itemssold as ‘‘vermeil’’ that have the qualitiesconsumers associate with ‘‘vermeil,’’and that have a gold coating of less than120 millionths of an inch. Furthermore,the definition of vermeil in the Jeweler’sDictionary is consistent with Korbelak’scomment (27) that many years ago, thetrade established a floor of 100millionths of an inch for vermeil.Therefore, the Commission hasconcluded that a thickness of 100millionths of an inch, or 2.5 microns, offine gold is an appropriate thickness‘‘floor’’ for vermeil.

Because there may be items currentlysold as ‘‘vermeil’’ that do not comportwith the generally accepted meaning(i.e., gold over silver), the Commissionhas added a general provision statingthat it would be unfair or deceptive todescribe an article as ‘‘vermeil’’ if itmisrepresents the product’s truecomposition. The Commission has alsoadded a section, 23.5(b), which providesguidance on when a product may bedescribed as ‘‘vermeil.’’ This sectionstates that a product may be describedas ‘‘vermeil,’’ ‘‘if it consists of a base of

sterling silver,144 coated or plated on allsignificant surfaces, with gold or goldalloy of not less than 10 karat fineness,which is of substantial thickness and aminimum thickness throughout whichis equivalent to two and one half (21⁄2)microns (or approximately 100/1,000,000ths of an inch) of fine gold.’’As with other gold-plated items(covered in § 23.4 of the revisedGuides), ‘‘substantial thickness’’ isdefined in a footnote which is similar tothe present footnote 1 in the currentGuides.

With respect to the problem of thetarnishing of the silver base, the JVCrecommended the addition of a noteallowing a nickel barrier. However, thenickel is placed over the silver base, andit is the silver that distinguishes vermeilfrom other gold plated items. Moreover,vermeil is by definition composedcompletely of precious metal alloys.145

Although the note indicates that thepurpose of the ‘‘diffusion barrier’’ is toprevent premature discoloration, therewas no discussion of the effect a‘‘diffusion barrier’’ over the silver wouldhave on the unique coloration ofvermeil. Moreover, no explanation wasoffered for limiting the thickness of thebarrier to 50/1,000,000ths of an inch.146

Although there may be a need for sucha barrier, in the absence of adequateinformation on this issue (includingwhether it changes the appearance ofthe product in a manner that would beobjectionable to consumers), theCommission has determined not to addthis note to the Guides. Instead, theCommission has added a Note whichstates that such a product should not bedescribed as vermeil unless there is adisclosure that the sterling silver iscovered with a base metal, which isgold-plated.

The JVC petition suggested severalother qualifications of the use of‘‘vermeil’’ that the Commission has notincluded in the revised Guides. Thepetition suggested that the applicationof the gold must be either by mechanicalbonding or electroplating. However,comments have indicated that somenew methods of application have beendeveloped, and no reasons were offered

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147 Franklin (250), at p.4, objected to theexclusion of ‘‘alternative descriptions and markings. . . such as ‘sterling silver electroplated with 24 kt.gold’’ and noted that ‘‘no evidence has beenproduced that such designations would mislead thepublic.’’ The Commission believes that alternativetruthful descriptions of a vermeil product (e.g.,sterling silver electroplated with 24 kt. gold) areacceptable.

148 Franklin (250) commented at p.5, that thepresumption implicit in allowing sterling to beabbreviated on other products ‘‘is that buyers of theother products named therein for which ‘ster.’ is anacceptable usage understand its meaning; it defieslogic to assume that the term ‘ster.’ is notrecognized and understood by the hollowware andflatware buying public.’’

149 The Watch Band Guides differ from theJewelry Guides in that they state that when anindustry product is marked as ‘‘silver plate’’ allsignificant surfaces ‘‘shall have a plating or coatingof silver of a high degree of fineness and suchplating or coating shall be of substantial thickness.’’16 CFR 19.2(b) (emphasis added). The JewelryGuides simply state that such a product shouldcontain a ‘‘plating or coating of silver which is ofsubstantial thickness.’’ The Jewelry Guides statethat ‘‘silver’’ means sterling silver (i.e., unlessqualified by the word ‘‘coin’’). Thus, the JewelryGuides appear to limit the use of ‘‘silver plate’’ tosterling silver plate, whereas the Watch BandGuides appear to allow coin silver to be used onan item marked ‘‘silver plate.’’ Because no oneobjected to the current provision in the JewelryGuides, the Commission has retained the provisionas it appears in the Jewelry Guides for both jewelryand detachable watch bands.

150 Gold Institute (13); Korbelak (27); G&B (30);Handy (62); Newhouse (76); ArtCarved (155); Bales(156); Phillips (204); Canada (209); Bruce (218);MJSA (226); Sheaffer (249); and Leach (257). Theone dissenter was the JCWA (216), which stated atp.3 that ‘‘there is insufficient data to determine an‘acceptable’ thickness of silver plating, and becauserelated ISO standards have not been established, itis difficult to determine the durability of specificlevels of silver plating. Therefore, it is not practicalto define ‘durability’ in numerical terms. Theexisting definition is appropriate.’’

151 G&B (30); Handy (62); Canada (209); andMJSA (226).

152 Sheaffer (249) p.4; Korbelak (27) p.4.153 Comment 13, pp.2–3.154 There is no ISO standard for silverplate.

for excluding those methods. (See infrafor a discussion of these comments.)The JVC also proposed that a vermeilindustry product only be represented bythe word ‘Vermeil’ standing alone,147

and proposed prohibiting use of thewords ‘‘gold’’ or ‘‘silver’’ to modify‘‘vermeil.’’ However, no reasons wereoffered as to why the terms ‘‘goldvermeil’’ or ‘‘silver vermeil’’ would bedeceptive. The use of the terms ‘‘gold’’and ‘‘silver’’ are covered by othersections of the revised Guides, and theCommission believes these sections areadequate to prevent the deceptive use ofthese terms in connection with vermeil.

Finally, the JVC suggested including arequirement that when ‘‘vermeil’’ isused as a quality mark, it must beaccompanied by the name or trademarkof the manufacturer or importeraccording to the provisions of theNational Stamping Act. The NationalStamping Act creates such arequirement for any quality markindicating the presence of gold or silver.Thus, the requirements of the Act mayapply to a ‘‘vermeil’’ quality mark.However, there is currently a Note inthe Guides, following the sectiondealing with quality marks, referring tothe requirements of the NationalStamping Act. Instead of creating asecond note, the Commission has added‘‘vermeil’’ to the list of quality marks inthat Note (and in § 23.9 of the revisedGuides).

3. Misrepresentation as to SilverContent: § 23.6

Section 23.6(a) of the current Guidescautions against misrepresenting thesilver content in any industry product.The JVC proposed adding theabbreviation ‘‘Ster.’’ to § 23.6(b) of theGuides, which states that the use of theterms ‘‘silver,’’ ‘‘solid silver,’’‘‘Sterling,’’ or ‘‘Sterling Silver’’ isdeceptive unless the product is 925/1000ths pure silver. Because consumersare likely to believe this term stands for‘‘Sterling,’’ the Commission has addedthe abbreviation ‘‘Ster.’’ to this section.

The JVC proposed stating thatabbreviating the term ‘‘Sterling’’ was notallowed when used to describehollowware or flatware. No reason wasoffered for prohibiting this practice, andthe Commission has no reason toconclude that this practice is inherently

unfair or deceptive.148 The JVC alsoproposed stating that ‘‘Sterling’’ or‘‘Ster.’’ was not allowed to be applied toa silverplated article. This proposedaddition to § 23.6(b) essentially restates§ 23.6(d) of the current Guides, whichstates that it is unfair to apply the terms‘‘Sterling’’ or ‘‘Coin’’ to any silver-platedarticle or the plating thereon. In fact, theNational Stamping Act states thatsilverplated articles shall not ‘‘bestamped, branded, engraved orimprinted with the word ‘sterling’ or theword ‘coin,’ either alone or inconjunction with other words ormarks.’’ 15 U.S.C. 297(a). However, theCommission has determined that§ 23.6(d) of the current Guides mayunnecessarily inhibit the use inadvertising of phrases such as ‘‘sterlingsilver plated’’ or ‘‘coin silver plated.’’Thus, the Commission has deleted§ 23.6(d) and has added a Note referringto the requirements of the NationalStamping Act.

Section 23.6(c) states that the use of‘‘coin’’ is deceptive unless the productis at least 900/1000ths pure silver. TheJVC proposed adding a prohibitionagainst abbreviating the term ‘‘coin.’’There is no evidence that ‘‘coin’’ isbeing abbreviated or, if it were, that itwould be misleading to consumers.Accordingly, the Commission has notadopted this proposal.

a. Silverplate. Section 23.6(e) of thecurrent Guides state that it is an unfairtrade practice to represent an industryproduct as plated with silver unless allsignificant surfaces are coated withsilver ‘‘which is of substantialthickness.’’ 149 The JVC proposedcontinuing the use of the ‘‘substantialthickness’’ standard but adding afootnote stating this means thickness

sufficient to assure durable coverage ofthe base metal. (The current Guidescontain such a footnote in § 23.5(c)(2)with respect to gold-filled items.) TheFRN solicited comment on whether thisaddition should be made or whether thethickness should be definednumerically.

All but one of the 16 pertinentcomments indicated that giving anumerical value to ‘‘substantialthickness’’ would be desirable.150

However, four of these suggested thatadditional data were needed.151

Moreover, only a few made specificrecommendations. Sheaffer noted that itwas ‘‘not aware of any problemsresulting from the current definition of‘substantial thickness’’’ but neverthelessproposed a coating five microns (200millionths of an inch) thick. Mr.Korbelak suggested 500 millionths of aninch where it is functionallynecessary.152

The Gold Institute made detailedrecommendations, but only for silverplated flatware and hollowware.153

However, without more evidence of theneed for, and desirability of, theseparticular standards, the Commissiondoes not believe it is appropriate toadopt specific standards for flatwareand hollowware. Moreover, the amountof wear received by jewelry is differentfrom the amount of wear received byflatware and hollowware. Therefore, theproposed standards for flatware may notbe appropriate for jewelry. Indeed, theamount of wear received by differentkinds of jewelry varies greatly (e.g.,earrings as compared to bracelets) andmanufacturers may need flexibility inany silver plate standard for jewelry.

Based on the comments, theCommission does not believe that thereis currently a consensus in the industryas to what would constitute anappropriate minimum numericalthickness for the purpose of identifyinga safe harbor for the term silverplate.154

However, the Commission has added anote to § 23.6(e) to provide someguidance to the industry regarding‘‘substantial thickness’’ in connection

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155 Rhodium, a member of the platinum groupmetals, is very hard.

156 Comment 13, p.2.

157 Comment 250, p.5.158 Footnote 2 in the current Guides references

former Commercial Standard CS 51–35 (‘‘Markingof Articles Made of Silver in Combination withGold’’) but only to note that it sets out exemptionsfrom an assay in quality. See discussion, infra,regarding Commercial Standards generally.

159 The VPS provides that articles where the goldand silver are visually indistinguishable (e.g., wherethe gold covers the entire article, or where whitegold is combined with silver) may be marked, e.g.,‘‘Sterling and 1⁄5 10 K,’’ where the fractionrepresents the proportion of the weight of thealloyed gold to the weight of the entire metal in thearticle. It also provides that the karat mark can onlybe used if the gold alloy is 1⁄20 of the weight of theentire metal in the article. For articles where thegold and silver are visually distinguishable, thekarat mark must always follow the Sterling mark,e.g., ‘‘Sterling and 10 K,’’ and there is norequirement that the proportion of the weight of thealloyed gold to the weight of the entire metal in thearticle be disclosed. The JVC also proposed thatarticles so marked must not contain any metal otherthan Sterling silver and 10 karat or better gold.

160 In an advisory opinion, Marking of jewelryproduced from a 14 karat gold sheet laminatedupon sterling, 89 F.T.C. 651 (1977), the Commissionstated that the mark ‘‘Sterling and 14K’’ wasdeceptive as applied to an article in which a 14Kgold sheet was laminated on sterling, and the goldconstituted at least 5% of the weight of the article.The Commission noted that the different metalswere visually distinguishable ‘‘but casualinspection cannot determine the relative thicknessof the gold layer and the silver.’’ Id. at 651. TheCommission stated that the suggested markings‘‘could suggest to consumers that the amount ofgold and silver. . . are approximately equal or, atleast, would suggest more than five percent 14Kgold.’’ Id.

In an advisory opinion involving two visuallyindistinguishable metals, Marking of 18 karat whitegold ring with platinum baguette prongs, 74 F.T.C.1686 (1968), the Commission stated that a whitegold ring with platinum baguettes could not bemarked ‘‘18K—10% Plat.’’ The Commissionreasoned that ‘‘the consumer might conclude thatall of the prongs, including those for the centerstone, are of platinum composition. Under thesecircumstances, it is not enough to merely say thatthe ring contains 10% platinum and 90% goldwithout disclosing the true composition of thevarious parts of the ring.’’ Id. The Commissionsuggested that the ring could be marked ‘‘18K-baguette prongs Plat.’’

with the use of the term silverplate. Thisnote is similar to footnote 1 in thecurrent Guides, which annotates the useof the phrase ‘‘substantial thickness’’ inconnection with ‘‘gold plate.’’

Finally, the JVC recommended addinga section to the Guides that would allowitems with an inner core of base metalto be referred to as sterling or coin(instead of silverplate) as long as theitem as a whole contained 925 or 900parts silver per thousand. A literalreading of the sections of the currentGuides pertaining to sterling and coin[§§ 23.6 (b) and (c)] indicates that thispractice is not currently perceived asmisleading. However, the actualpractice in most of the industry is onlyto label an item sterling if it is a uniformmixture throughout of 92.5% silver anda base metal (or, for coin, 90% silverand the rest base metal). Without moreinformation as to consumer beliefs, theCommission is not adopting thisspecific provision at this time.

b. Diffusion barrier on sterling silver.The JVC recommended adding a note tothe Guides that states that a diffusionbarrier (typically of nickel) may beelectrolytically applied, in a thicknessof no more than 50/1,000,000ths of aninch, under a layer of rhodium, to deterpremature tarnishing on sterling silverproducts.155

Although this note refers to ‘‘sterlingsilver products,’’ it follows the sectionon silver plate, and it is unclear whetherthis note is meant to apply to sterlingsilver products or silver plated productsor both. In either event, the describedproduct would have no silver on thesurface, and thus, strictly speaking, itwould not fall within the definitions inthe Guides of either sterling silver orsilver plate. John Lutley, ExecutiveDirector of the Silver Institute andPresident of the Gold Institute, stated,‘‘[s]ome jewelry manufacturers platepure silver over a nickel flash onsterling silver to achieve a mirror finishand reduce the rate of tarnishing.’’ 156

This may be the practice the note wasdesigned to address. However, in theabsence of adequate information on thisissue (e.g., how such products aredescribed to consumers), theCommission has not included this Notein the revised Guides.

c. Quality marks. The JVC proposedadding three subsections dealing withquality marks. Two subsections [23.6Section I(g) and I(h) in the JVC petition]reiterate the general provisionsconcerning the use of the terms‘‘Sterling,’’ ‘‘Ster,’’ ‘‘Sterling Silver,’’

‘‘Silver,’’ or ‘‘Solid Silver’’ and ‘‘Coin’’or ‘‘Coin Silver,’’ set out in subsections(a), (b), and (c) of the silver section.Therefore, the Commission is notrestating these provisions in anothersection.

The third proposed section dealingwith quality marks [section 23.6 SectionI (i) of the JVC petition] states that noquality marks shall be used ‘‘other thanthose herein specified.’’ The FranklinMint commented that this ‘‘inexplicablyprohibits use of such universallyrecognized numerical terms as ‘.925’ inconjunction with other applicablequality marks such as ‘ster.’ or‘sterling.’ ’’ 157 The Commission does notbelieve that a marking such as ‘‘.925ster.’’ is inherently deceptive, and is notincluding this proposal in the Guides.

d. Tolerances and exemptions fortesting purposes. Footnote 2 of thecurrent Guides notes that the tolerancesof the National Stamping Act areapplicable to claims made with respectto silver content. The JVC suggestedreorganizing this information, and theCommission believes that this changewill be helpful to industry memberswho are using the Guides. Footnote 2 ofthe current Guides also refers to theexemptions recognized in an assay forquality (to determine the amount of finesilver in the item which is assayed),which are taken from CommercialStandard CS 118–44 [Marking of Jewelryand Novelties of Silver] and CommercialStandard CS 51–35 [Marking ArticlesMade of Silver in Combination withGold]. The JVC suggested identifyingthese exemptions in an additionalsubsection. Because the exemptionsapply to both silver and gold, andbecause the lists of exemptions distractfrom the main points of the text of theGuides, the Commission has includedthis information as an appendix to theGuides. A Note following the silversection refers to the Appendix. 4.Marking of Articles Made of Silver inCombination With Gold

The current Guides do not contain aseparate section addressing howproducts which are a combination ofsilver and gold can be nondeceptivelydescribed. The JVC proposed includingin the Guides most of the text ofVoluntary Product Standard PS 68–76,‘‘Marking of Articles Made of Silver inCombination with Gold.’’ 158 Theproposed section defines the covered

products as sterling silver incombination with gold.159

The JVC’s proposals, at least in thecase of products with distinguishablecomponents, result in markings that theCommission has already identified asdeceptive.160 However, claims as tosilver content are covered by the silversection and claims as to gold content arecovered by the gold section.Furthermore, the marking of articleswhich are a combination of silver andgold is adequately addressed by§ 23.8(a) of the current Guides. Thatsection provides that it is unfair to placea quality mark on a product when themark would deceive purchasers as tothe metallic composition of the productor any part thereof. Moreover,subsection (a)(2) notes that, when aquality mark applies to one part of aproduct but not another part of a similarappearance, it should be accompaniedby an identification of the part to whichit applies. The JVC offered no evidenceregarding why additional guidance onthese issues was needed or that anycombination gold and silver products

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161 The Franklin Mint (250) stated at p.4, thatthere is no evidence that a gold karat mark ismisleading on a gold and silver item when the goldconstitutes less than 1⁄20 of the total metal weight.Moreover, it also noted that the JVC did not proposeany such prohibition for vermeil products, ‘‘whichare but another form of gold and silver item. . . .’’

162 Nowlin (109); LaPrad (181); Sheaffer (249); andLeach (258).

163 NACSM (219) p.7; Bales (156) p.9.164 Christopher R. Mellott, counsel for the Pewter

Guild, compiles voluntary statistical reports fromsamplings of pewter manufacturers and, over theperiod from 1983 to 1990, found a six-fold increasein the value at wholesale of pewter jewelry sales.

165 Comment 86, p.1.166 Comment 89 (also stating that pewter has been

defined as containing 90% tin in the Guild’s By-Laws since their adoption in 1976).

167 Stieff (25); Empire (44); Woodbury (64); Lance(84); Web (85); Salisbury (86); Fischer (87); Seagull(111 and 120); Universal (178); and Heritage (215).Other comments favoring the proposed standard forpewter are: Fasnacht (4); Estate (23); G&B (30); Jabel(47); Bales (156); Canada (209); Bruce (218); MJSA(226); and Preston (229).

168 The Watch Band Guides differ from theJewelry Guides with respect to quality marks in thatthey list the words duragold, diragold, noblegold,and goldine as quality marks in § 19.2(g). However,the Jewelry Guides, in a Note following § 23.8 onquality marks, reach the same practices by statingthat quality marks ‘‘include those in which thewords or terms ‘gold,’ ‘karat,’ ‘silver,’ ‘platinum,’ (orplatinum related metals), or their abbreviations, areincluded, either separately or as suffixes, prefixes,or syllables.’’ The Commission has added thissentence of this Note to the introductory paragraphof this section in the revised Guides (§ 23.9). TheCommission does not believe it is necessary to addthe words duragold, diragold, noblegold, andgoldine to the examples of quality marks listed incurrent § 23.8.

169 This is consistent with the references to suchmarks in the National Stamping Act, which appliesto articles ‘‘having stamped, branded, engraved, orprinted thereon, or upon any tag, card, or labelattached thereto, or upon any box, package, cover,or wrapper in which said article is incased orinclosed, any mark or word indicating or designedor intended to indicate’’ the degree of fineness ofthe gold or silver in the article. 15 U.S.C. 294. Aquality mark does not have to be placed on aproduct, but, if it is, it must be accurate within thetolerances prescribed by the National Stamping Act.15 U.S.C. 294–296. The National Stamping Act goesbeyond embossing quality marks on products tothings surrounding the product (e.g., labels,wrappers), but not as far as bills, advertisements,etc., as the JVC proposes for the Guides.

were being marketed in a manner thatdeceived consumers as to their metalliccontent.161

Finally, the JVC’s proposal to permitquality marks only for sterling and golditems is unduly restrictive. For example,an article made of coin silver combinedwith gold could not contain a qualitymark under the JVC proposal, nor couldan article which contains any metalother than sterling silver or gold. For allthese reasons, the Commission has notincluded in the Guides, the proposedprovisions relating to articles made ofsilver in combination with gold.

5. Platinum: § 23.7Section 23.7 of the current Guides

states that it is an unfair trade practiceto use the words ‘‘platinum,’’ ‘‘iridium,’’‘‘palladium,’’ ‘‘ruthenium,’’ ‘‘rhodium,’’or ‘‘osmium,’’ or any abbreviationsthereof, in a way likely to deceivepurchasers as to the true composition ofthe product. The JVC and a number ofcommenters proposed changes to thissection. However, the Commissionrecently received a request for anadvisory opinion from the JVC andPlatinum Guild International formarkings of platinum products. Thisrequest indicated that members of theplatinum industry are interested insimplifying current Commissionguidance regarding platinumdescriptions and bringing this guidanceinto closer accord with internationalstandards. The comments submitted inresponse to the FRN do not addresssome of these issues. Therefore, theCommission has decided that it wouldbe beneficial to solicit additionalcomment from the entire industry onmarkings and descriptions of platinumproducts before making any changes inthis section. A request for comment onthese issues will be published in aseparate Federal Register notice.

6. PewterThe current Guides do not pertain to

products made from pewter. The JVCrecommended including a section onpewter and the FRN solicited commenton whether the guides should include aprovision, and whether the standard ofany alloy consisting of at least 900 partsper thousand Grade A Tin isappropriate.

Thirty comments addressed this issue,and most thought pewter should beincluded in the Guides and that the

proposed standard was appropriate.Four opposed the change, stating thatthe Guides should only addressprecious metals.162 One comment statedthat there was no apparent need forregulation of pewter but another statedthat there are ‘‘many companies that areabusing the representation of pewterproducts.’’ 163

It appears that pewter has beenincreasingly utilized in costume orfashion jewelry. Nellie Fischer of theAmerican Pewter Guild advised staff ina telephone interview that over the pastfive years her company’s sales of pewterjewelry to the trade have increased by40 percent.164 Pewter jewelry and otherpewter products are sold by at leastsome of the same entities that sell otherproducts covered by the current Guides.The Commission has concluded thatinclusion of a provision for pewter mayprevent misrepresentations.

With respect to the proposedstandard, Salisbury Pewter stated that‘‘a 90% tin requirement is justified bythe metallurgical restraints for strengthand hardness.’’ 165 The American PewterGuild, a trade association, attached a listof historical references to pewter whichindicate that pewter has virtuallyalways had a tin content of at least90%.166 Ten pewter producers alsosupported the proposed standard.167

Because pewter has historicallycontained at least 90% tin, consumerspresumably expect pewter to have thequalities that are associated with analloy containing at least 90% tin. Thus,the Commission has included a sectionon pewter in the Guides. Section 23.8(a)states that it is unfair and deceptive todescribe a product as ‘‘pewter’’ if thedescription misrepresents the product’strue composition. Section 23.8(b) statesthat a product may be described as‘‘pewter’’ if it contains at least 90% tin,with the remainder composed of metalsappropriate for use in pewter.

7. Additional Guidance Relating toQuality Marks: § 23.8

The JVC proposed several changes in§ 23.8 of the current Guides. Theintroductory paragraph of this sectiondefines ‘‘quality mark’’ and givesspecific examples of words (e.g., ‘‘gold,’’‘‘karat,’’ ‘‘silver,’’ etc.) that areconsidered to be quality marks. (Asnoted previously, the Commission hasadded the word ‘‘vermeil’’ to this list ofwords that constitute quality marks.) 168

Part (a) of this section addresses theuse of quality marks on articles that aremade from more than one metal. TheJVC suggested that the title be changedfrom ‘‘Deception as to applicability ofmarks’’ to ‘‘Deception as to applicationof marks’’ and that a definition ofapplication be added. The definition ofapplication suggested by the JVCincludes bills, invoices, orders,statements, letters, and advertisements.However, this definition isinappropriate in the context of part (a)of this section, which is limited todeception in the use of quality marks,which do not encompass bills, invoices,etc. The term ‘‘quality mark’’ is definedas a mark ‘‘which has been stamped,embossed, inscribed, or otherwiseplaced, on any industry product andwhich indicates or suggests that suchproduct is composed throughout of anyprecious metal or any alloy thereof orhas a surface or surfaces on which therehas been plated or deposited anyprecious metal or any alloy thereof.’’ 169

Section 23.8 contains specific guidancefor marks on the products themselves

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170 There is no requirement that there be a qualitymark; however, it may be deceptive to place anillegible mark on a product, because consumersmight interpret such a mark to mean the productis of higher quality than it actually is.

171 The Watch Band Guides differ from theJewelry Guides in their treatment of quality marksin two respects (in addition to that discussed innote , supra). Section 19.2(g)(3) of the Watch BandGuides, dealing with the marking of watch bandscomposed of two metals of similar appearance, isadequately addressed by § 23.8(a) of the currentJewelry Guides, discussed above. Section 19.2(g)(1)of the Watch Band Guides provides that if a qualitymark is concealed by packaging, it should appearon the outside of the packaging if the failure to sodisplay it would deceive consumers. The JewelryGuides do not require that products contain qualitymarks and, thus, do not require that a quality markbe visible in spite of packaging. The Commissionbelieves it is neither unfair nor deceptive to fail toinclude a quality mark; hence, it is neither unfairnor deceptive to allow packaging to conceal aquality mark. Thus, the Commission has notincluded this provision in the revised Guides.

172 The Guides contain no exemptions forproducts which are never assayed. This includesproducts made of gold or silver electroplate. (Sucharticles are not sold with the representation thatthey contain a specific percent by weight ofprecious metal.)

173 The current Guides use the Appendix to listand classify the Guides. The JVC proposed placingthis material first as a Table of Contents. TheCommission believes that the existing list of sectionnumbers and titles in the table of contents issufficient and has omitted this classification fromthe revised Guides.

174 In addition, because the revised Guides coveritems other than jewelry, the exemptions are statedas applying to industry products, not to jewelryindustry products.

The JVC proposed exemptions from assay foroptical products, which are based on the VPS, withsome additions. There were no comments opposingthis proposal, and the Commission has includedthis list of exemptions for optical products in theGuides.

175 Comment 196, p.2.

176 Id.177 Id.178 Silver is relatively soft. Hence, it is logical for

the exemptions for gold-filled items to apply alsoto silver items.

179 Comment 88, p.1.180 Footnote 2 to current Guides.181 Comment 218, p.3.

(or attached thereto). Other sections ofthe Guides apply to claims made inbills, invoices, orders, statements,letters, and advertisements. Thus, theCommission has not included theproposed definition of application inthe Guides.

Part (b) of this section addressesdeception by reason of the difference inthe size of letters or words in qualitymarks (e.g., GOLD electroplate). A Notefollowing this section, entitled‘‘Legibility of markings,’’ recommendsthat quality marks be of sufficient sizeto be legible and be so placed as to belikely to be observed. The JVC has notsuggested any changes to this section, orto the Note following it. TheCommission agrees that the portion ofthe Note pertaining to legibility shouldremain unchanged.170 However, thesecond sentence of the Note implies thatquality marks should normally beengraved on products and that tag orlabels can only be used when ‘‘suchmarking cannot be achieved withoutinjury to the appearance of theproduct.’’ The National Stamping Actindicates that quality marks can beapplied by means of tags or labels,regardless of whether engraving woulddamage the product. The Commissionhas therefore modified this Note toclarify the fact that if a quality mark isused, it may be either engraved on theproduct or placed on a tag or label.

The second Note following thissection currently states that it is theconsensus of the members of theindustry that quality marks on suchitems should be accompanied byidentification of the manufacturer,processor, or distributor. TheCommission has changed this Note toreference the requirements foridentification contained in the NationalStamping Act.171

8. Exemptions From AssaySome functional parts of gold alloy,

gold-filled, silver and platinum itemsmay need to be made of other sturdiermetals to function properly, and thus,are exempt from any assay for quality.(An assay is a test made to determinethe quantity of precious metal in aproduct compared to the weight of thewhole product.) The current Guidesinclude the exemptions for these partsthat are set out in the various VoluntaryProduct Standards. Since trade practicefor many years has been to make suchparts of base metals, it is unlikely thatconsumers would expect them to bemade of precious metal; hence, a claimthat an item was silver would not bedeceptive because the screws and rivetswere made of base metal.

The current Guides list theexemptions for gold and gold-filleditems in section 23.5(e) and (f) and forsilver and for silver in combination withgold, in footnote 2.172 However, theCommission believes that detailedlistings of the exemptions need notappear in the body of the Guides andhas included the list of exemptions forall covered metal products in anAppendix.173

The list includes all exemptions fromthe current Guides and, based on thecomments, includes some additions.174

Tru-Kay stated that there is a significantinconsistency in the Guides between theexemptions recognized in themanufacture of gold-filled jewelry andthose which are exempted in themanufacture of silver jewelry. Tru-Kaystated that ‘‘industry trade practice overmany years has been to apply theexemptions as listed for gold-filled toboth gold-filled and sterling silver,’’because the same reasons that certainparts are exempt in gold-filled jewelryare also applicable in silver jewelry.175

Tru-Kay explained that when the

exemptions were first written, ‘‘manyarticles that were being produced ingold-filled, were not at that time beingproduced in sterling silver.’’ 176 Sincethis is no longer the case, Tru-Kay urgedthat ‘‘these exemptions be standardizedin a consistent manner.’’ 177 TheCommission agrees with this proposaland has expanded the list of exemptionsfor silver items to include allexemptions listed for gold-filleditems.178

General Findings, which makes smallfunctional components of jewelry,suggested that there should be twoadditions to the gold exemptions.179

First, it suggested the exemptions forkarat gold jewelry include ‘‘metallicparts completely encased in nonmetalliccovering.’’ This would include base-metal pegs used in gluing pearls orstones to the findings. (According toGeneral Findings, ‘‘the pegs arecompletely encased within the stone orpearl.’’) The current Guides exempt‘‘metallic parts completely encased innonmetallic covering’’ when they areincluded in articles made of silver incombination with gold.180 On the basisof the comment, the Commission hasdetermined that such parts should beadded to the list of exemptions for goldalloy jewelry (and to the list ofexemptions for silver items, under therationale advanced by Tru-Kay). Thesecond suggestion was that ‘‘braceletand necklace snap tongues, i.e., clasps’’(sometimes referred to as springs)should be added to the exemptions forrolled gold plate jewelry. Bracelet andnecklace snap tongues are already anexemption for articles made ofplatinum, and the Commission hasadded this to the list of exemptions forrolled gold plate jewelry (and to the listof exemptions for silver items).

Donald Bruce also suggested that themechanical parts of lockets be added tothe lists of exemptions for silver andgold alloy jewelry. These are already inthe list of exemptions for gold-filledjewelry (which exempt ‘‘field pieces andbezels for lockets’’), and Bruce statedthat ‘‘the trade practice has interpretedthis for Silver and Gold as well’’because a base metal hinged frame‘‘offers stability and strength to themoving parts.’’ 181 Adding these to thelist of exemptions for silver is logicalbecause silver is relatively soft. Gold

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182 As a result, the list of exemptions in thecurrent Guides is much shorter for gold items thanfor silver items.

183 The following were added to each list ofexemptions: (1) karat gold: metallic partscompletely and permanently encased in anonmetallic covering, and field pieces and bezelsfor lockets; (2) gold-filled: bracelet and necklacesnap tongues; (3) silver: field pieces and bezels forlockets; bracelet and necklace snap tongues; anyother joints, catches, or screws; metallic partscompletely and permanently encased in anonmetallic covering. There were no additions tothe exemptions for silver in combination with goldor for platinum.

184 AGTA (49) p.15 (commenting that eitherinformation should be added to the proposed JVCdefinition or the last sentence of that definition andthe following Note should ‘‘be struck,’’ adding that‘‘AGTA prefers that both be struck from theguides’’); NACSM (219) pp.25–26 (stating that theproposed addition to the definition is ‘‘not animprovement on the clarity of the mandates of thelaw’’).

185 Comment 244, p.2.

186 King (11); Estate (23); Lannyte (65); GIA (81);Bales (156); NACSM (219); and Best (225).

187 JMC (1); Fasnacht (4); Sibbing (5); Thorpe (7);Honora (14) and (15) p.1 (stating that if diamondscan be called perfect, ‘‘it would open vastopportunities for deceptive advertising and manyconsumers would be hurt’’); Argo (17); AGS (18) p.3(favoring the prohibition because ‘‘[t]he potentialfor misuse is too great’’); Capital (19); Estate (23);G&B (30); Jabel (47); Schwartz (52); Skalet (61);Eisen (91); Nowlin (109); McGee (112); ArtCarved(155); Bridge (163) p.2 (stating that ‘‘perfect’’ shouldnot be allowed because relatively few diamonds‘‘meet all these very high standards’’); LaPrad (181);IJA (192); Phillips (204); Bedford (210); Matthey(213); Bruce (218); MJSA (226); Preston (229);Limon (235); Leach (258); and Solid Gold (261).

188 Indeed, many consumers may regard the wordas ‘‘mere puffing.’’ One comment noted, ‘‘‘Perfect’pertaining to anything is a dumb word and shouldarouse suspicion.’’ Jabel (47) p.2.

189 One comment stated that limiting the use ofthe term ‘‘perfect’’ as a synonym for ‘‘flawless’’ tothose situations in which the diamond described isnot ‘‘of inferior color or make’’ is meaninglessbecause ‘‘inferior color or make’’ cannot be defined.Limon (235) p.2. The Commission agrees that thedefinition is not precise, but nevertheless believesthat the word can be used in a non-deceptivemanner.

alloy, however, is relatively hard.182

Nevertheless, because trade practice hasinterpreted this exemption as applyingto gold lockets for some time, it isunlikely that consumers would believethat the field pieces and bezels of alocket advertised as 14 karat gold were14 karat gold. Therefore, theCommission has added theseexemptions to the list of exemptions ofsilver and gold alloy products.183

9. Misuse of ‘‘Corrosion Proof,’’‘‘Noncorrosive,’’ etc.

The Watch Band Guides, 16 CFR 19.3,contain a section regarding the use ofthe terms ‘‘corrosion proof,’’‘‘noncorrosive,’’ ‘‘corrosion resistant,’’‘‘rust proof,’’ ‘‘rust resistant,’’ or anyword or term of equivalent import. TheJVC did not recommend any changes inthis section. Thus, the Commission hasincluded this provision, unchanged, inthe revised Guides as the last sectionpertaining to metals (§ 23.10).

D. Diamonds (Category III): §§ 23.9–23.14

The current Guides address diamondsin the definition section, § 23.0, and in§§ 23.9–23.14. Section 23.9 describespractices which are unfair uses of theword ‘‘diamond.’’ Sections 23.10–23.14deal with misuse of the terms ‘‘perfect,’’‘‘blue white,’’ ‘‘properly cut,’’‘‘brilliant,’’ ‘‘full cut,’’ and ‘‘clean.’’ Inaddition, artificial coloring, imitationand synthetic diamonds, and the words‘‘reproduction,’’ ‘‘replica,’’ ‘‘gem,’’‘‘real,’’ ‘‘genuine,’’ and ‘‘natural’’ areaddressed in §§ 23.18–23.21.

1. DefinitionThe Commission has moved the

definition of ‘‘diamond’’ from § 23.0 tothe beginning of the substantive sectionsthat deal with diamonds (§ 23.11, whichis renamed ‘‘Definition and misuse ofthe word ‘diamond’ ’’). The JVCproposed adding the following sentenceto the definition of the word diamond:‘‘It is the hardest natural substance andin 1818 was arbitrarily given 10 on theMohs relative scratch hardness scale.’’The JVC also proposed adding, after thedefinition of diamond, a ‘‘Note’’

regarding the Mohs scale and thestandards for determining mineral‘‘hardness.’’

A definition of diamond is helpful tothe extent that it makes clear what cannondeceptively be represented to be adiamond. However, there is noindication that the current definition ofdiamond has ever failed to serve itspurpose, and some comments indicatedthe current definition is better.184 TheCommission, therefore, is not adoptingthis proposal.

The Postal Service stated that mailorder jewelry promoters sell ‘‘tiny,unattractive, industrial gradediamonds’’ as jewelry which ‘‘no onewould buy if they saw them.’’ Itsuggested that the Guides be modified toprohibit ‘‘advertisers from representingexpressly or impliedly, that industrial orother non-jewelry quality diamonds areof jewelry quality.’’ 185 The Commissionagrees that such a practice is unfair anddeceptive, and has included a Note thatstates the practice of advertisingindustrial grade diamonds as jewelry isunfair and deceptive. The provisionadvising against misrepresentingproducts visually, in § 23.2, also wouldapply to this practice.

2. Misuse of the Word ‘‘Diamond’’

Section 23.9 of the current Guidesdeals with misuse of the word‘‘diamond.’’ Neither the JVC nor any ofthe commenters proposed a change inthis section, and there is no otherinformation indicating a need forchanging this section.

3. Misuse of the Words ‘‘Perfect’’ and‘‘Flawless’’

Section 23.10 of the current Guides,and the accompanying Note, deal withthe use of the words ‘‘perfect’’ and‘‘flawless’’ to describe a diamond. TheJVC proposed revising this section tofocus on the use of the term ‘‘flawless,’’with a subsection stating that it is unfairto use the word ‘‘perfect’’ with respectto any diamond which is not flawless,or which is of inferior color or make.The organization of the current sectionis convoluted and difficult tounderstand. The Commission hasdetermined that the proposed changewill improve the clarity of the Guides,and has revised this section accordingly.

To determine whether there wasevidence that the term ‘‘perfect’’ hasbeen used to mislead consumers, theFRN sought comment on whether theGuides should advise against use of theterm ‘‘perfect.’’ Thirty-two commentsaddressed this issue.

Seven comments indicated that theterm ‘‘perfect’’ is acceptable as definedin the current Guides.186 Twenty-eightcommenters stated that the term‘‘perfect’’ should be prohibited, and onestated it should be allowed only as asynonym for flawless.187 However, thecurrent Guides allow diamonds to becalled ‘‘perfect’’ if they are flawless andnot of inferior color or make, and thereis no evidence that large numbers ofconsumers have been deceived by theuse of the word ‘‘perfect.’’ 188 TheCommission has determined that thescheme in the current Guidesadequately explains the type ofdiamond that nondeceptively may bedescribed as ‘‘perfect’’ and thatguidance that in effect totally bars theuse of the word ‘‘perfect’’ would be anunwarranted infringement on freespeech.189

The JVC also proposed changingcurrent § 23.10 to state that it is unfairto use the word ‘‘flawless’’ to describea diamond ‘‘which discloses blemishes,inclusions, lasering, prominentreflective whitish or colored grain lines,or clarity faults of any sort whenexamined under a corrected magnifier at10-power, with adequate illumination,by a person skilled in diamondgrading.’’ With the exception of theaddition of ‘‘lasering,’’ the changesappear to be simply a change interminology. No reasons for the changes

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190 Preston (229) stated, at p.10, that the word‘‘internal’’ should precede the word ‘‘lasering’’ inthis section, apparently to clarify that ‘‘lasering’’ inthis section is not meant to include the use of lasersto cut diamonds but rather the use of lasers toremove blemishes. The Commission agrees withthis comment and has included this clarification inthe revised Guides.

191 ICT (189) also suggested, at p.2, a modificationof § 23.10, i.e., that the word ‘‘flawless’’ shouldalways be accompanied by the magnification levelat which no flaws are visible [for example,‘‘flawless under 15X loupe’’]. However, there is noevidence that such detailed information is materialto consumers.

192 Eisen (91) stated, at p.1, that ‘‘commerciallyflawless’’ should not be allowed but did not offerany reasons.

193 The JVC also proposed adding a Note thatstates that the term ‘‘internally flawless’’ may be

used to describe a diamond ‘‘which meets therequirements set forth . . . but possesses onlyminor surface blemishes such as grain lines, polishor burn marks, scratches, nicks, or small naturals.’’No reasons were offered for this change. However,Lannyte (65) p. 5, stated ‘‘Do not play games withthe word ‘internally.’ Any surface blemish has toexist on or in the surface to exist at all.’’ Based onthis comment, and the lack of other explanation forthis provision, the Commission has not includedthis Note in the Guides.

194 ISA (237A) proposed, at p.53, changing‘‘internal use of laser beam’’ to ‘‘the penetration ofa laser drilling technique and/or acid bath(s) whichis customarily used by the trade to change the colorof ‘black’ inclusions to ‘white.’’’ It also suggestedthat ‘‘infusion of any foreign substance’’ should befollowed by the words ‘‘fracture filled.’’ However,the Commission believes that the words used in theJVC proposal adequately identify the processes thatare being addressed.

195 Green (6) p.1; see also London Star (20); DMIA(26); Roisen (31); Werdiger (48); Verstandig (154);David (194); H.R. Diamonds (195); ADS (197); Weitz(200); Kwiat (203); NACSM (219); and Service (222).

196 Comment 154, p.2.197 Comment 26, pp.1–2.198 Comment 26, p.1. Roisen (31), David (194),

H.R. Diamonds (195), ADS (197), and Weitz (200),all referred to the fact that the rules of the WorldFederation of Diamond Bourses require strictpunishment of a member who fails to disclosetreatment of a diamond, such as irradiation orinfusion of a foreign substance. See the text of thejoint resolution of the World Federation of DiamondBourses and the International DiamondManufacturers Association, as described in the

in terminology are apparent (e.g.,changing the terms ‘‘flaws, cracks,carbon spots, clouds or other blemishesor imperfections’’ to ‘‘blemishes,inclusions, lasering, prominentreflective whitish or colored grain lines,or clarity faults’’). Thus, theCommission has not adopted thesechanges. However, the numerouscomments which addressed lasering ofdiamonds in the context of a related JVCproposal, discussed below, indicate thatlasering leaves channels or surfaceopenings in a diamond that are similarto grains or other clarity faults. TheCommission believes that it would bedeceptive to describe a diamond thatdiscloses internal lasering under theconditions specified in that section as‘‘flawless,’’ and therefore has revisedthis section.190

The Commission also has includedthe JVC’s descriptions of when the flawsare visible—i.e., ‘‘when examined undera corrected magnifier at 10-power, withadequate illumination, by a personskilled in diamond grading.’’ This is anupdating of the current Guides (whichrefer to an examination ‘‘in normaldaylight, or its equivalent, by a trainedeye under a ten-power, correcteddiamond eye loupe or equal magnifier’’)to reflect changes in availableequipment.191

In the current Guides, the Notefollowing § 23.10(a) also states that theuse of a phrase such as ‘‘commerciallyperfect’’ for a diamond that has flaws is‘‘regarded as misleading and inviolation of this section.’’ The JVCproposed expanding this portion of theNote to also cover the phrase‘‘commercially flawless.’’ 192 TheCommission believes that the provisionin the revised Guides, which applies touse of the words ‘‘perfect,’’ ‘‘flawless,’’or ‘‘any representation of similarmeaning,’’ is sufficient to preventdeception. The current Note issuperfluous, and the Commission hasdeleted it.193

Section 23.10(b) states that it is unfairto describe a ring or other article ofjewelry with a ‘‘perfect’’ center stoneand side stones which are not ‘‘perfect,’’as ‘‘perfect,’’ without disclosing that thedescription applies only to the centerstone. The JVC proposed modifying thisto apply to representations that stonesare ‘‘flawless,’’ and also proposedchanging the reference to ‘‘center stoneor stones’’ to ‘‘principal diamond ordiamonds.’’ Such a changeappropriately includes jewelry in whichthe principal stone is not the centerstone.

4. Disclosure of TreatmentsSection 23.18 of the current Guides,

entitled ‘‘Deception as to precious andsemi-precious stones,’’ contains a Notewhich states that any artificial coloringor tinting of a diamond or precious orsemi-precious stone by ‘‘coating,irradiating, or heating, or by use ofnuclear bombardment, or by any othermeans’’ should be disclosed and the factthat the coloring is not permanent, ifsuch is the fact.

The JVC proposed moving the portionof this section that applies to diamondsinto the diamond category, modifying itto apply to any diamond that has beentreated (rather than colored) by certainmethods, and adding the followingtreatments to this list of those thatshould be disclosed: the internal use ofa laser beam, the introduction or theinfusion of any foreign substance, ortreatment ‘‘by any other means, withoutdisclosure of the fact that the inherentquality and/or appearance of suchdiamond has been enhanced, and theresult of this enhancement is not or maynot be permanent, if such is thecase.’’ 194

Internal laser treatment and theinfusion of a foreign substance aretreatments that did not exist in 1959when the Guides were last substantivelyrevised. A laser treatment involves theuse of a laser beam to improve the

appearance of diamonds having blackinclusions by directing the laser beam atthe black inclusion and then forcingacid through the tunnel made by thelaser beam to remove the inclusion or toalter it so that the inclusion is notvisible to the naked eye. ‘‘Infusion’’treatment, also known as ‘‘fracture-filling,’’ conceals cracks in diamonds byfilling them with a foreign substance.

Thirteen comments opposed thedisclosure of laser treatment stating thatit is ‘‘a common practice’’ and ‘‘anextension of cutting, since soaking outsurface black leaves no evidence ofsoaking. The channel left by the laser isoften just one of several or numerous‘natural’ cracks, inclusions, or grain.’’ 195

Verstandig stated that the othertreatments which the JVC proposedshould be disclosed ‘‘are hardly-if at all-noticeable under a 10X magnification’’but that lasering is obvious under suchmagnification. It also noted that whilelasering produces a small surfaceopening, the majority of diamonds soldin the U.S. have similar surfaceimperfections, and disclosure of these isnot required.196

DMIA noted that lasering is‘‘irreversible, does not add a foreignsubstance, is readily detectable with aten power loupe, and does not requiredisclosure any morethan * * * cutting an additional facetto improve the purity of a diamond.’’ Italso noted that GIA, which it describedas a world-renowned diamond gradinglab, refuses to grade diamonds infusedwith a foreign substance but does gradelasered diamonds, indicating on thegrading report ‘‘inclusions, naturals,extra facets, as well as lasering.’’ 197 Inaddition, it noted that resolutions havebeen adopted on ‘‘a world-wide basisrequiring full disclosure of any‘‘treatment’’ of diamonds such asirradiation which changes the color andatomic structure or the infusion of aforeign substance which produces aproduct no longer a pure diamond, buta ‘‘composite’’ material.’’ It stated that‘‘[l]asering, on the other hand, is not a‘‘treatment’’ * * * .’’ 198

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Rapaport Diamond Report, July 17, 1992, p.5(attached to Rapaport (233)).

199 Rapaport Diamond Report, July 17, 1992, p.6,attached to Rapaport (233); see also Preston (229)p.3; ISA (237A) p.51.

200 Rapaport Diamond Report, July 17, 1992, p.6,attached to Rapaport (233).

201 Green (6); London Star (20); DMIA (26); Roisen(31); Werdiger (48); Verstandig (154); David (194);H.R. Diamonds (195); ADS (197); Weitz (200); Kwiat(203); and NACSM (219). Service (222) opposed alldisclosure of diamond treatments, and did notspecifically discuss fracture-filling. Best (225)opposed all the changes proposed by the JVC, butstated that fracture-filling ‘‘may justify some futurestudy and potential regulation by the FTC.’’

202 International Harvester Co., 104 F.T.C. 949,1051 (1984). NACSM (219), at p. 26, pointed outthat the process can sometimes be reversed by heat.For example, it is not uncommon for a diamond tobe remounted and the heat from that process maypartly melt out the foreign material used to fill thefracture. This adversely affects the appearance ofthe diamond and it may not be possible to removethe remainder of the fracture-filling material. See S.Lynn Diamond, ‘‘Filled Diamonds in the Spotlight,’’National Jeweler, Dec. 1, 1994, at 36, 42 & 43.

203 The definition of blue white in the Jewelers’Dictionary states: ‘‘Term, often abused, to describethe color of a diamond. As frequently abused, itincludes anything from a Jager to a SilverCape. . . . [n.b., Jager refers to a fine white diamond;Silver Cape is a yellow one.] Better BusinessBureaus recommend avoidance of the term and theAmerican Gem Society prohibits its use.’’ ‘‘Jewelers’Dictionary’’ 28 (3d ed. 1976). However, theproprietor of Solid Gold (261) stated, at p.2, that hehas seen ‘‘many diamonds which are accuratelydescribed as having a bluish-white color.’’

204 Rapaport (233) p. 2 (stating that the ‘‘guidesshould not outlaw any terminology used by thetrade’’ but instead should define it ‘‘so that it is notmisleading’’).

205 ISA (237A) recommended, at p.53, theaddition of a definition of ‘‘normal north daylight’’and an addition which would limit the use of theterm blue white to ‘‘a diamond which is totallynatural and free from any man induced treatmentswhich exhibits a partially white body color and apartially blue body color. . . . The term blue body

color is not to be blue caused by visiblefluorescence . . . ’’ However, no evidence wasprovided that either of these additions werenecessary, and the Commission has not includedthem in the Guides.

206 This section does allow certain other cuts(emerald, pear-shaped, heart-shaped, oval-shaped,and marquise) meeting the above-stated facetrequirements to be described as ‘‘brilliant cut’’ or‘‘full cut’’ if ‘‘disclosure is made of the fact that thediamond is of such form.’’

207 ISA (237A) pp.54–56; Rapaport (233) p.3(proposing a definition for a range of ‘Properly Cut’round diamonds and numerical standards (whichdiffer from ISA’s proposed numerical standards)).

208 Comment 230, p.5. AGL also suggested thatthe Guides state that it is unfair for any diamondor colored stone quality assessment reports orappraisals to fail to contain adequate toleranceinformation for each element that impacts on thevalue. Id. at 4. However, the Commission believessuch a proposal, which would involve providingguidance on the manner in which appraisers andgraders prepare reports, is beyond the scope ofthese Guides.

209 Comment 230, p.5. Preston (229) stated, at p.6,that ‘‘AGS attempts to train its members to specifycutting grades rather precisely. GIA, on the otherhand, does not specify a cutting grade at this time.’’

On the other hand, one commentcontained an attachment that arguedthat internal lasering should bedisclosed because it adversely affectsthe value of the diamond.199 Theattachment stated that lasered stones areinferior because they ‘‘are worth lessthan normal non-lasered stones of thesame grade.’’ It further stated that adiamond purchaser who is unaware ofthe lasering, will be upset ‘‘when theappraisal indicates laser treatment, orupon resale when the buyer offers alower price due to lasering.’’ 200

However, the comments (includingeleven comments from diamond dealersand a diamond trade association)indicated that lasering is a commonpractice and not an extraordinaryprocess that would be deceptive toconceal from the consumer. Moreover, aconsumer acting reasonably under thecircumstances would be on notice oflaser treatment before sale. A gradingreport would indicate that the diamondhad been laser-cleaned, and, if the buyerchose to examine the diamond understandard ten-power magnification, thelaser tunnels would be obvious to thebuyer. Thus, the Commission hasdetermined not to include laseringamong the treatments that alwaysshould be disclosed to avoid misleadingconsumers.

By contrast, twelve of the thirteencomments that opposed disclosure oflasering stated that the fracture-fillingprocess is a treatment of a diamond thatshould be disclosed to the consumer.201

As previously noted, several of thesecomments stated that the rules of theWorld Federation of Diamond Boursesrequire disclosure of fracture-filling.Because fracture-filling is not the normor what consumers acting reasonablyunder the circumstances would expect,it would be deceptive to fail to disclosefracture-filling. Consumers will notlikely expect, in the absence ofdisclosure, that the stone was so treated.Thus, the absence of disclosure is alsounfair in that it is likely to cause injuryto consumers by affirmativelymisleading their informed choice and so

causing substantial, unavoidable injurythat is not outweighed by anycountervailing benefits.202 Accordingly,the revised Guides advise sellers todisclose this treatment.

The JVC also proposed that thissection require the disclosure oftreatment of a diamond ‘‘by any othermeans.’’ However, the Commissionbelieves that phrase is sufficiently vagueto imply, for example, that removal ofblemishes by lasering always should bedisclosed, and thus, has not includedthis phrase in the section.

5. ‘‘Blue White’’: § 23.11Section 23.11 of the current Guides

prohibits the use of ‘‘blue white’’ todescribe a diamond ‘‘which undernormal, north daylight or its equivalent,shows any color or any trace of colorother than blue or bluish.’’ The JVCproposed prohibiting the use of thisterm.

The term ‘‘blue white’’ has apparentlybeen misused in the past to describepoorer quality or ‘‘off color’’diamonds.203 The use of blue whiteappears to have diminished becausemost of the industry now uses formaldiamond grading systems. Onecomment suggested that ‘‘blue white’’ berestricted to ‘‘a diamond that has strongblue fluorescence and is of the D–Gcolor range [in the GIA gradingsystem].’’ 204 However, the currentGuides describe a proper use of blue-white and discourage its misuse. TheCommission therefore has retained thissection of the Guides.205

6. Cuts of Diamonds and ‘‘CleanDiamonds’’: §§ 23.12– 23.14

Section 23.12 of the current Guidesstates that it is unfair to describe adiamond as ‘‘properly cut,’’ ‘‘wellmade,’’ or ‘‘modern cut’’ or words ofsimilar meaning, if it is ‘‘lopsided, or sothick or so thin in depth as materiallyto detract from the brilliance of thestone.’’ Section 23.13 restricts the use ofthe terms ‘‘brilliant,’’ ‘‘brilliant cut’’ or‘‘full cut’’ to a round diamond having atleast 56 facets.206

The JVC did not propose any changesto these sections, but several commentsdid propose revisions. Two commentsproposed certain numerical standardsfor describing ‘‘properly cut’’diamonds.207 AGL proposed that theGuides state that it is unfair for ‘‘adiamond quality assessment report toitemize a series of percentages and non-integrated cutting details withoutreference to a meaningful andcomprehensive evaluation of cutting inorder to facilitate a consumer’sunderstanding of these critical valuecomponents.’’ 208 However, AGL alsoindicated that such reports do notusually contain such an evaluation ofcutting.209 No other commentsaddressed this issue. Because there isinsufficient information in the record toevaluate the proposals, the Commissionhas not changed these sections.

Section 23.14 states that it is unfair touse the terms ‘‘clean,’’ ‘‘eye clean,’’‘‘commercially clean,’’ ‘‘commerciallywhite,’’ or similar terms to mislead ordeceive consumers. The JVC did notpropose any changes to this section.Unlike other provisions of the Guides,this section does not provide guidanceregarding the use of these terms, other

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210 Rapaport (233) stated, at pp.2–3, that theterms ‘‘clean,’’ ‘‘eye clean,’’ and ‘‘commercialwhite’’ are ‘‘regularly used by the diamond trade todescribe diamonds,’’ noting specifically that theterm ‘‘eye clean’’ is ‘‘commonly used to describediamonds that do not have inclusions that arevisible to the naked eye.’’

211 The term ‘‘point’’ is used to express one-hundredths of a carat (e.g., .25 ct = 25 points).

212 Limon (235) p.3 (stating that the proposal‘‘was inspired by a nationally publishedadvertisement for an item containing a diamondweighing ‘.25 pt.’[which was] universally misreadas ‘.25 ct.’’’); Skalet (61) p.4 (stating that‘‘considerable deception has been leveled at the

consuming public to make a ‘point .25 carat’ or ‘.25point’ gemstone appear to be describing a 1⁄4 caratgemstone’’); Bedford (210) p.2 (stating ‘‘I have hadsome people come in thinking they were going towin a .25ct. diamond and they were actually gettinga .025 point diamond’’); Bruce (218) p.10 (notingthat ‘‘we have seen advertisements where peopleconfuse points with carats (pt. with ct.)’’).

213 Honora (15); Lannyte (65); NACAA (90); andPostal Service (244).

214 Fasnacht (4); Sibbing (5); Thorpe (7); Argo(17); AGS (18); Capital (19); Estate (23); Jabel (47);Schwartz (52); Skalet (61); GIA (81); Nowlin (109);McGee (112); Bridge (163); IJA (192); Phillips (204);Bedford (210); Matthey (213); Bruce (218); MJSA(226); Preston (229); and Limon (235).

215 G&B (30); ArtCarved (155); Bales (156); LaPrad(181); NACSM (219); Service (222); Diamonique(224); Best (225); and Leach (256). Diamonique(224) stated, at p.1, that prohibition of ‘‘point’’ or‘‘pt.’’ would ‘‘result in the use of fractionaldefinitions of diamond weights as used in the past.’’However, other comments (discussed below), statedthat fractions are currently in wide use, and are notdeceptive.

216 Bruce (218) p.10.217 Comment 244, pp.1–2.218 Thorpe (7) p.2 (stating that the ‘‘consumer

sees a jewelry term they are ‘familiar’ with and readit as 0.25 ct.’’).

219 However, one comment noted that problemsalso occur in television advertising. Sibbing (5) p.1(stating ‘‘No more ‘quarter point diamonds’ as canbe found on TV advertisements’’).

220 Apparently the proposal was limited to newproducts because, as one comment noted, ‘‘it isimpossible to get exact measurements of a diamondweight when measuring diamonds when mounted.’’Bedford (210) p.2.

221 JMC (1); Fasnacht (4); Sibbing (5); Thorpe (7);Honora (15); AGS (18); Capital (19); Estate (23); G&B(30); Jabel (47); Schwartz (52); Skalet (61); Lannyte(65); GIA (81); NACAA (90); Nowlin (109); McGee(112); ArtCarved (155); Bales (156); Bridge (163);LaPrad (181); IJA (192); Phillips (204); Bedford(210); JVC (212); Matthey (213); Bruce (218); MJSA(226); Preston (229); Limon (235); and Leach (258).Two of these stated that diamonds under .10 caratshould be exempt [Skalet (61) and ArtCarved (155)],and one stated that the minimum weightinformation should only be required on the invoice[Honora (15)].

222 Argo (17); Schaeffer (211); NACSM (219);Service (222); Best (225); Sheaffer (249); andFranklin (250). (Solid Gold (261) also opposed thisprovision, but apparently did not understand thatit would only apply to new jewelry.) Several ofthese comments stated that this requirement wouldincrease costs.

223 Comment 81, p.2.

than to state that they should not beused to deceive purchasers. Althoughone comment indicated that these termsare still in use,210 the Commission hasconcluded that the admonition in § 23.1not to misrepresent materialcharacteristics of a product adequatelyencompasses misrepresentationsregarding these terms. Therefore, theCommission has deleted this provisionfrom the Guides.

7. Proposals Relating to DiamondWeight

a. Misrepresentation of weight.Section 23.16 of the JVC petition dealswith misrepresentations of diamondweights, an issue which is notspecifically addressed in the currentGuides. The JVC’s proposed preamble tothis section states that the standard unitof weight for diamonds is the carat,defines the terms carat and point, andstates that the abbreviation for carat isct. The Commission has not includedthis preamble in the revised Guides. Asdiscussed below, the Commission hasincluded a provision relating to the useof ‘‘points’’ in the revised Guides, andthat provision contains an explanationof the meaning of ‘‘carat’’ and ‘‘point.’’

The JVC suggested adding a sectionstating that it is unfair to misrepresentthe weight of a diamond. Section 23.1of the current Guides provides that it isunfair to misrepresent various materialcharacteristics of industry products,including weight. However, theCommission has included thisadmonition against misrepresenting theweight of diamonds in section 23.17 ofthe revised Guides, and has providedadditional guidance for diamond weightrepresentations in that section, asdiscussed in detail below.

b. Use of ‘‘points’’. The JVC, in section23.16(a), proposed that a section beadded to the Guides stating that the useof the term ‘‘points’’ 211 to represent theweight of a diamond is unfair except ‘‘indirect conversations.’’ In someinstances, according to the comments,consumers perceive a representationthat a diamond is ‘‘.25 pt.’’ to mean ‘‘.25ct.’’ 212 The latter is 1⁄4th carat; the

former (.25 pt.) is 1/400th carat. Toobtain more information about thisissue, the FRN asked whether the use of‘‘points’’ to describe diamond weightsshould be limited to oralrepresentations.

Thirty-five comments addressed thisissue. Four comments, including onesfrom the Postal Service and NACAA,supported eliminating use of the term‘‘points’’ in either oral or writtenrepresentations.213 Twenty-twocomments supported limiting the use ofthe term ‘‘points’’ to oralrepresentations.214 Nine commentsstated that the use of the term should bepermitted in written as well as oralrepresentations, contending that theterm can be used in writing in a mannerthat is not unfair or deceptive.215

One comment noted that ‘‘points’’ is‘‘a term that the layman is not familiarwith.’’ 216 The Postal Service favored aprohibition, stating that, in manysituations, consumers do not actuallysee the jewelry before purchasing it, andthe term point (i.e., .25 pt.) is used tomisrepresent the value of a diamond.217

The comments clearly believe that theterm ‘‘pt.’’ is being used to deceive thepublic, particularly in mail ordertransactions.218 The deception describedin the comments appears to ariseprimarily when the abbreviation forpoint (‘‘pt.’’) appears in writing.219

Nevertheless, the term ‘‘point,’’ withadequate disclosure, could be used in anon-deceptive manner. Therefore, theCommission has added a provision tothe Guides which states that if the term

‘‘point’’ is used in advertising(including television) or in point of salematerials to describe the weight of adiamond, the weight should also begiven in decimal parts of a carat (e.g.,.25 pt. is .0025 ct.). The admonition toinclude the carat weight in decimalsshould deter sellers from attempting tomislead consumers. Furthermore, § 23.2of the Guides addresses the use ofmisleading visual representations ofdiamonds.

c. Disclosure of minimum totalweight. The JVC also proposed addingprovisions to the Guides stating that itis unfair to fail to mark new industryproducts containing one or morediamonds with the minimum weight ofthe diamonds in the product and that itis unfair to refer to the weight of adiamond or diamonds in advertising fornew industry products withoutdisclosing the minimum total weight.220

The FRN solicited comment on thisproposal.

Thirty-nine comments addressed thisissue. Thirty-one comments approvedmarking jewelry, or tags or invoicesattached to it, with the minimum weightof the diamonds set in it.221 Eightcomments opposed the proposal.222

Generally, the comments indicated abelief that marking new jewelry with theminimum diamond weight wouldprevent misrepresentation of weight bythe manufacturer or other sellers fartherdown in the line of commerce. GIAstated that there was a tendency for‘‘multistone rings and other jewelry soldas a given weight to weigh less than theindicated weight,’’ especially where thering is not stamped with the minimumweight.223 GIA further stated that ‘‘[i]nour experience, if the total weight isstamped on the jewelry, themanufacturer usually makes sure that

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224 Comment 81, p.2. AGS (18) p.2 (stating, ‘‘Themarket place is replete with purveyors of diamondjewelry who overstate the total carat weight ofmulti-diamond items’’).

225 Comment 90, pp.1–2.226 Indeed, if this practice is unfair or deceptive

for ‘‘new’’ jewelry, logically it is also unfair ordeceptive for ‘‘old’’ jewelry and for jewelrycontaining gemstones other than diamonds. LaPrad(181) p.2, and Limon (235) p.4, each suggested thatthe weight marking requirement should apply tocolored stones as well as diamonds.

227 This figure is exclusive of comments thatsimply favored all the changes suggested by theJVC.

228 Bruce (218); Limon (235); and Schwartz (52).229 NACSM (219); Service (222); Diamonique

(224); Best (225); MJSA (226); Rapaport (233); andNRF (238) submitted individual comments. Theother 74 were form letters. In the interest of brevity,the 74 commenters are listed here by their commentnumber only: 28; 32; 33; 35; 36; 37; 39; 40; 41; 43;45; 46; 50; 51; 53; 54; 55; 56; 57; 58; 59; 60; 63; 67;68; 69; 70; 71; 72; 73; 74; 75; 77; 78; 79; 80; 93; 94;95; 96; 97; 99; 100; 101; 102; 104; 105; 107; 108;110; 114; 115; 117; 119; 121; 122; 157; 158; 160;164; 179; 180; 190; 191; 201; 211; 214; 220; 241;243; 260; 263; and 264.

230 Rapaport (233) p.4. Diamonique (224) pp.1–2(stating that current measuring devices are notadequate and the present tolerance is .01 carat). Butsee Fasnacht (4) p.2 (stating that weighing is fastand accurate with today’s electronic scales).

231 Commission staff interviewed 5 jewelers(Boone and Sons Jewelers, Fleisher Jewelers, KingsJewelry, Loubons, and Jewelry by Design) in theWashington area about what kind of scales they use.No store utilized a scale that was not accurateenough to meet the proposed .005 carat tolerance.Staff also interviewed Ben Fine, who sells MelterScales; Gaston Lopez, a sales representative ofGemological Institute of America, which sellsseveral different makes of scales; and arepresentative from Dendritic Scales. All confirmedthat they sell scales that are accurate to within 1⁄2point.

232 Comment 226, p.8.233 Comment 226, p.8. NACSM (219) pp.20–21

(explaining that rough diamonds ‘‘are purchasedmost often from DeBeers * * * [and] sold tomanufacturers * * * in parcels containing certaingrade and quantities such as ‘one fifths,’ ‘quarters,’‘one thirds,’ ‘halves,’ ‘carats,’ etc. The fractions referto the approximate sizes of the diamonds containedin the parcels’’); Goldman (60) p.3 (stating that theinternational market ‘‘sells as a fifth of a carat,goods (diamonds) from 18 to 23 points’’).

234 Comment 218, pp.2–3 (also stating that ‘‘ifpeople in the trade buy a single stone they will payfor it by its exact weight’’).

235 Comment 222, p.3. Numerous comments alsoindicated that there would be high demand forstones close enough to the fractions to bedesignated as fractions, and other stones could notbe used by mass retailers. ‘‘If retailers were nolonger allowed to sell 18 points as a fifth, then whatwould happen to all the 18 and 19 pointers * * *?’’Goldman (60) p.2. London Star stated, ‘‘Thisstandard would considerably lessen the availabilityof stones within each size and therefore drasticallyincrease the price to the consumer.’’ Comment 20,p.2. Of course, diamond weights can be, and oftenare, expressed in the decimal system. However, themass marketers, for the reasons described above,state that it is more efficient for them to describediamond weights as fractions.

236 Attachment B to NACSM (219). Best (225)pp.4–5 (stating that these standards ‘‘have beenwidely used and accepted for many years and haveeffectively become the national and internationalindustry standard’’); NACSM (219) p.11 (stating thatthese GIA ranges ‘‘merely recognize industrystandards which have resulted from longstandingaccepted custom and usage’’).

237 Attachment B to NACSM (219). The bookletnotes that the ranges ‘‘may vary slightly from onefirm or organization to another.’’ Id. This is borneout by the comments.

the weight is accurate,’’ and believedthat ‘‘requiring stamping of a minimumweight on the jewelry (particularly incombination with trademark stamping)would provide a strong deterrent againstunderweighting diamond content.’’ 224

NACAA commented that its membersreceived complaints about exaggerationof the weights of stones (not limited todiamonds) and stated that it would be‘‘helpful to consumers’’ for the Guidesto require marking of minimum totalweight on new items.225 However, theGuides already state that it is unfair tomisrepresent the weight of a diamond(or any other jewelry). Moreover, noneof the comments explained why itwould be unfair or deceptive to fail tomark new jewelry containing diamondswith the minimum total weight of thediamonds, nor is there any obviousreason why a failure to so mark thejewelry, or to include this inadvertising, would be unfair ordeceptive.226 Therefore, the Commissionhas not included this provision in therevised Guides.

d. Weight tolerance. The JVC alsoproposed adding provisions to theGuides setting forth specific tolerancesfor diamond weight representations.The JVC proposed in sections 23.16(c)–(e) of its petition, a tolerance of .005carat for weight representations forindividual diamonds, whether mountedor unmounted, and a tolerance of .01carat for weight representationspertaining to ‘‘two or more diamonds ina single product.’’ This proposalgenerated 84 comments.227 Threecomments specifically supported theJVC’s proposed tolerance.228 Eighty-onecommenters opposed the proposedtolerances.229

One comment stated that theproposed tolerance was too smallbecause few diamond scales are sofinely calibrated, and that the toleranceshould be .01 ct.—one hundredth of acarat.230 However, Commission stafftelephoned several companies, anddetermined that most have scales thatcan weigh diamonds to .005 carats.231

Numerous other comments opposedthe tolerances because they wouldincrease the cost of sorting diamonds,raise the price of diamonds for high-volume manufacturers, and increaseprices for consumers. MJSA explainedthat high-volume manufacturers sieverather than weigh individual stones, andthat the proposed tolerance wouldrequire manufacturers to ‘‘weigh, tag,and flute the stones to be incorporatedin a piece of jewelry.’’ 232 MJSA statedthat ‘‘the added costs of this procedurewould be reflected in the price of thefinished article and be passed on to theconsumer.’’ 233

Although Bruce supported theproposed tolerance and opposed the useof fractions to describe diamondweights, it noted that ‘‘fractionaldiamond sizes are a convenience for theindustry, in the trading of loose stones,’’and that ‘‘keeping track of diamondsizes for tagging purposes would requirea little more care and planning, but itcan be done.’’ 234

Many commenters stated that thecurrent industry practice is to usefractions to designate weights of lessthan a carat, and that there is a standardtolerance for such fractionalrepresentations. Service explained thatchain retailers use fractions to advertise

diamonds so that specific prices can begiven for specific weights. Serviceexplained that the proposed tolerancewould be costly because it ‘‘wouldnarrowly and unreasonably limit therange of weights available for particularfractions of a carat.’’ 235 For example, afifth represents 20 points and under theJVC’s proposed tolerances, onlydiamonds that weigh at least 19.5 pointscould be described as a fifth. Severalcommenters stated that they used thestandards contained in the GIApublication, ‘‘Diamonds 3.’’ 236 This1986 GIA booklet, states, at p.19, that‘‘approximate weights are often stated infractions,’’ and it sets out a chart statingthe average weight range associatedwith the various fractions (i.e., 1⁄5 caratrefers to .18 through .22 carat).237

Best noted that under the GIAtolerances, a diamond can be sold ashalf a carat if it weighs between .47 and.56 carats, but that the proposedtolerances would require it to weigh atleast .495 carats. Best stated that underthe JVC proposal it would be forced toeither select stones that fall within thetolerances, so that prices for the sizecould be advertised, or to treat eachstone individually, and not provideprice information regarding the stonesin advertising. It explained that becausethere is a limited supply of stones thatfall within the JVC’s proposedtolerances, demand will escalate forthese stones and the cost of the stoneswill increase. Therefore, ‘‘[j]ewelers likeBest would no longer be able to offer aconsistently lower price alternative tothe traditional high margin jewelers.’’Instead, Best would be forced to ‘‘price,mark and sell each item individually,’’which is the philosophy of a boutique

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238 Comment 255, p.8.239 Comment 226, p.8.240 Ross-Simons (67) stated, at p.1, that for

catalog advertisers ‘‘a tolerance of just .01 ct on apiece of jewelry with multiple diamonds is toorestrictive . . . [because] we show a piece ofdiamond jewelry in our catalog and order backupitems after the catalog is mailed.’’ Ross-Simonsfurther stated that for pieces containing severalcarats of diamonds, with multiple stones, a .01 ct.deviation is unrealistic, and would require it toeither ‘‘understate the weight to be safe orovercharge the consumer.’’ Comment 67, p.1.

241 GIA booklet, p.19, attached as Exh. B toNACSM (219).

242 Some mass retailers stated that they alreadyprovide the weight ranges in their catalogs and/orat the point of purchase. Best (225) p.5 and Service(222) p.3.

243 Limon (235) p.4.

244 Comment 238, p.2.245 A&Z Pearls (29) p.1 (suggesting that the JVC’s

definition of ‘‘cultured pearl’’ be revised to includea better definition of the word ‘‘nacre’’ because itwould ‘‘eliminate misinterpretations of the termtherefore clearing any misconceptions of ‘nacre’being formed by a human agency’’); AGTA (49) p.15(suggesting editing the JVC’s proposed definition of‘‘pearl’’); CPAA (193) p.3 (suggesting editing theJVC’s proposed definition of ‘‘pearl’’ and ‘‘imitationpearl’’).

246 Comment 238, p.1; NACSM (219) p.27 (statingthat the definitions ‘‘seem unnecessary’’).

jeweler, and ‘‘contrary to the way a massmerchandiser operates.’’ 238

Several comments suggestedalternatives to the JVC proposal. MJSAsuggested ‘‘a broader minus tolerancewhich is expressed in proportionalterms rather than as an absolutequantitative measurement.’’ 239 Ross-Simons suggested a tolerance of 5% or.05 carat for a piece with multiplediamonds, whichever is smaller.240

The Commission agrees with thecomments that state that the proposedtolerance may be too restrictive and mayresult in an increased cost to theconsumer. However, consumers may notinterpret a claim that a diamond is halfa carat as meaning that it falls withinthe range set out in the GIA booklet. Infact, the GIA booklet states: ‘‘Customersalso think in terms of fractions, but theytend to expect a half-carat stone toweigh exactly 0.50 carat.’’ 241

Furthermore, diamonds are soexpensive that receiving a diamond thatis even a few points less than what wasrepresented can be a significant loss tothe consumer. In this respect it appearsthat at least for some industry members,current practice may be contrary toconsumers’ expectations and may notadequately apprise consumers of theterms of the seller’s offer (i.e., thatjewelry advertised with 1⁄5 caratdiamonds is actually offered as jewelrywith 1⁄5 carat weight, plus or minussome tolerance the seller is using).

However, the Commission believesthat a fractional representation of caratweight may be qualified so that it isneither unfair or deceptive. Forexample, if a claim such as ‘‘1⁄2 carat’’is accompanied by a disclosure of theweight range that is used, it does notimply precision to the level of 0.005carat. A decimal representation of caratweight, such as ‘‘0.47 carat,’’ does implyaccuracy to the level of the seconddecimal place—i.e., .005 carat.Therefore, the level of toleranceapplicable to a diamond weight claimdepends on the type of claim that hasbeen made.

Thus, the revised Guides clarify thatrepresentations of diamond weight

should indicate the weight tolerancethat is being used. If diamond weight isstated as decimal parts of a carat, thestated figure should be accurate to thelast decimal place. If a fractionalrepresentation is used to describe theweight of a diamond, the fact that thediamond weight is not exact should beconspicuously disclosed in closeproximity to the fractionalrepresentation, and the range of weightfor each fraction should also bedisclosed. A Note following this section(23.17) explicitly states that, for claimsmade in catalogs, the disclosure shouldappear on every page where the claimis made, but that the disclosure mayrefer to a chart or other detailedexplanation of the actual ranges used.(For example, ‘‘Diamond weights are notexact; see chart on p.X for ranges.’’) 242

These provisions also provide guidancefor making weight representations foritems with multiple stones.

e. Misrepresentation of weight ofdiamonds combined with othergemstones. Finally, one commentsuggested that a provision be added tothe Guides stating that it is unfair torepresent the combined weight of two ormore gemstones of different gemologicalvarieties in any new single product as‘‘total gemstone weight’’ or words ofsimilar import, without disclosing withequal conspicuity the combined weightof the gemstone of each gemologicalvariety in the products.243

However, the phrase ‘‘total gemstoneweight’’ does provide notice that theweight given applies to all gemstones inthe item, not just the most expensive.Thus, the Commission does not believethat a representation of ‘‘total gemstoneweight’’ would inherently be unfair ordeceptive. Consumers interested in abreakdown by gemstone category wouldbe put on notice by the statement ‘‘totalgemstone weight’’ that further inquiry isneeded.

E. Pearls (Category IV): §§ 23.15–23.17The current Guides address pearls in

the definition section, § 23.0, and in§§ 23.15–23.17. Section 23.15 describespractices which are unfair uses of theword ‘‘pearl.’’ Section 23.16 describesunfair uses of other terms, such as‘‘cultured pearl,’’ ‘‘Oriental pearl,’’ and‘‘natura.’’ Section 23.17 describes unfairpractices involving false, misleading, ordeceptive statements about culturedpearls, including the manner in whichthey are produced and the thickness ofthe nacre coating. In addition,

provisions in §§ 23.20 and 23.21,pertaining to the misuse of certainwords (real, genuine, natural, gem,reproduction, replica, and synthetic)apply to pearls. The changes proposedby the JVC and by certain commentersare discussed below.

1. Definitionsa. Modifications of existing

definitions. The Commission hasmoved the definitions relating to pearlsfrom § 23.0 to the beginning of thesubstantive sections that deal withpearls (§ 23.18). The JVC proposedchanges (in section 23.17 of its petition)in the three definitions pertaining topearls (‘‘pearl,’’ ‘‘cultured pearl,’’ and‘‘imitation pearl’’) that currently appearin the Guides. No reasons were offeredfor changing the current definitions, andthere was no allegation that they wereinaccurate or caused any problems.

Four comments addressed theproposed changes in the definitions.The National Retail Federation statedthat cogent definitions for the threebasic types of pearls ‘‘are lacking’’ in theJVC petition.244 Three commentssuggested changes in the JVC’s proposeddefinitions, but did not explain why itis necessary to change the definitions inthe current Guides, nor state that anymisconceptions have occurred.245

Definitions are helpful to the extentthat they make clear what cannondeceptively be represented to be apearl, a cultured pearl, or an imitationpearl. There is no indication that thedefinitions of the three types of pearlsin the current Guides have ever failed toserve this purpose. Consequently, theCommission has not changed thesedefinitions.

b. Additional proposed definitions.The JVC proposed adding eleven newdefinitions of types of pearls to theGuides. The JVC offered no reason foradding definitions of these terms to theGuides, nor did it allege that these termshad been used to deceive consumers.The National Retail Federation notedthat there are three basic types of pearls(natural, cultured, and simulated) andthat the definition section proposed bythe JVC ‘‘is unnecessarily detailed andconfusing.’’ 246 The Commission has

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247 Finlay implied that retailers may bedescribing fresh water cultured pearls as simply‘‘fresh water pearls’’ and objected to requiringadvertisers to use ‘‘cultured’’ for fresh water pearls,stating, ‘‘consumers have come to associate the term‘cultured pearls’ with round pearls and that to usethe term ‘cultured’ in conjunction with irregularlyshapen [sic] fresh water pearls would createconfusion.’’ Comment 253, p.2.

248 Rapaport Diamond Report, July 17, 1992, p.24,attached to Comment 233 (noting that the South Seapearls are the product of a different oyster thanJapanese pearls).

249 Comment 193, pp.13–14.250 The CPAA suggested revising the JVC’s

proposed definition of South Sea pearl: ‘‘The word‘Burma’ should be replaced with the words‘Southeast Asia.’ Not only is Burma now officiallycalled Myanmar, but there are other countries suchas Malaysia, Indonesia, and Thailand in that regionwhich are producing similar pearls.’’ Comment 193,p.4. The Commission has made this change.

251 AGTA (49) pp.15–16 (defining ‘‘Keshi pearls’’as: ‘‘Pearls that grow accidentally in the soft tissueor the adductor muscle of cultured pearl-bearingmollusks. These tiny non-nucleated pearls are by-products of cultured pearls. The term ‘Keshi’ alsorefers to the bigger pearls without nuclei that arespontaneously formed in mollusks which bearSouth Sea cultured pearls and freshwater culturedpearls’’).

252 Comment 193, p.8 (defining ‘‘Keshi pearl’’ as:‘‘A non-nucleated pearl, usually less than 2millimeters in size, that may be formed by an oysterin addition to the cultured product during theprocess of cultivation’’).

253 Comment 29, p.2 (defining ‘‘Keshi pearl’’ as:‘‘A formation of some nucleated baroque shapepearls that grow ‘accidentally.’ The invasion of aforeign body (such as a nucleus shell or mantletissue) stimulates the mollusk and inducesabnormal production of nacre that forms to create‘keshi’ pearls’’).

254 Comment 240, p.6 (‘‘A pearl produced bymeans of manufacture characterized by a formationof layers obtained from guanine crystals, an organicsubstance from the scales of ocean fish around anucleus.’’).

determined to include additionaldefinitions in the Guides, as discussedbelow, only where there are specificreasons for doing so.

i. Definitions proposed by the JVC.The only apparent purpose for five ofthe proposed definitions appears to beto emphasize the fact that a culturedpearl (or whatever specific type ofcultured pearl) must be described as acultured pearl. The JVC proposeddefinitions, with accompanying sectionsregarding the use of the term‘‘cultured,’’ for the following pearls:Mabe cultured pearl, black pearl andblack cultured pearl, natural color, freshwater pearl 247 and sweet water pearl.However, § 23.15 of the current Guidesalready states that it is unfair to use theunqualified word ‘‘pearl’’ to describeanything other than a natural pearl andthat it is unfair to use the word ‘‘pearl’’to describe a cultured pearl ‘‘unless it isimmediately preceded, with equalconspicuity, by the word ‘cultured’ or‘cultivated,’ or by some other word orphrase of like meaning and connotation,so as to indicate definitely and clearlythat the product is not a pearl.’’ Becausethere is no information indicating aproblem with these terms, or theadequacy of the existing provision, theCommission is not including thesedefinitions in the Guides.

South Sea pearls: The JVC suggestedthe following definitions for South Seapearls: ‘‘A natural pearl found in the saltwater mollusks of the Pacific OceanSouth Sea Islands, Australia andBurma.’’ It suggested that a South Seacultured pearl be defined as a culturedpearl ‘‘found in the salt water mollusksof the Pacific Ocean South Sea Islands,Australia and Burma.’’ There wascomment suggesting that there is amarket for South Sea cultured pearls,and that such pearls are quite valuable.An article attached to the Rapaportcomment stated that South Sea culturedpearls ‘‘have come to challenge thesupremacy of the Japanese akoya[cultured pearls] in quality * * *. TheSouth Sea pearls have a strong marketbecause of one particular feature thatmakes them attractive: size.’’ 248 TheCPAA stated that it frequently receivescomplaints that imitation pearl

companies are using foreign names toconfuse consumers.249

The Commission therefore has revisedthe Guides to state that it is unfair ordeceptive to represent a pearl or acultured pearl as being a South Seapearl when such is not the case. Thisstatement, which includes a definitionof the term, is included in section23.20(g) of the revised Guides.250

Oriental pearl: The meaning of theterm ‘‘Oriental pearl’’ is clear in thecurrent Guides. There is no evidencethat the lack of a separate definition hascaused any confusion or resulted in anymisuse of the term. There was nocomment pertaining specifically to thisproposed definition. Thus, theCommission has not included a separatedefinition in the Guides.

Blister pearls: The JVC suggesteddefinitions for ‘‘blister pearl’’ and‘‘cultured blister pearl’’ and proposed asection stating that it is unfair to use theterm blister pearl unless it is a pearlwhich meets the definition (i.e., a pearl‘‘often hollow and irregular in form’’).

There is no evidence that blisterpearls are more valuable than otherpearls or that the term ‘‘blister pearl’’ isbeing used to deceive consumers.Moreover, misrepresentations of theword ‘‘pearl’’ are adequately covered inthe Guides. The Commission thereforeis not including the definitions relatingto blister pearls in the Guides.

Seed pearl: Section 23.16(b) of theGuides states that it is unfair to use theterm ‘‘seed pearl’’ or any similar term todescribe any cultured or imitation pearl.The JVC proposed defining seed pearlas: ‘‘A small, natural pearl whichmeasures approximately twomillimeters or less.’’ In a related portionof its petition, the JVC proposed asection that states that it is unfair todescribe a cultured or simulated pearl asa seed pearl without using a qualifyingterm such as ‘‘cultured,’’ ‘‘simulated,’’‘‘artificial,’’ or ‘‘imitation.’’

The proposed definition and relatedsection would indicate it is notdeceptive to describe cultured andartificial pearls as seed pearls, ifqualified appropriately, whereas thecurrent Guides appear to inhibit this.The Commission has concluded thatthis is a useful change because it allowsproducts that consumers might wish topurchase (i.e., cultured or artificial seedpearls) to be accurately described.

ii. Definitions suggested by othercommenters. Keshi pearls: A & Z Pearls,CPAA, and AGTA proposed that adefinition of ‘‘Keshi’’ pearls be added tothe Guides.251 A & Z Pearls and CPAAalso proposed adding two moredefinitions relating to ‘‘Keshi’’ pearls(Keshi pearl, Sweet Water or FreshwaterKeshi pearl, and South Sea Keshi pearl.)CPAA stated the word ‘‘Keshi’’ has beenused in recent years ‘‘as a product namefor seed pearls derived by accident as aby-product of the pearl cultivationprocess.’’ CPAA proposed adding theterm to the Guides ‘‘to further definewhat is and what is not a culturedpearl.’’ 252 A & Z Pearls stated, ‘‘There isa lot of debate in the trade as to whether‘‘Keshi’’ pearls should be considerednatural pearls. Like natural pearls, theygrow accidentally, but they form inmollusks that are cultivated by man.’’ 253

The Commission believes that the JVCproposal—i.e., allowing the term‘‘cultured seed pearl’’ to be used todescribe very small pearls that grow inmollusks cultivated by man—is anappropriate solution to this issue.However, there is no reason that theterm ‘‘Keshi’’ could not also be used torefer to these pearls as long as it is notused to deceive consumers. There is noevidence that the term ‘‘Keshi’’ is beingused to deceive consumers, and thus,the Commission has not included theterm in the Guides at this time.

Organic pearl: Majorica suggestedadding a definition for ‘‘organicpearl.’’ 254 This definition would permitMajorica pearls to be called ‘‘organic’’rather than ‘‘imitation.’’ An articleattached to Majorica’s comment notedthat ‘‘to the untrained eye, Majoricaimitation pearls look very much like

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255 ‘‘Majorica Imitation Pearls,’’ Gems andGemology 185 (Fall 1990), attached to Comment240.

256 The article notes that ‘‘pearl essence’’ (i.e.,guanine crystals) was discovered in the late 17thcentury. Id. at 181. It states that ‘‘the process usedto produce most other imitation pearls involvesdipping or painting the beads with a resin; thus,these imitations lack the iridescence of the Majoricaproduct and its cultured counterpart.’’ Id.

257 Comment 240, p.5.258 Russell (217) pp.1, 2, and 4.259 Comment 90, p.3.260 Lange (183) and CPAA (193) p.14.261 See below for a discussion of other proposals

regarding the term ‘‘organic.’’

262 Comment 90, p.3.263 Comment 193, p.9.264 Comment 90, p.3 and comment 244, p.3.

265 The comments discussing the use of the word‘‘faux’’ are discussed in more detail infra.

266 The JVC did suggest that subsection (b), whichrelates to the term ‘‘seed pearl,’’ be modified toallow the use of the term ‘‘cultured seed pearl’’ orthe terms ‘‘simulated,’’ ‘‘artificial,’’ or ‘‘imitationseed pearl.’’ As noted above, the Commission hasconcluded that this change is useful and hasincluded it in the revised Guides.

267 Comment 193, p.6.268 Id.

saltwater cultured pearls.’’ 255 Thearticle, authored by employees of theGemological Institute of America, alsoimplies that some other brands ofimitation pearls, like Majorica pearls,are made from guanine crystals,although there may be other differencesin the manufacturing process that makeMajorica imitation pearls superior tomost other imitation pearls.256

Majorica states that the current systemof classification (i.e., pearl, cultured,and imitation) ‘‘has narrowed themarket for MAJORICA pearls as a realalternative to so-called cultured pearls’’and ‘‘gives an unfair advantage to thecultured pearl industry.’’ 257 Onecommenter noted that most culturedpearls today have only a smallpercentage of nacre (the iridescentcoating), unlike pearls from 40–50 yearsago. Thus, cultured pearls today maynot look very different from imitationpearls.258

Majorica’s suggestion, however,involves renaming items that the publichas for many years known as imitationpearls. This seems likely to providemore rather than less opportunity fordeceiving consumers. NACAA noted,for example, that ‘‘consumers may beparticularly confused by the manyvarieties of natural, cultured, andimitation pearls.’’ 259 Moreover, twocommenters noted that consumerscurrently confuse Majorica pearls withreal or cultured pearls.260 Accordingly,the Commission is not including adefinition of ‘‘organic pearls’’ in theGuides.261

2. Misuse of the Word ‘‘Pearl’’

Section 23.15 of the current Guidesdeals with misuse of the word pearl.Section 23.15 (a) states that it is unfairto use the unqualified word ‘‘pearl’’ todescribe anything other than a naturalpearl, and § 23.15(b) states that it isunfair to use the word ‘‘pearl’’ todescribe a cultured pearl unless it isqualified by the word ‘‘cultured’’ or‘‘cultivated,’’ or a word of similarimport, to indicate that the product is

not a pearl. The JVC did not proposeany changes in these two sections.

Section 23.15(c) states that it is unfairto use the word ‘‘pearl’’ to describe animitation pearl unless it is immediatelypreceded, with equal conspicuity, bythe word ‘‘imitation’’ or ‘‘simulated,’’ orby some other similar word or phrase.The JVC proposed adding the word‘‘artificial’’ to this section. NACAAstated that the Guides should ‘‘requireartificial pearls to be clearly labeledusing one standard term.’’ It preferredthe terms ‘‘imitation’’ or ‘‘artificial,’’instead of ‘‘simulated,’’ because‘‘consumers are more likely tounderstand what those words mean.’’ 262

The word ‘‘artificial’’ clearly indicatesthat a product is not a natural pearl.Thus, the Commission is including thisterm in the Guides as another exampleof a term (along with simulated) that canbe used to describe imitation pearls.

CPAA suggested that the Guidesinclude a section that states that it isunfair ‘‘to use the terms ‘faux pearl,’‘fashion pearl,’ ‘Mother of Pearl’ or anyother proper name or noun term alonewhen describing or qualifying animitation pearl product withoutincluding the words ‘imitation’,‘simulated’ or any other term of similarconnotation within the same productdescription and with equalconspicuousness.’’ CPAA stated that theuse of these terms ‘‘has been the numberone marketing and advertising tool inthe sale of imitation pearl productsacross the U.S.’’ CPAA explained that‘‘many customers can not tell thedifference between the products by sightalone,’’ and that ‘‘[w]ithout properproduct designations such as natural,cultured and imitation, customers areoften misled as to the true nature of theproduct that they are buying.’’ 263 Withrespect to ‘‘faux’’ generally, NACAAstated that ‘‘we do not believe that mostconsumers know what it means’’ andthe Postal Service stated that ‘‘the term‘faux’ has been used to confuseunsophisticated consumers and enhancethe apparent value of their costumejewelry.’’ 264

As noted, the Guides currently statethat it is unfair to describe an imitationpearl as a pearl without a qualifier suchas ‘‘imitation.’’ Although the Guidespermit sellers to use terms other thanimitation as long as they ‘‘indicatedefinitely and clearly that the product isnot a pearl,’’ based on information fromCPAA, the Postal Service, and NACAA,it appears that the terms faux pearl,fashion pearl, and Mother of Pearl are

inadequate to convey to a substantialgroup of unsophisticated consumersthat the items are imitation pearls.Accordingly, the Commission hasrevised the Guides to state that it isunfair or deceptive ‘‘to use the terms‘faux pearl,’ ‘fashion pearl,’ ‘Mother ofPearl,’ or any other such term todescribe or qualify an imitation pearlproduct unless it is immediatelypreceded, with equal conspicuousness,by the word ‘artificial,’ ‘imitation,’ or‘simulated,’ or by some other word orphrase of like meaning, so as to indicatedefinitely and clearly that the product isnot a pearl.’’ 265

The JVC also proposed adding a newsubsection (d) which states that it isunfair to use the word ‘pearl’ with anasterisk which references to a footnoteexplaining that the product is animitation or cultured pearl. Thisproposal is similar to a Note currentlyin section 23.15 of the Guides. However,section 23.15(c) states that the word‘‘pearl’’ should be ‘‘immediatelypreceded’’ by a qualifying word such as‘‘imitation’’ or ‘‘cultured,’’ if the item isnot a natural pearl. The Commissionbelieves that this language advisessellers about how to avoid a deceptiveuse of the term ‘‘pearl.’’ The currentNote is superfluous and the Commissionhas deleted it.

3. Misuse of Other Terms

a. Proposed changes to existingsubsections. Section 23.16 of the currentGuides consists of six subsectionsdescribing several terms that can onlybe used to describe specific types ofpearls. The JVC did not suggest anychanges in these sections.266

The only comment on these sectionsreferred to § 23.16(e), which states thatit is unfair to use the word ‘‘natura’’ orany similar word to describe a culturedor imitation pearl. CPAA suggested thewords ‘‘natural,’’ ‘‘nature’s,’’ and‘‘organic’’ be ‘‘added to the list of wordsthat cannot be used to describe animitation pearl product.’’ 267 CPAAexplained that these words have beenused to describe imitation pearls, andargued that they ‘‘only serve to confusethe consumer and retail buyer as to theproper origin and intrinsic value of animitation product.’’ 268

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269 Comment 240, pp.6 and 11. The sectionrequested by Majorica would limit the use of‘‘organic’’ to any pearl other than an imitation pearlmade from guanine crystals. Id. at 7.

270 Attachment to comment 49.271 Comment 193, p.6. 272 Comment 193, p.7.

273 Comment 193, p.7.274 Comment 193, p.8; comment 49, p.15.275 Comment 193, p.6.

On the other hand, Majorica requestedthat the Guides be revised to add asection stating that pearls made fromguanine crystals can be described as‘‘organic’’ pearls. It stated thatelimination of the word ‘‘organic’’would eliminate ‘‘the only realcompetition which cultured pearls havein this country.’’ 269 However, for thereasons stated above, the Commissionhas concluded that describing pearlsmade from guanine crystals as ‘‘organic’’pearls is likely to mislead consumers.Nevertheless, there is a differencebetween the words ‘‘natural’’ and‘‘nature’s’’—neither of which caninherently be used in a nondeceptivemanner with respect to imitationpearls—and the word ‘‘organic.’’ TheCommission believes that the word‘‘organic’’ could be used, with adequatequalification, to describe Majoricapearls in a truthful manner. Forexample, in its ads, Majorica describesits pearls as ‘‘organic man-made pearls’’that consist of a translucent nucleus‘‘coated with layers of pearlizedessence, an organic material extractedfrom marine species.’’ 270 Thus, theCommission has revised § 23.16(e) ofthe current Guides to indicate that it isunfair or deceptive to use the term‘‘natural’’ and ‘‘nature’s’’ to refer to animitation pearl. The Commission alsohas added a sentence to this sectionstating that it is unfair or deceptive touse the term ‘‘organic’’ to refer to animitation pearl unless the term isqualified in such a way as to make clearthat the product is not a natural pearl.

The JVC suggested adding the word‘‘cultura’’ to § 23.16(f) of the currentGuides, which states that it is unfair touse the word ‘‘kultured’’ or any similarword to describe an imitation pearl.However, the section as currentlywritten prohibits the use of ‘‘any otherword, term, or phrase of like meaning* * * .’’ The word ‘‘cultura’’ is verysimilar to ‘‘kultured.’’ Thus, § 23.16(f)already provides adequate guidance onhow to avoid deceptive representations.However, CPAA stated that terms suchas ‘‘semi-cultured pearl,’’ ‘‘cultured-like,’’ ‘‘part-cultured,’’ and ‘‘pre-maturecultured pearl,’’ have been used todescribe imitation pearls, and arguedthat they ‘‘only serve to confuse theconsumer and retail buyer as to theproper origin of an imitationproduct.’’ 271 The Commission hasdetermined that these terms are

deceptive when applied to imitationproducts and has included them in§ 23.16(f) of the current Guides.

b. Additional proposed provisionsrelating to cultured pearls. The JVCproposed the addition of six newsubsections relating to the failure todescribe a cultured pearl as a culturedpearl. These proposed subsections relateto fresh water cultured pearls, Biwacultured pearls, South Sea culturedpearls, black cultured pearls, and Mabecultured pearls.

All of these have been discussedpreviously, in connection with thesection on definitions, except Biwapearls (which were not included in thedefinition section proposed by the JVC.)As noted, the Commission hasconcluded that § 23.15(b) of the currentGuides, which states that it is unfair touse the word ‘‘pearl’’ to describe acultured pearl unless the word ‘‘pearl’’is ‘‘immediately preceded, with equalconspicuity,’’ by the word ‘‘cultured’’ ora word of similar import, is sufficient toadmonish sellers that they shouldadequately disclose that a culturedpearl—of whatever type—is cultured.Thus, the Commission has not includedany of these proposed subsectionsexcept the ones dealing with South Seapearls (discussed supra) and Biwapearls.

The subsection proposed by the JVCfor Biwa pearls states that it is unfair touse the term ‘‘Biwa pearl’’ without thequalifying term ‘‘cultured.’’ TheCommission has concluded that thisportion of the proposed subsection isunnecessary. However, the proposedsubsection also provides that ‘‘the term‘Biwa cultured pearl’ must only be usedwhen describing those formationswhich have the distinctive appearanceof a fresh water cultured pearl takenfrom the fresh water mollusksinhabiting Lake Biwa within the islandof Honshu, Japan.’’

CPAA commented that the termshould be limited to ‘‘those formationswhich are grown in fresh watermollusks in the lakes and rivers ofJapan.’’ CPAA stated that the words‘‘distinctive appearance’’ might allowimitation pearls and pearls from othercountries to use the regionaldescription. CPAA explained that‘‘Biwa’’ represents all Japanesefreshwater pearls because ‘‘first, manypeople currently refer to all Japaneseorigin freshwater cultured pearls as‘Biwa’’ and second, because freshwaterpearl production in Japan is nearingextinction ‘‘Biwa pearls’’ areappreciating in value.272 CPAA statedthat many U.S. importers use the term

‘‘Biwa pearl’’ ‘‘to describe freshwaterpearls that have a similar appearance toBiwa pearls but come from othercountries such as China’’ and artificiallyinflate the prices of them, which ‘‘costas little as 30 times less than theBiwas.’’ 273

Because of the evidence of deceptiveuse of this term, the Commission hasincluded a provision in the Guidesstating that the term ‘‘Biwa’’ shouldonly be applied to pearls ‘‘which aregrown in fresh water mollusks in thelakes and rivers of Japan.’’

c. Other proposed provisions. The JVCproposed that eight other subsections beadded to the section dealing withmisuse of specific terms (in addition tothe proposed subsections describedabove.) The first such proposedsubsection is general: ‘‘It is an unfairtrade practice to use the term ‘pearl,’‘oriental pearl,’ ‘cultured pearl,’‘cultivated pearl’ * * * to describe* * * any such pearl product whoseouter surface does not consist wholly ofnaturally occurring concentric layers ofnacre secreted by that mollusk.’’ Thissection duplicates other subparts of§ 23.16 of the current Guides, andtherefore, the Commission has notincluded it in the Guides.

Another JVC proposal prohibits theuse of the term ‘‘non-nucleated pearl,’’because ‘‘cultured pearls of this type areformed by the introduction of mantletissue within the body of the mollusk’’and thus are nucleated. However, boththe CPAA and AGTA used theexpression ‘‘non-nucleated pearl’’ intheir comments in referring to Keshipearls.274 Moreover, whether or not theterm ‘‘non-nucleated’’ is correct, noevidence has been offered to show thatit is being used to deceive consumers asto a material fact. Thus, the Commissionhas not included this section.

Two of the additional proposedsections relate solely to imitation pearls.One states that it is unfair ‘‘to use theterm ‘man-made’ or ‘man-created’without using the term ‘simulated’ orsimilar term, to qualify the product asin ‘man-made simulated pearls.’’’ CPAAcommented that this section shouldstate that it is unfair to use these terms‘‘without also using the term‘simulated,’ ‘imitation’ or any other termthat has the same connotation andmeaning when qualifying or describingan imitation pearl product.’’ 275 The onlyother comment relating to this provisionwas from Majorica, which requested theFTC ‘‘to withhold any furtherrestrictions on the words ‘organic,’

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276 Comment 240, p.6 (emphasis added).277 Although there was no comment on the

inclusion of ‘‘precious’’ in this subsection, theCommission has determined that it is deceptive asapplied to imitation pearls because ‘‘precious’’ inthe jewelry industry implies rarity. Althoughimitation pearls can be of high quality, they are notlikely to be rare.

278 Comment 49, p.16 (noting that there is not asimilar prohibition of the use of the term ‘gem’ inthe section on diamonds).

279 The Commission has deleted § 23.21(c) of theGuides, as discussed below, in the sectionpertaining to gemstones.

280 AGTA (49) p.16; CPAA (193) p.7 (suggestingthat the provision be modified to apply to‘‘cultured, simulated, or imitation pearls’’ ratherthan to ‘‘cultured or imitation pearls’’); Majorica(240) p.6 (requesting no ‘‘further restrictions’’ beplaced on the use of ‘‘created’’ or ‘‘synthetic’’).

281 Comment 193, p.8 (‘‘Orient is gemologicallydefined as a subdued iridescence, occurring whenwhite light is divided into its separate and distinctspectral colors as it passes through and is refractedback from the nacre secreted by mollusks whethersurrounding a nucleus or not.’’).

‘man-made,’ ‘synthetic,’ and ‘created’while considering the creation of a newcategory of pearl to which the word‘organic’ could properly and accuratelybe applied.’’ 276 CPAA may be arguingthat the phrase ‘‘man-made’’ could beunderstood to mean cultured pearls,since such pearls are ‘‘started’’ by man.However, there is no evidence thatconsumers are interpreting the phrase‘‘man-made’’ or similar phrases in thismanner, and without such evidence, theCommission has decided not to includethe section, as proposed by CPAA, inthe revised Guides.

Four of the remaining five proposedsubsections relate to the misuse ofcertain words, which are described in§§ 23.20 and 23.21 of the currentGuides. Section 23.20 of the currentGuides provides that it is unfair to usethe words ‘‘real,’’ ‘‘genuine,’’ ‘‘natural,’’or ‘‘similar terms as descriptive of anyarticle or articles which aremanufactured or produced syntheticallyor artificially, or artificially cultured orcultivated * * *.’’ Although this sectiondeals primarily with precious and semi-precious stones, it also applies tocultured or imitation pearls.

The subsection proposed by the JVCstates that it is unfair to use these wordsor the word ‘‘precious’’ or similar termsto describe imitation or cultured pearls.

The Commission has reorganized theGuides so that this statement appears inthe pearl section, making it more likelythat industry members searching forguidance as to pearl advertising will seeit. As noted above, the Commissionalready has included the term ‘‘natural’’in the subsection dealing with the term‘‘natura,’’ § 23.20(e) of the revisedGuides. Thus, the Commission hasadded a new subsection, 23.20(i), thatstates that it is unfair or deceptive to usethe terms ‘‘real,’’ ‘‘genuine,’’ or‘‘precious’’ as descriptive of animitation pearl.277

This subsection does not state that theterms ‘‘real’’ or ‘‘genuine’’ are unfair ordeceptive if used to describe culturedpearls. The Commission has determinedthat it is possible to truthfully describe‘‘real’’ or ‘‘genuine’’ cultured pearlswithout implying that they are notcultured. In addition, there may beinstances when cultured pearls could betruthfully described as ‘‘precious.’’Therefore, § 23.20(i) is limited toimitation pearls.

Section 23.21(a) in the current Guidesstates that it is unfair to use the term‘‘gem’’ or a similar term to describe ‘‘apearl, cultured pearl, diamond, ruby,* * * which does not possess thebeauty, symmetry, rarity, and valuenecessary for qualification as a gem.’’The JVC proposed a sectionrecommending that the word ‘‘gem’’ notbe used as a quality designation ordescription of natural pearls, ‘‘sincethere is no existing criteria for theseterms, and their use to describe, imply,or represent quality could bemisleading.’’

AGTA commented that this provisionshould only apply to sales to aconsumer, stating, ‘‘The term ‘gem’ istraditionally used within the trade todescribe particularly fine qualities ofany given gemstone species, includingpearls. To prohibit its use within thetrade is restrictive of traditional practiceand is unnecessary as it is clearlyunderstood.’’ 278 There is no evidencethat consumers would be deceived bythis term as applied to pearls that‘‘possess the beauty, symmetry, rarity,and value necessary for qualification asa gem.’’ Therefore, the Commission hasretained current § 23.21(a) and hasmoved the portion relating to pearls tothe pearls section of the Guides (revised§ 23.20(j)). The Commission hasincluded a Note after this section(which currently follows § 23.21(b) inthe current Guides) which states that theuse of ‘‘gem’’ with respect to culturedpearls should be avoided since fewcultured pearls possess the necessaryqualities and that imitation pearlsshould not be described as ‘gems.’

Section 23.21(c) of the current Guidesstates that it is unfair to use the words‘‘reproduction,’’ ‘‘replica,’’ or similarterms to describe a cultured or imitationpearl (or imitation precious or semi-precious stones.) The JVC proposedincluding this statement, as it pertainsto pearls, in the pearls section.However, if the nature of the materialused in a reproduction or replica isadequately disclosed, as advised byother sections of the Guides, it is notclear that the use of these terms wouldbe deceptive or unfair. Thus, theCommission has not added this sectionto the Guides.279

Section 23.21(d) of the current Guidesstates that the use of the term‘‘synthetic’’ to describe cultured orimitation pearls is unfair. The term maybe used for precious and semi-precious

synthetic stones if they have‘‘essentially the same optical, physical,and chemical properties as the stonenamed.’’ The JVC proposed moving theportion of § 23.21(d) that pertains topearls to the pearls section and addingthat it is unfair to use the word‘‘created’’ to describe cultured orimitation pearls. AGTA and CPAA bothsupported the proposal, and Majoricaopposed it.280 No evidence was offeredto explain why the use of the term‘‘created’’ is unfair or deceptive asapplied to cultured or imitation pearls.The Commission therefore has notincluded the proposed section regardingthe term ‘‘created’’ in the Guides.

However, the term ‘‘synthetic’’ hasbeen used with respect to gemstones torefer to a man-made substance that hasall the physical, chemical and opticalproperties of the natural stone. Sincecultured pearls do not have the samephysical and optical properties asnatural pearls, the use of this term maybe deceptive. Furthermore, the use ofthe term ‘‘synthetic’’ to describe animitation pearl might convince someconsumers that the pearls were culturedrather than imitation. Thus, theCommission has included a newsubsection, 23.20(k), which states that itis unfair or deceptive to use the word‘‘synthetic’’ to describe cultured orimitation pearls.

Finally, the JVC proposed asubsection stating that it is unfair to usethe term ‘‘semi-precious’’ to describeany pearl, cultured pearl, ‘‘or man-madeindustry product.’’ No evidence wasoffered to show that this use of ‘‘semi-precious’’ would be unfair or deceptive,and there was no comment on thisproposal. In the absence of suchevidence, the Commission has decidednot to add this provision to the Guidesat this time.

d. Additional provisions proposed bycommenters. CPAA proposed thatseveral additional subsections be addedto the section pertaining to ‘‘Misuse ofterms.’’ First, CPAA suggested asubsection stating that it is unfair to usethe term ‘‘orient’’ to describe theproperties of an imitation pearl.281

CPAA stated that ‘‘the term ‘orient’ wasfirst used in a gemological sense by theGemological Institute of America in

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282 Comment 193, p.9.283 Id.284 CPAA (193) p.9 (explaining, for example, that

the ‘‘use of the term ‘Misaki Japanese Pearls’ inseveral cases has led consumers to believe that theywere purchasing Japanese cultured pearls instead ofimitation pearl products’’).

285 Comment 240, pp.8–10. Unlike the CPAAproposal, Majorica proposed to prohibit the use ofthe term ‘‘Mallorca’’ or any similar expressionconnoting the name of the Island of Mallorca, Spainin combination with the word pearl. (The CPAAproposal would allow an imitation pearl to bedescribed as a ‘‘Mallorca imitation pearl.’’) Majoricastated that it has sued distributors of pearls and hasobtained relief which requires such distributors to‘‘to reduce the emphasis on [Mallorca] in theiradvertising and distribution.’’ Majorica asserts thatit is unfair to require it to go to the expense oflitigation every time such an abuse occurs. Id.However, Majorica’s specific complaint regardingthe ‘‘passing off’’ of one manufacturer’s product foranother is already adequately addressed by caselawunder Section 5.

286 Comment 217, p.1 (suggesting that culturedpearls with a 1⁄4 to 1⁄2 mm. coating of nacre shouldbe marked ‘‘Service Grade’’ and those with morethan 1⁄2 mm. marked ‘‘Heirloom Grade’’).

287 Id. at p.2.288 ‘‘Majorica Imitation Pearls,’’ Gems and

Gemology 187 (Fall 1990), attached to Comment240.

289 ‘‘Rapaport Diamond Report’’ 26 (July 17, 1992)attached to Comment 233.

290 Id.

291 Nassau (10) suggested, at p.1, threemodifications to the JVC proposal: the addition ofthe word ‘‘impregnation’’ after the word ‘‘coating’’;the addition of the words ‘‘wax, plastic, or glass’’after ‘‘colored oil’’; and the removal of the word‘‘surface’’ (i.e., in ‘‘surface diffusion’’).

292 Although most of these techniques enhancecolor, application of colorless oil could arguably beused simply to cover inclusions. The current

Continued

order to explain and clarify qualitypoints of natural and cultured pearls* * * many retailers and gemologistsalike hold their [GIA] definitions to bethe authoritative standard within theindustry.’’ 282 However, an article fromthe GIA quarterly journal Gems &Gemology was attached to Majorica’scomment; the authors are all employeesof GIA. The article states, ‘‘Aniridescence resembling the orient seenon some cultured pearls may also beobserved on Majoricas [an imitationpearl].’’ Thus, it appears that at leastsome imitation pearls can possess‘‘orient.’’ Therefore, the Commission hasnot included this provision in therevised Guides.

CPAA also proposed a new provision,stating that it is unfair to use the terms‘‘Japanese Pearls,’’ ‘‘Mallorca Pearls,’’‘‘Chinese Pearls,’’ or any other regionaldesignation to describe cultured orimitation pearls without including thewords ‘‘cultured, imitation orsimulated.’’ 283 CPAA explained thatimitation pearl companies recently haveused regional terms to describe theirproducts, and that this misleadsconsumers about the true nature of theproduct.284

Majorica made a similar suggestion,stating that there is continued abuse ofterms such as ‘‘Mallorca Pearl,’’‘‘Majorca Pearl,’’ and ‘‘Mayorca Pearl’’and that they ‘‘have numerous examplesof customers and distributors who havebeen deceived into purchasing pearlsunder the label of ‘Majorca’ or‘Mallorca’ pearls believing them to havespecial qualities related to the Island ofMajorca or, for that matter, that they areMAJORICA pearls.’’ 285

The Commission has concluded thatthere is some evidence that regionaldescriptions are being used to misleadconsumers. The Commission thereforehas included a provision in the revised

Guides that states that the regionaldescription of a pearl should beaccompanied by a description ofwhether the item is a cultured orimitation pearl.

4. Misrepresentation as to CulturedPearls

The JVC recommended no substantivechanges in § 23.17 of the current Guides.As noted above, this section describesunfair practices involving false,misleading, or deceptive statementsabout cultured pearls, including themanner in which they are produced andthe thickness of the nacre coating.

One commenter, Kenneth Russell,recommended that the Commissionestablish grades for cultured pearlsbased on the thickness of the nacredeposited by the mollusk, following theintroduction by man of a mother-of-pearl bead. He noted that the thicknessof the nacre ‘‘mainly determines theirwearable value’’ and that this‘‘indexing’’ information shouldaccompany this product ‘‘just askaratage serves to rank gold jewelry.’’ 286

He stated that most cultured pearlsconsist of 90 to 95% nucleus and verylittle nacre.287

The article attached to the Majoricacomment stated that the thickness of thenacre in a cultured pearl ‘‘will varydepending on the amount of time thenucleated mollusk was allowed to growbefore harvest.’’ 288 The article attachedto the Rapaport comment quoted a pearlindustry source as saying that some ofthe lowest-quality Chinese pearlsshould not be on the market because‘‘the nacre peels off the nucleus withina year.’’ 289 The article notes that pearlgrading is ‘‘a non-standardized processthat gives dealers a lot of room foropinion.’’ It also notes that GIA has agrading system which ‘‘uses numericalgrades to show differences inappearance, durability and value ofpearl strands’’ and that some companiesuse their own methods.290

The literature indicates that the nacreon some cultured pearls might be sothin that they do not meet theexpectations consumers have when anitem is described as a cultured pearl.Section 23.17 in the current Guidesadmonishes against misrepresentations

about the thickness of the nacre oncultured pearls or the quality of pearls.However, it is not unfair or deceptive tofail to grade cultured pearls that containa coating of nacre that is thick enoughto meet minimal consumer expectations.

F. Precious and Semi-precious Stones(Category V): §§ 23.18–23.21

Guides in this part apply primarily tocolored gemstones, precious (rubies,sapphires, emeralds) and semi-precious(amethyst, topaz, etc.) stones. TheGuides refer to three types of gemstones:natural (i.e., mined from the ground);synthetic stones, which are laboratory-created and which § 23.21(d) describesas having ‘‘essentially the same optical,physical, and chemical properties’’ asnatural stones; and imitation stones,which resemble natural stones but donot have the same properties.

1. Deception Generally: § 23.18Section 23.18 states that any material

misrepresentation with respect toprecious or semi-precious gemstones isunfair. The JVC proposal omitted thissection. Section 23.18 merely repeatsthe general admonition in § 23.1 againstmaterial misrepresentations of anyindustry product. Thus, the Commissionhas deleted this provision from therevised Guides.

a. Disclosure of TreatmentA Note following § 23.18 states that

any artificial coloring or tinting of adiamond or precious or semi-preciousstone by ‘‘coating, irradiating, orheating, or by use of nuclearbombardment, or by any other means’’should be disclosed and the fact that thecoloring is not permanent, if such is thefact. The JVC proposed, in section23.20(c) of its petition, a section in lieuof the Note which requires thedisclosure of any enhancement ‘‘bycoating, application of colorless orcolored oil, irradiation, surfacediffusion, dyeing, heating or by use ofnuclear bombardment, or by any othermeans.’’ 291 This proposal would expandthe recommended disclosure aboutenhancements relating to color to allenhancements (e.g., those related toconcealing cracks). In addition, itexplicitly covers enhancement byapplications of colored or colorless oil,surface diffusion, or dyeing.292

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Guides recommend disclosure of techniques whichartificially color gemstones, and the fact that thetechniques are not explicitly mentioned may leadreaders to assume that it need not be disclosed.Some comments gave this indication because theyassumed that the disclosure of treatment withcolorless oil was not currently advised.

293 Lannyte (65) p.8 (also suggesting, at p.10, thatthe guides state that it is unfair to state that agemstone has not been enhanced when it has been,a suggestion that has been incorporated into § 23.1of the revised Guides by including ‘‘treatment’’ inthe list of attributes that should not bemisrepresented); JGL (77) p.1; Majestic (115) p.1;Suberi (214) p.2; Bruce (218) p.12; NACSM (219)p.13; Impex (220) p.1; Best (225) pp.8–9.

294 Comment 18, p.2; AGTA (49) p.5 (notingseveral technologies (e.g., diffusion-treatedsapphires, irradiated topaz) that ‘‘did not even existon a commercial scale ten years ago’’); GIA (81) p.2;Eisen (91) p.1; ArtCarved (155) p.1; LaPrad (181)p.1; IJA (192) p.1.

295 Comment 219, p.13 and letter to Secretary, p.1.See also ‘‘Epoxy-Like Resins,’’ Jewelers’ Circular-Keystone 176 (June 1994) (stating that ‘‘[t]hemajority of emeralds sold today are epoxy resinimpregnated’’ and noted that oil and epoxy resinare both designed to ‘‘soften or hide the effect ofcracks and fissures’’).

296 Id.297 Comment 90, p.1.298 Lannyte (65) p.7; Impex (220) stated that the

JVC proposal would ‘‘defy standard industrypractices.’’

299 See discussion infra of the 1990 GemstoneEnhancement Manual (attached to comment 49).

300 By letter dated February 7, 1989, the JVCinformed staff that it wished to revise its petitionto ‘‘include disclosure in the colored gemstoneprovision the permanency and/or non-permanencyof enhancement.’’

301 Bales (156) p. 10.302 Comment 49, p. 5 (stating that it sees examples

of overcharging too frequently and listing as ‘‘mostnotable examples,’’ i.e., diffusion-treated sapphire,Yehuda-treated and laser-drilled diamonds, andirradiated topaz, sapphire, and diamond); Chatham(231) p. 24 (stating that consumers are deceived bytreated natural stones that are passed off as morevaluable than they actually are).

303 AGTA recommended that diffusion-treatedand irradiated gemstones always be described as‘‘chemically colored by diffusion,’’ and, if the colordoes not permeate the entire gem, that fact shouldbe revealed with a warning that re-cutting or re-polishing is not recommended. Comment 49, p. 16.However, River (254) stated, at pp. 2–3, that manypeople find diffusion treated sapphire a bettervalue, and that the problem of re-cutting is ‘‘blownout of proportion’’ since very few stones are re-cutor re-polished at a customer’s request, and in therare instance when a stone is broken, it is replaced.For these latter reasons, the Commission has notincluded the language suggested by AGTA (i.e., awarning about re-cutting or re-polishing) in theGuides. Further, it is not practical for the Guidesto address every conceivable issue that may arisein a jewelry transaction.

304 Comment 222, p.5.305 Numerous comments noted that disclosure of

treatment of all gemstones would be expensive forretailers. Service (222) p.5 (stating this is difficultbecause the stone probably changed hands a fewtimes before being purchased by the retailer); Best(225) p.9 (stating that the retailer may not know ofthe enhancement); Finlay (253) p.2 (stating that itwould be an ‘‘overwhelming task’’ for the retailerto obtain information about enhancement from themanufacturers). Others commented (without furtherexplanation) that disclosure would ‘‘complicate’’sorting, advertising, and selling. Philnor (93) p.1;PanAmerican (101) p.1; Fame (102) p.1; Orion (113)p.1; Precision (121) p.1.

306 The Commission does not believe that itwould be unfair to fail to disclose the treatmentsbecause, even assuming there might be someconsumer injury associated with such failure, theinjury would be outweighed by the benefits tocompetition, see supra note 305, associated withnot requiring the disclosure. See InternationalHarvester, 104 F.T.C. at 949.

Numerous commenters noted thatalmost every natural gemstone is subjectto some form of enhancement.293 AGSstated that many new enhancementtechniques have been developed sincethe Guides were issued and that‘‘[c]oating processes are developeddaily.’’ 294 NACSM stated that up to 95%of colored gemstones are dipped in oiland that this treatment is ‘‘taken forgranted by retailers and consumersalike.’’ 295 It questioned the value ofdisclosures under these circumstancesand contended they would clutterwritten advertisements and increaseprices.296 However, NACAA commentedthat its members receive complaintsabout failure to disclose stoneenhancement.297 Although the Guidescurrently recommend disclosure ofcolor enhancement, some commentsindicated that there is little suchdisclosure in the marketplace.298

However, some industry associationsstrongly encourage their members todisclose treatments.299

The Commission is persuaded by thecomments that many consumers do nothave detailed knowledge about thenature and types of treatments used toenhance gemstones. However,consumers would expect their gemstonepurchases to retain their appearanceover time regardless of any treatmentsand to not require special care to retaintheir appearance. On the basis of thecomments and for the reasons discussedbelow, the Commission has concluded

that non-permanent treatments ofvarious types (not just those that affectcolor), or any treatments that createspecial care requirements should bedisclosed. There is no logical reason tolimit disclosure to treatments that affectcolor. Further, consumers should beinformed when the treatment is notpermanent.300

Some comments argued that anytreatment, even if it is permanent, mayreduce the value of a stone and a failureto reveal treatment amounts to arepresentation that a stone is morevaluable than it is. One commenternoted that treatments should bedisclosed ‘‘since the stone gives theappearance to the consumer that it is ahigher grade than what it actuallyis.’’ 301 AGTA also stated that ‘‘thedifficulty in detecting treatmentspresents opportunities formisrepresentation of the value’’ and that‘‘the potential for overchargingconsumers if the enhancements are notdisclosed at every level of the trade isvery real.’’ 302 AGTA attached a May1993 notice it issued to its members inwhich it referred to the fact that anumber of knowledgeable wholesalerspurchased diffusion-treated sapphireswithout knowing that they weretreated.303

On the other hand, Service arguedthat failure to reveal treatment is notdeceptive if the treatment is permanent,stating, ‘‘[i]t is unreasonable to requirea retailer to disclose what has happenedto a stone in the manufacturing processif the change is permanent.’’ Serviceagreed that if the change is notpermanent, the customer ‘‘wants to

know if the color or quality may degradeover time and what the customer mustdo, if anything, to maintain the stone’squality and color. Requiring thisinformation to be provided isacceptable.’’304

The Commission has concluded thatit is not unfair or deceptive to fail todisclose a treatment that is permanentor that does not create special carerequirements. As the Commission statedin International Harvester, 104 F.T.C. at948, it may be deceptive for a seller ‘‘tosimply remain silent, if he does sounder circumstances that constitute animplied but false representation.’’ Theseimplied representations ‘‘may arise fromthe physical appearance of the product,or from the circumstances of a specifictransaction, or they may be based onordinary consumer expectations as tothe irreducible minimum performancestandards of a particular class of goods.’’Id. The Commission explained,however, that ‘‘[i]ndividual consumersmay have erroneous preconceptionsabout issues as diverse as the entirerange of human error, and it would beboth impractical and very costly torequire corrective information on allsuch points.’’ Id. at 949.305 Thus, if anexpress or implied representation ismade (in advertising or at the point ofsale) that might imply rarity andtherefore lack of treatment—e.g., thatthe gemstones are of an exceptionallyhigh quality—then the failure to revealany treatment may be deceptive.However, if no such representation ismade, consumers simply might not giveany thought to whether the gemstoneswere treated, beyond assuming that allgemstones undergo some processing toachieve their finished state. Therefore, itis neither unfair nor deceptive to fail toreveal treatments that are permanent,and that do not create special carerequirements.306

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307 For example, the Manual states that emeraldsare usually oiled with colorless oil to improveappearance; the stability of this treatment isdescribed as ‘‘fair to good.’’ According to theManual, oiled emeralds should not be subjected totemperature changes, steaming, chemicals, orultrasonic cleaning machines. Moreover, numerousother stones that are commonly treated to improveappearance (e.g., Amazonite—usually waxed;Jadite—impregnated with colorless wax; LapisLazuli—impregnated with colorless wax or oil;Malachite—coated with wax) should not be cleanedin ultrasonic machines, according to the Manual.Ultrasonic cleaning machines are now sold to thegeneral public by mass retailers.

308 An article entitled ‘‘Emeralds’’ in NationalGeographic, Vol. 178, July 1990, stated that oilingof emeralds probably lasts from a few months to ayear or two ‘‘if the emerald is kept away from heatand out of the sun.’’ Id. at 68. The oiling processinvolves submerging vials of emeralds in boilingwater and then placing the vials in a pressurechamber to drive the oil even deeper into the cracksin the emeralds. This is not a process that theaverage consumer could repeat. The article noted,at another point, that the oil evaporates or seeps out‘‘within a year or two’’ and that oiling ‘‘can puzzleand dismay emerald owners.’’ Id. at p.49.

309 ‘‘Epoxy-Like Resins,’’ supra, at 177. The articlequotes experts who suggest that the filler may beharder to take out if it deteriorates and changescolor, that it may turn cloudy over time, or that itmay cause stress and increase the chances of gembreakage. Id. at 178.

310 NACSM (219) pp.9, 10, 13; Best (225) p.8; NRF(238) p.2.

311 JMC (1); Thorpe (7); Capital (19); G&B (30);Lannyte (65); Nowlin (109); McGee (112); Bridge(163); LaPrad (181); IJA (192); Bedford (210);Matthey (213); NACSM (219); MJSA (226); Preston(229); Sheaffer (249); and Solid Gold (261). Some

of these comments indicated that such disclosureshould be recommended, rather than required.

312 Honora (15); Argo (17); AGS (18) p.3 (statingthat ‘‘professional jewelers routinely disclosespecial care requirements’’); Estate (23); Jabel (47)p.2 (suggesting that the ‘‘stone manufacturer mightsupply a ‘care and feeding’ card for every type ofstone he handles’’); Skalet (61); NACAA (90);ArtCarved (155); Bales (156); Shire (221); and Leach(257).

313 Comment 81, p.3; Schwartz (52) p.3 (statingthat there should be disclosure since ‘‘many, if notmost, of gemstone enhancements areunstable . . . .’’); Bruce (218) p.12 (stating that ‘‘itis only when a stone is not permanently changedand may revert back to another color or shade thata ticket should be attached letting the consumerknow of this, as well as other precautions’’); Service(222) p.3 (stating that it does not oppose disclosing‘‘the need for any particular care of a gemstone toinsure its continued quality in appearance’’).

314 AGTA (49) and CPAA (193).315 Comment 49, p.10 (stating that the Manual,

unlike the Guides, is revised frequently and ‘‘if theguides attempt to address specific enhancements,the information may be obsolete before changescould be incorporated at the federal level’’). But seeRiver (254) p.2 (stating that the Manual uses lettercodes to describe treatment, which it described as‘‘an arcane method of communicating’’).

Nevertheless, most treatments ofgemstones are not permanent, and mosttreatments create special carerequirements. AGTA attached to itscomment a copy of the 1990 GemstoneEnhancement Manual, which states, atp.3, that it was ‘‘developed by acoalition of jewelry industry leadersrepresenting the various tradeorganizations, gemological scientists,and the trade press.’’ This Manual givesexamples of treatments that are notpermanent, or that create special carerequirements.307 What appears to be themost common treatment—oiling—isdefinitely not permanent.308 Although anew treatment with epoxy resin ‘‘leadsto a longer lasting improvement inappearance which is not possible withvolatile compounds like oils andparaffin used traditionally,’’ expertshave suggested that a number ofproblems may occur even with thistreatment and that disclosure isnecessary because otherwise a seller‘‘could easily ask a price commensuratewith a stone’s appearance.’’ 309

Further, as noted above, mostconsumers probably do not havedetailed knowledge about the natureand type of treatments that are used toenhance gemstones. Therefore, ifconsumers are unaware of the non-permanency of a treatment or thespecial care requirements associatedwith a treatment, the gemstone may notmeet their expectations if the color fadesor inclusions appear, etc. Accordingly,the Commission has included a sectionin the revised Guides that states that

non-permanent treatments andtreatments that create special carerequirements should be disclosed. Thissection explicitly states that certaintreatments, such as application ofcolored or colorless oil or epoxy-likeresins, surface diffusion, or dyeing,should be disclosed because theyusually are either not permanent orcreate special care requirements. Thisrecognizes that whether a treatment ispermanent or invokes special carerequirements may be dependent onfactors such as the type of gemstone thatis treated.

Several commenters noted that thecurrent Guides do not specify whetherdisclosure of treatment should appear inadvertising (as opposed to at the pointof sale). Several retailers commentedthat disclosure of enhancement inadvertising would be burdensome andwould have a disparate impact on largechains, which do advertise, as opposedto small jewelry stores, which generallydo not advertise. NRF suggested thatwhatever enhancement disclosures arerequired should be limited to the pointof sale.310 Because the potentialdeception arises due to the appearanceof the product, the Commission hasdetermined that disclosure at the pointof sale is adequate to prevent thedeception, except in the case of anysolicitations where the product can bepurchased without first viewing it (e.g.,mail, on-line, or telephone orders). Inthose cases there should be disclosurethat stones have been treated in thesolicitation or, in the case of televisedshopping programs, on the air.

b. Disclosure of special carerequirements. The current Guides donot recommend the disclosure of specialcare requirements for treated stones, andthe JVC petition did not propose thatspecial care requirements be disclosed.However, the permanency of sometreatments is dependent on the careexercised by the consumer. The FRNsolicited comment on whether theGuides should advise sellers to discloseto consumers in writing any special carerequirements and whether the methodof disclosure should be specified.

Thirty-four comments addressed thisissue. Seventeen comments stated thatthe Guides should not require suchdisclosure, with several stating that itwould be a costly burden for theretailer.311 Eleven commenters favored

the disclosure of special carerequirements.312 GIA and three othercommenters stated that the Guidesshould require such disclosures if thestability of the enhancement may beaffected by the care provided.313 AGTAand CPAA both stated that theyadvocated responsible communicationbetween retailers and their clients as tospecial care, but they deferred to theopinion of retail jewelers as to whetherthis should be required by theGuides.314 AGTA suggested appendingthe current edition of the industry’sGemstone Enhancement Manual to theFTC guides to advise the industry aboutthe current methods being used.315

However, none of the commentsexplained why failure to disclosespecial care requirements would beunfair or deceptive. Although failure toreveal a fact material to consumers canconstitute deception by omission, theCommission has determined that it isnot inherently deceptive to fail to revealspecial care requirements. First, asdiscussed supra, the Commission hasrevised the Guides to state that sellersshould disclose enhancements thatresult in special care requirements.Therefore, having been informed thatthe stone was ‘‘enhanced,’’ a consumeracting reasonably in the circumstancescould be expected to inquire about theprocess and its permanence, and thatinquiry should result in disclosure ofspecial care requirements. For example,Capital commented that ‘‘as long asenhancement is faithfully disclosed,special care requirements will also bedisclosed,’’ since consumers will ask for

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316 Comment 19, p.2 (noting that tradeassociations provide the industry with material ondisclosing care information, and that it is notnecessary to include this in the Guides).

317 A Note following this section states thatqualifying these terms by means of an asterisk,which reference a footnote explanation, ‘‘is not tobe regarded as compliance with the requirements ofthis section.’’ The Commission believes that thissection, which states that a qualifying term shouldimmediately precede the name of the stone,adequately advises sellers of the proper disclosure.

The Note is superfluous and the Commission hasdeleted it.

318 Comment 231, p.5.319 Comment 49, p.17.320 Comment 230, p.3. AGL also noted that the

colored stone industry opposed this change, citing‘‘the historical, ‘universally understood’ applicationof the term ‘synthetic.’’’ However, AGL stated thatthere is a ‘‘conscious desire to leave the consumerin a quandary regarding the difference between‘synthetic’ and ‘imitation’ products. . . . to reducethe capacity of the synthetic material manufacturerto penetrate the U.S. marketplace with theirproducts.’’ Id.

321 Chatham (231) pp.2, 31; Crystal (24) pp.1, 4;Kimberley (227) p.7 (stating that the hydrothermalprocess is the same process that creates ‘‘natural’’emeralds); Matlins (205) pp.2–3, favored the use ofterms such as ‘‘created’’ or ‘‘laboratory-grown’’ forflux-grown synthetic gems only, which shedescribed as being very different from melt or‘‘flame-fusion’’ synthetic products, in that the flux-grown products look more like natural stones andare more expensive to produce. Manning (159) p.2,

which uses the melt method to produce rubies,argued that solution growers [by which it appearsto be referring to flux-growers] should be allowedto describe their products as ‘‘cultured’’ and meltgrowers to describe their products as ‘‘created’’ or‘‘lab-grown’’ because ‘‘without the ability ofsolution growers to somehow separate their processfrom ours in fair descriptive language, they will beforced from the marketplace as too costly for themarket to bear.’’ Diamonique (224) p.3, statedwithout elaboration, that it favored ‘‘cultured’’ forgemstones that were produced by a method ‘‘whichreplicates that growth process of naturalgemstones.’’

322 ICT (189), which makes gemstones by the meltmethod, stated at p.3, that it objected to ‘‘reservingthe word ‘lab-created,’ ‘lab-grown,’ or ‘created,’ todescribe flux or hydrothermal methods of growthonly.’’ Service (222) stated, at p.2, that it is ‘‘unfairto allow sellers of low quality created stones to usethe same term for their product as is used for thehighest quality of created stones’’ but suggested thisissue should be addressed in a ‘‘separaterulemaking.’’ Friedman (234) stated, at p.3, that‘‘cultured’’ would communicate to consumers ‘‘thatthey were purchasing a true, high-value gemstone,identical to a natural gemstone and made by aprocess which included human intervention.’’ Itapparently favored the use of ‘‘cultured’’ for bothtypes of lab-created stones.

323 Crystal (24) p.3 (stating that it uses the term‘‘cultured’’ to describe its ‘‘Ramura CulturedRuby’’); Chatham (231) p.31 (stating that Crystaland Emsprit Cultured Emeralds have been using theterm ‘‘cultured’’ for flux-grown gems).

324 Krementz (208) p.1; Shire (221) p.1; River(254) p.3.

instructions and retailers will offer themto avoid future problems.316

Furthermore, according to theGemstone Enhancement Manual,attached to the AGTA comment, specialcare requirements are quite common formany types of unenhanced stones. TheGuides have not recommended thedisclosure of special care requirementsfor these unenhanced stones. Becauseunenhanced stones have been sold formany years, the Commission presumesthat over time consumers have becomefamiliar with their characteristics andtheir care requirements. Similarly,consumers may expect that enhancedstones would require certain carerequirements too. Therefore, theCommission believes that if theenhancement is revealed, it is notinherently unfair or deceptive to fail toreveal special care requirements.(Consumers who request, but do notreceive special care requirements,presumably will choose to take theirbusiness elsewhere. Thus, sellers shouldhave an incentive to provide suchinformation.) However, since enhancedstones that have special carerequirements are newer products in themarketplace, and consumers may not beas familiar with the requirements ofthese stones, the Commission hasrecommended that the seller disclosespecial care instructions to theconsumer.

2. Deceptive Use of Names of SpecificStones: § 23.19

Section 23.19(a) in the current Guidesstates that it is unfair to use theunqualified name of a precious or semi-precious stone to describe a productwhich is not a natural stone. Thissection is not changed in the revisedGuides (§ 23.23(a)).

Section 23.19(b) states that it is unfairto use the name of a precious or semi-precious stone (or the words ‘‘stone’’ or‘‘birthstone’’) to describe a synthetic,imitation or simulated stone unless thename is immediately preceded by theword ‘‘synthetic,’’ ‘‘imitation,’’ or‘‘simulated,’’ whichever is applicable, orby some other word or phrase of likemeaning, so as to disclose the fact thatit is not a natural stone.317

Both the current Guides and the JVCpetition allow the use of ‘‘synthetic’’ orwords or phrases of like meaning todescribe created stones that have thesame properties as a natural stone. Thepurpose of this section is to prevent thedeceptive impression that an item is anatural stone, and any word or wordsthat accomplish that goal are acceptable.In Chatham Research Laboratories, 64F.T.C. 1064, 1075 (1964), theCommission found that the phrase‘‘Chatham-Created Emeralds’’ was notdeceptive because the reasonableinference from the phrase was that‘‘such emeralds are Chatham createdand must therefore be synthetic sincethey are not created by nature.’’Chatham’s comment stated that afteralmost 30 years of use, there is noevidence that ‘‘Chatham-created’’ isdeceptive to consumers.318

AGTA commented, however, thatthere should be no acceptable synonymsfor the word ‘‘synthetic.’’ 319 Othercomments argued that the Guidesshould specifically identify terms otherthan ‘‘synthetic’’ that can be used, suchas ‘‘laboratory created,’’ ‘‘created,’’ or‘‘cultured.’’ AGL noted that itintroduced the term ‘‘Laboratory Grown(Synthetic)’’ some time ago because itseemed obvious that this would‘‘increase the ability of a retailer toexplain and the capacity of consumer tounderstand the basic differencesbetween glass/plastic, i.e., imitations,and those products that are laboratorygrown to emulate the characteristics andproperties of a natural material.’’ 320

Chatham and numerous othercommenters also suggested thatsynthetic stones appropriately could bedescribed as ‘‘cultured.’’ Chatham,Kimberley, and Crystal argued that thisterm should only be used for syntheticsthat were created by the ‘‘hydrothermal’’or ‘‘flux’’ method (which they use).321

Others argued that synthetics made bythe ‘‘melt’’ or ‘‘flame-fusion’’ processalso should be allowed to describe thestones as ‘‘cultured.’’ 322

Although some companies have usedthe term ‘‘cultured’’ to describe theirproducts for some time,323 no actualevidence about consumer perceptionsarising from the use of a term such as‘‘cultured ruby’’ was submitted.However, in Chatham ResearchLaboratories, 64 F.T.C. at 1074, theCommission found that the phrase‘‘Chatham Cultured Emeralds’’ wasdeceptive. Further, several commentersindicated that they regarded the term‘‘cultured emerald’’ as deceptive.324

Because there currently is insufficientevidence as to consumer perceptionsregarding the use of the term‘‘cultured,’’ the Commission has notincluded the term in the Guides as a‘‘safe harbor’’ (e.g., an example of anadequate disclosure). Furthermore, theCommission has concluded that there isnot enough evidence in the record toestablish ‘‘safe harbor’’ terms by whichmakers of flux-grown gems coulddistinguish their products from othercreated gems. However, suchmanufacturers can distinguish theirproducts from others by means oftruthful advertising.

Similarly, the Commission hasdetermined that there is not sufficientevidence with respect to the consumerinterpretation of a phrase such as‘‘created emerald’’ (as opposed to

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325 Comment 254, p.3.326 Comment 231, pp.2, 5, 22; Manning (159) p.4

(stating that there is no way to change the publicmisunderstanding of ‘‘synthetic’’); River (254) p.3(stating that consumers misunderstand ‘‘synthetic,’’and noting that ‘‘their greatest experience is withsynthetic fabrics’’ so that ‘‘it is difficult for a clerkin a retail store to explain that gemologists have aspecial meaning for the word synthetic’’).

327 Although the revised Guides no longer list theword ‘‘synthetic,’’ some consumers may know thetechnical meaning that has been attributed to theword in the context of gemstones for many years,and they might be deceived into thinking thatimitation stones described as ‘‘synthetic’’ have thesame physical and optical properties as naturalstones. Thus, the Commission has determined thatthe provision which limits the use of the word‘‘synthetic’’ to certain circumstances continues tobe useful.

328 AGTA (49) argued, at p.17, that a phrase suchas ‘‘A ‘Chatham-created emerald ring’ implies notthat the emerald was created, but that the ring wasmanufactured by Chatham.’’ (Emphasis added.)However, it provided no evidence that consumersinterpret the phrase in that manner. Ifmanufacturers or sellers of these items have reasonto believe that consumers are misinterpreting thisphrase, it would be unfair or deceptive not tocorrect the misunderstanding.

329 Only one of the comments focused on theissue of whether foreign words or phrases shouldbe added to the list of terms that are not to be usedto describe industry products. Sheaffer (249) stated,at p.5, that it is not necessary ‘‘to identify andspecify . . . the many foreign terms which mightbe misleading if used in connection with anindustry product’’ but instead believed it moredesirable to add a general admonition that it wouldbe unfair or deceptive ‘‘to use any foreign termwhich may be accurate and appropriate in its nativelanguage’’ but which is not otherwise generallyused or understood.

330 Comment 244, p.3.331 Schwartz (52); Bridge (163); and CPAA (193).332 Honora (15); Skalet (61); NACAA (90); Bedford

(210); MJSA (226); and Preston (229). Bedford statedthat a consumer might think that ‘‘faux’’ refers tothe color of a ‘‘faux emerald.’’

333 AGTA (49); Bruce (218); and Shire (221).AGTA gave an example, at p.11, of a consumer whothought that ‘‘faux’’ referred to the place of originof a ‘‘faux emerald.’’

334 JMC (1); Fasnacht (4); Sibbing (5); AGS (18);Estate (23); G&B (30); GIA (81); Nowlin (109);McGee (112); LaPrad (181); Lange (183); IJA (192);and Leach (257).

335 Lannyte (65); Ross-Simons (67); ArtCarved(155); Bales (156); NACSM (219); ICT (189); Service(222); Best (225) and Franklin Mint (250). Two ofthese [NACSM (219) and ICT (189)] stated that‘‘faux’’ has become part of the English language.Ross-Simons (67) stated that ‘‘faux’’ should bepermitted because it romances the merchandisewithout deception.

336 There was little comment on this suggestion.Lannyte (65) stated, at p.11, that ‘‘it is totallyinappropriate for a school to be THE authority ondescriptive names as names will develop fromwithin the trade usage in the same way as languageusage changes. This smacks of censorship!’’

‘‘laboratory created’’ or ‘‘Chatham-created’’) to justify including it in theGuides as a safe harbor. As River stated,the description ‘‘laboratory grown’’ isclear immediately, without furtherexplanation. However, terms such ascultured, created and synthetic ‘‘are notas clear to the general public and aremore often misunderstood because theyare not part of the common vocabularyin the special sense in which we usethem.’’ 325

Chatham argued that most consumers‘‘understand synthetic to mean fake,artificial, and otherwise of low quality.’’It also stated that it is essential that it‘‘be able to honestly and accuratelyeducate consumers that the onlydifference between its gemstones andnatural is the environment in which thecrystals grow.’’ 326 The Commission ispersuaded that the term ‘‘synthetic,’’ asapplied to gemstones, is misunderstoodby some consumers to mean somethingfake or artificial. Therefore, theCommission has included the phrases‘‘laboratory grown,’’ ‘‘laboratory-created,’’ or ‘‘[manufacturer name]-created’’ in the revised Guides (now§ 23.23).327 Although the Commissionhas determined that these terms moreclearly communicate the nature of thestone, sellers can still use the term‘‘synthetic.’’ The Commission has alsoincluded an admonition againstmisusing the terms ‘‘laboratory-grown,’’‘‘laboratory-created,’’ or ‘‘[manufacturername]-created.’’

The JVC also proposed adding a Notestating that if the term ‘‘created’’ is usedto describe a synthetic stone, ‘‘the nameof the firm or company using thisproduct-term must be disclosed in equalprominence and size type as the term‘created’ . . . [and] must be separatedfrom the term ‘created by a dash (-) soas clearly to disclose the stone is man-made, i.e., Chatham-Created Emerald.’’AGTA proposed prohibiting anysynonym for ‘‘synthetic,’’ but urged that,if the Commission decided to allow the

continued use of the term ‘‘created,’’then ‘‘the precise language’’ from theChatham action should be incorporatedinto the Guides.328 The effect of theNote proposed by the JVC (and ‘‘urged’’by AGTA) would be to prohibit the useof ‘‘created’’ except in precisely theform mandated by the Note. However,there is no evidence as to how mostconsumers interpret a phrase such as‘‘created emerald.’’ The Commission hasthus determined that there is no basisfor advising against all but one specificuse of the term ‘‘created.’’ However,although the terms ‘‘laboratory created’’and ‘‘[manufacturer name]-created’’ willbe included in the list of ‘‘safe harbor’’terms, the term ‘‘created’’ alone will notbe included in this list.

In the FRN, the Commission alsosought comment on whether foreignwords or phrases like ‘‘faux’’ should beadded ‘‘to the list of terms in Section23.24(b) [of the JVC petition] that are notto be used to describe industryproducts.’’ Thirty-five commentsaddressed this question.329 The PostalService stated that ‘‘faux’’ has been used‘‘by disreputable promoters to confuseunsophisticated consumers and enhancethe apparent value of their costumejewelry.’’ 330 Three other commentersstated that ‘‘faux’’ is only used todeceive and should be prohibited.331

Six commenters, including NACAA,stated that ‘‘faux’’ should be prohibitedbecause some consumers do not knowwhat it means.332 Three stated that‘‘faux’’ is confusing and misleading.333

Thirteen other comments stated that‘‘faux’’ should be prohibited but

provided no reasons.334 Nine commentsbelieve the use of ‘‘faux’’ to describeindustry products should beacceptable.335

The evidence shows that manyunsophisticated consumers do not knowwhat the word ‘‘faux’’ means and that ithas been used to deceive them. Thus,the Commission has added a Note to theGuides that states that the use of theword ‘‘faux’’ to describe a laboratory-created stone is not regarded as anadequate disclosure of the fact that it isnot a natural stone.

Finally, the JVC proposed theaddition of a Note [following petitionsection 23.22] that states thatdescriptive words relating to speciesand varieties of gemstones must be inconformance with approvedgemological terminology. No evidencewas offered to show that there is a needfor guidance in this area.336 Thus, theCommission has not added this Note tothe revised Guides.

3. Misuse of the Words ‘‘Real,’’‘‘Genuine,’’ ‘‘Natural’’: § 23.20

Section 23.20 states that it is unfair touse the words ‘‘real,’’ ‘‘genuine,’’‘‘natural,’’ or similar terms, to describeany ‘‘articles which are manufactured orproduced synthetically or artificially, orartificially cultured or cultivated,’’ ifsuch use is likely to deceive consumers.The JVC has proposed [in section23.23(a) of its petition] expanding thissection to include the words ‘‘precious’’or ‘‘cultured’’ and to state that ‘‘it mustclearly be disclosed that a man-madeindustry product is not a gemstone.’’ Forthe reasons discussed above, theCommission has not included the word‘‘cultured’’ as a ‘‘safe harbor’’ term todescribe man-made gemstones.However, there is not sufficientevidence to advise against the use of‘‘cultured’’ as applied to syntheticgemstones. Further, there is no evidencethat it is being applied to imitationgemstones, where its use is more likelyto be misleading. Thus, the Commission

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337 ‘‘Precious’’ stones are diamonds, emeralds,rubies, and sapphires. All other gemstones are‘‘semi-precious.’’

338 Several comments that opposed banning‘‘semi-precious’’ stated that its use with respect tosynthetic or imitation gems would be confusing.AGTA (49) p.11; Schwartz (52) p.3; GIA (81) p.4;MJSA (226) p.10.

339 A synthetic stone is not likely to meet therarity criterion necessary to be described as a gem,although it is conceivable that a particularlybeautiful and difficult to create stone could meetthe rarity criterion. In a separate section of itspetition [23.24(a)], the JVC also proposed theaddition of a section that states that it is unfair touse the word ‘‘gem’’ to describe a synthetic orimitation stone. Diamonique (224) noted, at p.4,that ‘‘there are differing quality levels with naturalgemstones, as there are with man-made gemstones.If the term ‘gem’ is appropriate for natural material,it should also be appropriate for man-madematerial.’’ The Commission has determined that theword ‘‘gem’’ may be appropriately used to describea synthetic stone and has not added the proposedsection to the Guides.

340 Comment 162, p.2 (adding, at p.3, that mostgemstones are not durable ‘‘in the true sense of theword,’’ citing as examples amber, ivory, malachite,lapis lazuli, coral pearls, cameos, sodalite, andturquoise).

341 One comment suggested that the words ‘‘rarityand value’’ be deleted from the current definitionof gem in § 23.21, arguing that beauty and durabilityare the two basic properties of all gemstones.Lannyte (65) pp.6, 11. However, this commentappears to have confused the definition of‘‘gemstone’’ with ‘‘gem.’’ As noted, the currentGuides suggest only a very limited use of the word‘‘gem’’ is appropriate.

342 Comment 18, p.3.343 Comment 222, p.4 (noting that this proposal

creates problems for ‘‘fair and competitiveadvertising’’); Franklin (250) p.6 (stating that thereis no reason the term should not be used forlaboratory-created stones as long as it is properlyqualified); Lannyte (65) p.9, 10 (asking ‘‘How doesone refer to gemstones made by man whendiscussing them generically?’’ and suggesting thatthe Guides provide that it is unfair to use the word‘‘gemstone’’ to refer to a synthetic stone withoutdisclosing that it is ‘‘not the unassisted product ofnature’’).

has not added the word ‘‘cultured’’ tothis section of the Guides.

The Commission, however, hasdetermined that the term ‘‘precious’’ 337

is deceptive when applied to syntheticor imitation gemstones because itimplies rarity. Because synthetic orimitation gemstones can be produced invirtually unlimited quantities, they arenot ‘‘rare’’ or ‘‘precious’’ like naturalgemstones. Therefore, the Commissionhas included the word ‘‘precious’’ inthis section (§ 23.24 of the revisedGuides).

The JVC also proposed (in section23.23(b) of its petition) a section whichwould in effect prohibit the use of theterm ‘‘semi-precious’’ to describe anygemstones. The Commission hasdetermined that ‘‘semi-precious’’ isdeceptive when applied to synthetic orimitation gemstones (because it impliesthey occur naturally) and has includedit in § 23.24 of the revised Guides.338

The proposal to ban its use as to naturalgemstones is discussed below, as is theproposal that the Guides state that ‘‘itmust clearly be disclosed that a man-made industry product is not agemstone.’’

4. Deceptive Use of ‘‘Gem’’ and‘‘Synthetic’’: § 23.21

Section 23.21(a) in the current Guidesstates that it is unfair to use the word‘‘gem’’ to refer to a pearl or a stone(whether precious or semi-precious)‘‘which does not possess the beauty,symmetry, rarity, and value necessaryfor qualification as a gem.’’ Section23.21(b) states that the word ‘‘gem’’ maynot be used to describe a syntheticproduct unless that product meets therequirements of 23.21(a) and ‘‘unlesssuch word is immediately accompanied,with equal conspicuity, by the word‘synthetic,’ or by some other word orphrase of like meaning.* * *’’ A Noteto section 23.21 states that ‘‘fewcultured pearls or synthetic stonespossess the necessary qualifications toproperly be termed ‘gems’ ’’ and that theuse of the word ‘‘gem’’ therefore shouldbe avoided. The Note also states thatimitation pearls, diamonds, and otherstones should not be described as‘‘gems.’’ Finally, the Note states that‘‘Not all diamonds or natural stones,including those classified as preciousstones, possess the necessary

qualifications to properly be termed‘gems.’ ’’

The current Guides do not containany admonitions as to the use of thewords ‘‘gem stone’’ other than thegeneral admonition, in § 23.18, againstmisleading representations used inconnection with the sale of precious orsemi-precious gemstones. Under thecurrent Guides, few if any syntheticstones are likely to qualify as ‘‘gems,’’but synthetic stones may be described as‘‘gemstones’’ (for example, in anadvertisement for various varieties ofstones), as long as the term is soqualified as to disclose that the productis not a natural stone.339 In addition, theGuides allow lower quality naturalstones, which do not possess ‘‘thebeauty, symmetry, rarity, and valuenecessary for qualification as a gem’’ tobe referred to as gemstones as long asthey are not of such low quality (e.g.,industrial quality stones) that it wouldbe deceptive to so describe them.

The JVC proposed changing thisscheme. It proposed that the Guidesstate that the word ‘gem’ should not beused as a quality designation ofgemstones. It also proposed that adefinition of ‘‘gemstone’’ be added tothe Guides, along with a provisionstating that it is unfair to use the word‘‘gemstone’’ to describe any object thatdoes not meet the definition. The JVCdefined gemstone as ‘‘a naturallyoccurring substance which has beencarefully fashioned into a jewel suitablefor use in jewelry, for personaladornment, display, etc. A gemstonepossesses beauty, rarity, durability andvalue.’’

This definition is similar to thedefinition of ‘‘gem’’ in the currentGuides but it limits the use of‘‘gemstone’’ to natural cut and polishedstones, suitable for use in jewelry, thatare also durable. The JVC has providedno evidence indicating that industrymembers or consumers havemisunderstood the definition of ‘‘gem’’in § 23.21 in the current Guides, nor hasit provided any evidence as to why thedefinition it suggests for ‘‘gemstone’’

(which omits symmetry and addsdurability to the qualities a gem mustpossess and excludes any syntheticstone) is more accurate or useful thanthe definition of ‘‘gem’’ in the currentGuides.

The part of the proposal that wouldprevent natural stones from beingdescribed as gemstones unless theypossessed beauty, rarity, durability andvalue was not discussed by mostcomments. However, the House of Onyxstated, ‘‘This is a broad statement that,if taken literally, would eliminate thevast majority of the Gemstones currentlyin the market.’’ 340 For example, underthe scheme proposed by the JVC, anatural emerald that did not possess,e.g., rarity, would not be a gemstone.The Commission has determined toretain the current Guides, which allowlower quality natural stones, which donot possess ‘‘the beauty, symmetry,rarity, and value necessary forqualification as a gem’’ to be referred toas gemstones.341

The proposed definition of‘‘gemstone’’ also would preventsynthetic stones from being described as‘‘gemstones.’’ The FRN solicitedcomment on this proposal. AGScommented simply that it is essential‘‘that a like size declaration of the words‘synthetic, imitation, etc.’ accompanythe description of the stone.’’ 342 Servicecommented that the proposed definitionof gemstone ‘‘is not needed to avoiddeception of the consumer. As long asthe consumer is ultimately advisedwhether or not the stone was naturallyoccurring * * * the interest in fulldisclosure has been satisfied.’’ 343 Bestnoted that ‘‘gemstone’’ is ‘‘loosely usedin the industry today to refer to bothnaturally occurring and laboratory

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344 Comment 225, attachment at p.8.345 Comment 234, p.2. Freidman did suggest that

imitation gems should not be defined as gemstones.Id. at 3.

346 Comment 231, p.5. Chatham also attached adeclaration from Robert Miller, a merchant who hassold both Chatham-created gemstones and naturalgemstones for ten years. He stated that a prohibitionon the use of the words ‘‘gem’’ or ‘‘gemstone’’‘‘would be inconsistent with current trade practice,in which the words ‘gemstone’ and ‘gem’ are anintegral part of the marketing of Chatham products,as well as most other jewelry’’ and that ‘‘prohibitingsellers from using these common-place terms wouldhurt our ability to communicate with our customersabout the very nature of Chatham products’’ andthat the end result ‘‘would be confusion on the partof consumers who would wrongly perceive that theprohibition is a negative reflection on the qualityof Chatham gemstones.’’ Miller declaration ¶ 8 and9. Chatham also attached a declaration from Dr.Frederick Pough, who received a Ph.D. inMineralogy from Harvard in 1935 and who hasauthored hundreds of articles on mineralogy. Hestates that the definitions proposed by the JVC‘‘would represent a dramatic departure from theway in which the terms ‘gemstone’ and ‘gem’ havebeen understood and used in the trade and ingemological circles for several decades’’ and ‘‘as itis currently and loosely used, and as it has beenused for years, the term ‘gemstone’ does not identifythe source of the stone, or whether or not it is a‘naturally occurring substance.’’’ Similarly, hestated ‘‘under no current definition of ‘gem’ ofwhich I am aware, is the term limited to ‘naturallyoccurring substances.’’’ Pough declaration ¶ 8, 9,and 13.

347 Comment 231, pp.5, 9. The eight othercommenters who sell significant quantities ofsynthetic gemstones also believe it is not deceptiveto use the term for synthetic stones as long as it isqualified to indicate that the stones are not naturalstones: Crystal (24); Union Carbide (38); Manning(159); ICT (189); Kimberley (227); Friedman (234);Kyocera (242); and River (254).

348 Comment 81, p.3 (stating ‘‘We consider thisto be of minor importance, but believe neither stonenor gemstone should be used to describe anartificial product.’’).

349 Comment 49, p.9.350 One of these, LaPrad (181) stated, at p.3, that

‘‘gemstone’’ should also be prohibited asdescriptive of any artificially colored natural stone.

351 Comment 162, p.3; NACSM (219) stated, atp.12, that this would ‘‘limit the use of the Englishlanguage;’’ AGTA (49) stated, at p.16, that the Noteshould be stricken or, if retained, ‘‘like languageshould be added to the diamond section.’’

352 Onyx (162) p.3 (stating that the proposedprohibition ‘‘flies in the face of fact’’); NACSM (219)p.13 (opposing the provision and describing it as arestrictive limitation for which no justification hasbeen given); Service (222) p.5 (stating that there isno reason to prohibit a phrase such as ‘‘gemstonejewelry box’’).

353 Thorpe (7) p.2; Capital (19) p.2.354 Comment 49, p.10355 Comment 61, p.5.

manufactured stones.’’ 344 Friedmanstated, ‘‘[t]o our customers, thelaboratory grown gems have gainedacceptance as, and are, gemstones.’’ 345

Chatham noted that it has used theterms ‘‘gemstone’’ and ‘‘gem’’ virtuallyfrom its inception in 1946 and that theterms ‘‘have been adopted and widelyused by tradespeople in the jewelryindustry * * * To date there has notbeen any suggestion (other than by theJVC) that consumers have been misledthereby.’’ 346 Chatham also noted thatthe proposal would place Chathamgemstones ‘‘at a competitivedisadvantage vis-a-vis their naturalcounterparts and would do so for nojustifiable reason.’’ 347

Although many commenterssupported the JVC proposal, few gaveany reason beyond stating that‘‘synthetics are not natural.’’ GIA agreedthat ‘‘gemstone’’ should be limited tonatural stones because it implies thatthe material occurred in nature.348

AGTA stated that synthetics ‘‘emulateand often approximate the appearanceof and have similar durability to that of

natural gemstones,’’ but they lack rarity,and allowing them to be referred to as‘‘gemstones’’ will ‘‘further blur thedistinction in the consumer’s mind as tothe important differences between thetwo. In all probability, this will result inhigher consumer prices for syntheticand simulated materials.’’ 349 Othercommenters agreed that syntheticsshould not be described asgemstones.350

The current Guides permit the use of,e.g., ‘‘synthetic ruby’’ or ‘‘imitationruby.’’ The Commission is persuadedthat consumers would understand thatgemstones described as ‘‘laboratory-created gemstones’’ or ‘‘imitationgemstones’’ are not natural gemstones.Thus, the word ‘‘gemstone’’ is notdeceptive when applied to synthetic orimitation stones, if its use is properlyqualified by a word or phrase thatdiscloses that the stone is not natural.The Commission therefore has addedthe word ‘‘gemstone’’ to § 23.19(b) of thecurrent Guides, which states that thename of a precious or semi-preciousgemstone as descriptive of a synthetic orimitation stone should be adequatelyqualified to disclose that it is not anatural stone. However, for the reasonsdescribed above, the Commission hasnot adopted the definition of‘‘gemstone’’ suggested by the JVC norchanged the definition of ‘‘gem’’ in§ 23.21 of the current Guides.

As noted, the JVC also proposedadding a Note recommending that theword ‘‘gem’’ or ‘‘similar term’’ not beused as a quality designation or asdescriptive of gemstones because nocriteria for these terms exist and ‘‘theiruse to describe, imply or representquality could be misleading.’’ However,the JVC cited no evidence that suchterms have actually been misleading toconsumers. Moreover, as Onyx noted,‘‘there are ‘Gem’ quality Gemstones aswell as ‘trash’ quality in the sameGemstone.’’ 351 Truthful, and indeedinformative, use of the word ‘‘gem’’ ispossible and thus, the Commission hasnot adopted this proposal.

The JVC also proposed adding asection to the Guides stating that‘‘gemstone’’ may not be used to describeany object ‘‘not fashioned for use asjewelry or personal adornment, e.g.,statues, ashtrays, boxes, etc.’’ unlessqualified by a term such as ‘‘carving’’ or

‘‘engraving’’ [Petition 23.20(b)]. Noexplanation was offered as to how sucha use could deceive consumers.352

The Commission has not includedthis section in the Guides because itemsother than jewelry are sometimes madeof gemstones and it would not bedeceptive to so describe them.

The JVC proposed that a section beadded to the Guides stating that it isunfair to use the term ‘‘semi-precious’’when referring to gemstones or anysynthetic, imitation, or simulated stone.[Petition 23.23(b)] The FRN solicitedcomment on this proposal.

No explanation was offered as to whythe term ‘‘semi-precious’’ was unfair ordeceptive when applied to naturalgemstones. Some commenters whofavored the proposal stated that it is a‘‘misnomer’’ or that it ‘‘gives a falseimpression of a gem having littleintrinsic value; an impression whichmay not be correct.’’ 353 However, sellersare not required to describe their waresas semi-precious; the import of the JVC’sproposal would be to prohibit thosewho wish to so describe their waresfrom doing so. AGTA commented that,while it believes ‘‘semi-precious’’ isdenigrating to ‘‘natural gemstones otherthan Ruby, Emerald, Sapphire andDiamond which are traditionallyreferred to in the trade as the ‘preciousgemstones,’’’ it did not believe it shouldbe illegal to so describe naturalstones.354 Skalet explained that the term‘‘semi-precious’’ has been used in thejewelry and gemstone industry forgenerations ‘‘as a reference to naturalgemstones of moderate value and wideavailability.’’ 355 Based on thecomments, the Commission hasconcluded that there is no basis foradvising against the use of this term todescribe natural gemstones.

Finally, the JVC also proposedredrafting all sections pertaining toprecious and semi-precious stones,removing the terms ‘‘precious’’ and‘‘semi-precious’’ and substituting‘‘gemstone.’’ However, there is no validpurpose for this change, and theCommission has determined thatsubstituting the term ‘‘gemstone’’ for‘‘precious and semi-precious stones’’would make the Guides less clear.

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356 The JVC proposed that the Guides state thatit is unfair ‘‘to use the word ‘‘flawless’’ as a qualitydescription of any gemstone which disclosesblemishes, inclusions, or clarity faults of any sortwhen examined under a corrected magnifier at 10-power, with adequate illumination, by a personskilled in gemstone grading.’’ However, noreference was made, in the petition or thecomments, to removal of blemishes by internallasering of gemstones.

357 There was little comment about thisprovision. Diamonique (224) stated, at p.4, that thechange ‘‘regarding the examination of gemstonesunder 10-power magnification is radical and wouldhave far-reaching consequences. This proposedchange replaces practices and guidelines currentlyin use worldwide, requiring examination ofgemstones with the unaided eye.’’ However, noother commenter stated that the proposal was achange from existing practices. Lannyte (65)suggested, at p.10, modifying the section to statethat it is unfair ‘‘to use the words ‘‘flawless’’ or‘‘perfect’’ or any other description which wouldlead a buyer to presume that such gemstone istotally without blemishes, inclusion or other faultswhen viewed by a skilled person under ten timesmagnification in adequate light.’’

358 Lannyte (65) p.11; ICT (189) p.2. AGTA (49)stated, at pp.15, 16, that it ‘‘prefers that the term‘perfect’ be deleted from use in the trade for bothdiamonds and colored gems,’’ but if the use of theterm ‘‘perfect’’ is acceptable for diamonds, it shouldalso be acceptable for colored gemstones.Otherwise, there ‘‘would be a passive inference thatcolored gemstones are less desirable thandiamonds. There are certainly as many ‘perfect,’ i.e.flawless (under 10X magnification), top color, well-cut gemstones as there are diamonds.’’

359 Diamonique (224) p.3 (stating that ‘‘theGuides should contain more specific guidelines inthis area, including a definition of the term‘perfect,’ instead of simply limiting its use’’).

360 NACSM (219) p.27 (stating that the proposal‘‘fails to take into account a clearly recognizeddifference in the marketplace between a ‘synthetic’. . . and an ‘imitation’ stone’’); Diamonique (224) p.3(stating that ‘‘cultured, synthetic and simulatedgemstones would be described according to thesame standards used for natural gemstones. To dootherwise would create confusion within theindustry itself as well as among consumers’’).

361 NACSM (219) p.27 (stating that the attemptto ‘‘ban’’ the word ‘‘reproduction’’ is dubious); ISA(237A) p.15 (stating that this would prohibit the useof ‘‘reproduction’’ and ‘‘replica’’ to describe ‘‘itemswhich are in fact reproductions and replicas. Werecommend more emphasis on section 23.1(a), thegeneral paragraph which makes clear that the intentof the Guides is to prohibit deception and deceptiveuse of such terms’’).

1 The Guides for the Watch Industry, 16 C.F.R.Part 245, address watchcases and permanentlyattached watchbands.

5. Misuse of the Words ‘‘Flawless,’’‘‘Perfect,’’ Etc.

The JVC proposed the addition of anew section [petition 23.21] thatprohibits the use of the word ‘‘perfect’’when applied to gemstones and limits‘‘flawless’’ to gemstones that do nothave blemishes. The JVC’s definition of‘‘flawless’’ is similar to the provision in§ 23.10 of the current Guides, whichapplies only to diamonds.356 A claimthat a colored stone is flawless when itis not is deceptive. The Commission hasdetermined that the addition of thissection clarifies the meaning of‘‘flawless.’’ 357

Part (b) of the section proposed by theJVC prohibits the use of ‘‘perfect’’ as aquality description ‘‘of any gemstoneother than a diamond.’’ No reasons wereoffered as to why the use of ‘‘perfect’’as applied to colored stones wouldalways be deceptive, and numerouscomments objected to this provision.358

On the basis of the comments, theCommission has not included thisprovision. However, the Commissionhas determined that the industry mayneed guidance as to the use of ‘‘perfect’’with respect to gemstones,359 and hasincluded a provision (like the provisionfor diamonds) that ‘‘perfect’’ should be

used only for a gemstone that is flawlessand not of inferior color or cut.

The JVC proposed that the Guidesstate it is unfair to use ‘‘flawless’’ or‘‘perfect’’ to describe synthetics orimitations. No reasons were offered as towhy the use of ‘‘flawless’’ or ‘‘perfect’’as applied to synthetic stones wouldalways be deceptive. Thus, theCommission has concluded that there isnot enough evidence to include thisprovision as to synthetic stones.However, because the terms imply thata stone is a finer quality and,accordingly, a greater value, when usedto describe imitation stones, which arealmost always flawless, they could bemisleading.360 Thus, the terms‘‘flawless’’ and ‘‘perfect’’ should not beused to describe imitation stones.

6. Misuse of the Words ‘‘Reproduction,’’or ‘‘Replica’’: § 23.21(c)

Section 23.21(c) of the current Guidesstates that it is unfair to use the words‘‘reproduction,’’ ‘‘replica,’’ or similarterms to describe cultured or imitationpearls or any imitation of precious orsemi-precious stones. The JVC proposedchanging this section so that it onlyprohibits the use of ‘‘reproduction’’ or‘‘replica’’ when applied to synthetic orimitation stones [petition 23.24(b)]. Ifthe nature of the material used in areproduction or replica is adequatelydisclosed, as is advised by othersections of the Guides, it is not clearthat the use of these terms would bedeceptive or unfair.361 Accordingly, theCommission has deleted this entiresection from the Guides.

List of Subjects in 16 CFR Parts 19 and23

Advertising, Labeling, Tradepractices, Watch bands and jewelry.

Accordingly, Part 23 is revised to readas follows:

PART 23—GUIDES FOR THEJEWELRY, PRECIOUS METALS, ANDPEWTER INDUSTRIES

Sec.23.0 Scope and application.23.1 Deception (general).23.2 Misleading illustrations.23.3 Misuse of the terms ‘‘hand-made,’’

‘‘hand-polished,’’ etc.23.4 Misrepresentation as to gold content.23.5 Misuse of the word ‘‘Vermeil.’’23.6 Misrepresentation as to silver content.23.7 Misuse of words ‘‘platinum,’’

‘‘iridium,’’ ‘‘palladium,’’ ‘‘ruthenium,’’‘‘rhodium,’’ and ‘‘osmium.’’

23.8 Misrepresentation as to content ofpewter.

23.9 Additional guidance for the use ofquality marks.

23.10 Misuse of ‘‘corrosion proof,’’‘‘noncorrosive,’’ ‘‘corrosion resistant,’’‘‘rust proof,’’ ‘‘rust resistant,’’ etc.

23.11 Definition and Misuse of the word‘‘diamond.’’

23.12 Misuse of the words ‘‘flawless,’’‘‘perfect,’’ etc.

23.13 Disclosing existence of artificialcoloring, infusing, etc.

23.14 Misuse of the term ‘‘blue white.’’23.15 Misuse of the term ‘‘properly cut,’’

etc.23.16 Misuse of the words ‘‘brilliant’’ and

‘‘full cut.’’23.17 Misrepresentation of weight and

‘‘total weight.’’23.18 Definitions of various pearls.23.19 Misuse of the word ‘‘pearl.’’23.20 Misuse of terms such as ‘‘cultured

pearl,’’ ‘‘seed pearl,’’ ‘‘Oriental pearl,’’‘‘natura,’’ ‘‘kultured,’’ ‘‘real,’’ ‘‘gem,’’‘‘synthetic,’’ and regional designations.

23.21 Misrepresentation as to culturedpearls.

23.22 Deception as to gemstones.23.23 Misuse of the words ‘‘ruby,’’

‘‘sapphire,’’ ‘‘emerald,’’ ‘‘topaz,’’‘‘stone,’’ ‘‘birthstone,’’ ‘‘gemstone,’’ etc.

23.24 Misuse of the words ‘‘real,’’‘‘genuine,’’ ‘‘natural,’’ ‘‘precious,’’ etc.

23.25 Misuse of the word ‘‘gem.’’23.26 Misuse of the words ‘‘flawless,’’

‘‘perfect,’’ etc.Appendix to Part 23—Exemptions recognized

in the assay for quality of gold alloy, goldfilled, gold overlay, rolled gold plate,silver, and platinum industry products.

Authority: Sec. 6, 5, 38 Stat. 721, 719; 15U.S.C. 46, 45.

§ 23.0 Scope and application.(a) These guides apply to jewelry

industry products, which include, butare not limited to, the following:gemstones and their laboratory-createdand imitation substitutes; natural andcultured pearls and their imitations; andmetallic watch bands not permanentlyattached to watches.1 These guides alsoapply to articles, including opticalframes, pens and pencils, flatware, and

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2 See § 23.4(c) for examples of acceptablemarkings and descriptions.

hollowware, fabricated from preciousmetals (gold, silver and platinum groupmetals), precious metal alloys, and theirimitations. These guides also apply toall articles made from pewter. For thepurposes of these guides, all articlescovered by these guides are defined as‘‘industry products.’’

(b) These guides apply to persons,partnerships, or corporations, at everylevel of the trade (including but notlimited to manufacturers, suppliers, andretailers) engaged in the business ofoffering for sale, selling, or distributingindustry products.

Note to paragraph (b): To preventconsumer deception, persons, partnerships,or corporations in the business of appraising,identifying, or grading industry productsshould utilize the terminology and standardsset forth in the guides.

(c) These guides apply to claims andrepresentations about industry productsincluded in labeling, advertising,promotional materials, and all otherforms of marketing, whether asserteddirectly or by implication, throughwords, symbols, emblems, logos,illustrations, depictions, product brandnames, or through any other means.

§ 23.1 Deception (general).It is unfair or deceptive to

misrepresent the type, kind, grade,quality, quantity, metallic content, size,weight, cut, color, character, treatment,substance, durability, serviceability,origin, price, value, preparation,production, manufacture, distribution,or any other material aspect of anindustry product.

Note 1 to § 23.1: If, in the sale or offeringfor sale of an industry product, anyrepresentation is made as to the gradeassigned the product, the identity of thegrading system used should be disclosed.

Note 2 to § 23.1: To prevent deception, anyqualifications or disclosures, such as thosedescribed in the guides, should besufficiently clear and prominent. Clarity oflanguage, relative type size and proximity tothe claim being qualified, and an absence ofcontrary claims that could undercuteffectiveness, will maximize the likelihoodthat the qualifications and disclosures areappropriately clear and prominent.

§ 23.2 Misleading illustrations.It is unfair or deceptive to use, as part

of any advertisement, packagingmaterial, label, or other sales promotionmatter, any visual representation,picture, televised or computer image,illustration, diagram, or other depictionwhich, either alone or in conjunctionwith any accompanying words orphrases, misrepresents the type, kind,grade, quality, quantity, metalliccontent, size, weight, cut, color,character, treatment, substance,

durability, serviceability, origin,preparation, production, manufacture,distribution, or any other materialaspect of an industry product.

Note to § 23.2: An illustration or depictionof a diamond or other gemstone that portraysit in greater than its actual size may misleadconsumers, unless a disclosure is made aboutthe item’s true size.

§ 23.3 Misuse of the terms ‘‘hand-made,’’‘‘hand-polished,’’ etc.

(a) It is unfair or deceptive torepresent, directly or by implication,that any industry product is hand-madeor hand-wrought unless the entireshaping and forming of such productfrom raw materials and its finishing anddecoration were accomplished by handlabor and manually-controlled methodswhich permit the maker to control andvary the construction, shape, design,and finish of each part of eachindividual product.

Note to paragraph (a): As used herein,‘‘raw materials’’ include bulk sheet, strip,wire, and similar items that have not beencut, shaped, or formed into jewelry parts,semi-finished parts, or blanks.

(b) It is unfair or deceptive torepresent, directly or by implication,that any industry product is hand-forged, hand-engraved, hand-finished,or hand-polished, or has been otherwisehand-processed, unless the operationdescribed was accomplished by handlabor and manually-controlled methodswhich permit the maker to control andvary the type, amount, and effect ofsuch operation on each part of eachindividual product.

§ 23.4 Misrepresentation as to goldcontent.

(a) It is unfair or deceptive tomisrepresent the presence of gold orgold alloy in an industry product, or thequantity or karat fineness of gold or goldalloy contained in the product, or thekarat fineness, thickness, weight ratio,or manner of application of any gold orgold alloy plating, covering, or coatingon any surface of an industry product orpart thereof.

(b) The following are examples ofmarkings or descriptions that may bemisleading: 2

(1) Use of the word ‘‘Gold’’ or anyabbreviation, without qualification, todescribe all or part of an industryproduct, which is not composedthroughout of fine (24 karat) gold.

(2) Use of the word ‘‘Gold’’ or anyabbreviation to describe all or part of anindustry product composed throughoutof an alloy of gold, unless a correct

designation of the karat fineness of thealloy immediately precedes the word‘‘Gold’’ or its abbreviation, and suchfineness designation is of at least equalconspicuousness.

(3) Use of the word ‘‘Gold’’ or anyabbreviation to describe all or part of anindustry product that is not composedthroughout of gold or a gold alloy, butis surface-plated or coated with goldalloy, unless the word ‘‘Gold’’ or itsabbreviation is adequately qualified toindicate that the product or part is onlysurface-plated.

(4) Use of the term ‘‘Gold Plate,’’‘‘Gold Plated,’’ or any abbreviation todescribe all or part of an industryproduct unless such product or partcontains a surface-plating of gold alloy,applied by any process, which is of suchthickness and extent of surface coveragethat reasonable durability is assured.

(5) Use of the terms ‘‘Gold Filled,’’‘‘Rolled Gold Plate,’’ ‘‘Rolled GoldPlated,’’ ‘‘Gold Overlay,’’ or anyabbreviation to describe all or part of anindustry product unless such product orpart contains a surface-plating of goldalloy applied by a mechanical processand of such thickness and extent ofsurface coverage that reasonabledurability is assured, and unless theterm is immediately preceded by acorrect designation of the karat finenessof the alloy that is of at least equalconspicuousness as the term used.

(6) Use of the terms ‘‘Gold Plate,’’‘‘Gold Plated,’’ ‘‘Gold Filled,’’ ‘‘RolledGold Plate,’’ ‘‘Rolled Gold Plated,’’‘‘Gold Overlay,’’ or any abbreviation todescribe a product in which the layer ofgold plating has been covered with abase metal (such as nickel), which iscovered with a thin wash of gold, unlessthere is a disclosure that the primarygold coating is covered with a basemetal, which is gold washed.

(7) Use of the term ‘‘GoldElectroplate,’’ ‘‘Gold Electroplated,’’ orany abbreviation to describe all or partof an industry product unless suchproduct or part is electroplated withgold or a gold alloy and suchelectroplating is of such karat fineness,thickness, and extent of surfacecoverage that reasonable durability isassured.

(8) Use of any name, terminology, orother term to misrepresent that anindustry product is equal or superior to,or different than, a known andestablished type of industry productwith reference to its gold content ormethod of manufacture.

(9) Use of the word ‘‘Gold’’ or anyabbreviation, or of a quality markimplying gold content (e.g., 9 karat), todescribe all or part of an industryproduct that is composed throughout of

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3 The term ‘‘substantial thickness’’ means that allareas of the plating are of such thickness as toassure a durable coverage of the base metal towhich it has been affixed. Since industry productsinclude items having surfaces and parts of surfacesthat are subject to different degrees of wear, thethickness of plating for all items or for differentareas of the surface of individual items does notnecessarily have to be uniform.

4 A product containing 1 micron (otherwiseknown as 1µ) of 12 karat gold is equivalent to one-half micron of 24 karat gold. 5 See footnote 3.

6 Under the National Stamping Act, articles orparts made of gold or of gold alloy that contain nosolder have a permissible tolerance of three partsper thousand. If the part tested contains solder, thepermissible tolerance is seven parts per thousand.For full text, see 15 U.S.C. 295, et seq.

7 See footnote 3.

an alloy of gold of less than 10 karatfineness.

Note to paragraph (b) § 23.4: Theprovisions regarding the use of the word‘‘Gold,’’ or any abbreviation, as describedabove, are applicable to ‘‘Duragold,’’‘‘Diragold,’’ ‘‘Noblegold,’’ ‘‘Goldine,’’‘‘Layered Gold,’’ or any words or terms ofsimilar meaning.

(c) The following are examples ofmarkings and descriptions that areconsistent with the principles describedabove:

(1) An industry product or partthereof, composed throughout of analloy of gold of not less than 10 karatfineness, may be marked and describedas ‘‘Gold’’ when such word ‘‘Gold,’’wherever appearing, is immediatelypreceded by a correct designation of thekarat fineness of the alloy, and suchkarat designation is of equalconspicuousness as the word ‘‘Gold’’(for example, ‘‘14 Karat Gold,’’ ‘‘14 K.Gold,’’ or ‘‘14 Kt. Gold’’). Such productmay also be marked and described by adesignation of the karat fineness of thegold alloy unaccompanied by the word‘‘Gold’’ (for example, ‘‘14 Karat,’’ ‘‘14Kt.,’’ or ‘‘14 K.’’).

Note to paragraph (c)(1): Use of the term‘‘Gold’’ or any abbreviation to describe all orpart of a product that is composedthroughout of gold alloy, but contains ahollow center or interior, may misleadconsumers, unless the fact that the productcontains a hollow center is disclosed inimmediate proximity to the term ‘‘Gold’’ orits abbreviation (for example, ‘‘14 Karat Gold-Hollow Center,’’ or ‘‘14 K. Gold Tubing,’’when of a gold alloy tubing of such karatfineness). Such products should not bemarked or described as ‘‘solid’’ or as beingsolidly of gold or of a gold alloy. Forexample, when the composition of such aproduct is 14 karat gold alloy, it should notbe described or marked as either ‘‘14 Kt.Solid Gold’’ or as ‘‘Solid 14 Kt. Gold.’’

(2) An industry product or partthereof, on which there has been affixedon all significant surfaces, by anyprocess, a coating, electroplating, ordeposition by any means, of gold or goldalloy of not less than 10 karat finenessthat is of substantial thickness,3 and theminimum thickness throughout ofwhich is equivalent to one-half micron(or approximately 20 millionths of aninch) of fine gold,4 may be marked or

described as ‘‘Gold Plate’’ or ‘‘GoldPlated,’’ or abbreviated, as, for example,G.P. The exact thickness of the platemay be marked on the item, if it isimmediately followed by a designationof the karat fineness of the platingwhich is of equal conspicuousness asthe term used (as, for example, ‘‘2microns 12 K. gold plate’’ or ‘‘2µ 12 K.G.P.’’ for an item plated with 2 micronsof 12 karat gold.)

Note paragraph (c)(2) to paragraph (b): Ifan industry product has a thicker coating orelectroplating of gold or gold alloy on someareas than others, the minimum thickness ofthe plate should be marked.

(3) An industry product or partthereof on which there has been affixedon all significant surfaces by soldering,brazing, welding, or other mechanicalmeans, a plating of gold alloy of not lessthan 10 karat fineness and of substantialthickness 5 may be marked or describedas ‘‘Gold Filled,’’ ‘‘Gold Overlay,’’‘‘Rolled Gold Plate,’’ or an adequateabbreviation, when such platingconstitutes at least 1⁄20th of the weightof the metal in the entire article andwhen the term is immediately precededby a designation of the karat fineness ofthe plating which is of equalconspicuousness as the term used (forexample, ‘‘14 Karat Gold Filled,’’ ‘‘14Kt. Gold Filled,’’ ‘‘14 Kt. G.F.,’’ ‘‘14 Kt.Gold Overlay,’’ or ‘‘14K. R.G.P.’’). Whenconforming to all such requirementsexcept the specified minimum of 1⁄20thof the weight of the metal in the entirearticle, the terms ‘‘Gold Overlay’’ and‘‘Rolled Gold Plate’’ may be used whenthe karat fineness designation isimmediately preceded by a fractionaccurately disclosing the portion of theweight of the metal in the entire articleaccounted for by the plating, and whensuch fraction is of equalconspicuousness as the term used (forexample, ‘‘1⁄40th 12 Kt. Rolled GoldPlate’’ or ‘‘1⁄40 12 Kt. R.G.P.’’).

(4) An industry product or partthereof, on which there has been affixedon all significant surfaces by anelectrolytic process, an electroplating ofgold, or of a gold alloy of not less than10 karat fineness, which has a minimumthickness throughout equivalent to .175microns (approximately 7/1,000,000ths ofan inch) of fine gold, may be marked ordescribed as ‘‘Gold Electroplate’’ or‘‘Gold Electroplated,’’ or abbreviated, as,for example, ‘‘G.E.P.’’ When theelectroplating meets the minimumfineness but not the minimum thicknessspecified above, the marking ordescription may be ‘‘Gold Flashed’’ or‘‘Gold Washed.’’ When theelectroplating is of the minimum

fineness specified above and of aminimum thickness throughoutequivalent to two and one half (21⁄2)microns (or approximately 100/1,000,000thsof an inch) of fine gold, the marking ordescription may be ‘‘Heavy GoldElectroplate’’ or ‘‘Heavy GoldElectroplated.’’ When electroplatingsqualify for the term ‘‘Gold Electroplate’’(or ‘‘Gold Electroplated’’), or the term‘‘Heavy Gold Electroplate’’ (or ‘‘HeavyGold Electroplated’’), and have beenapplied by use of a particular kind ofelectrolytic process, the marking may beaccompanied by identification of theprocess used, as for example, ‘‘GoldElectroplated (X Process)’’ or ‘‘HeavyGold Electroplated (Y Process).’’

(d) The provisions of this sectionrelating to markings and descriptions ofindustry products and parts thereof aresubject to the applicable tolerances ofthe National Stamping Act or anyamendment thereof.6

Note 4 to paragraph (d) : Exemptionsrecognized in the assay of karat gold industryproducts and in the assay of gold filled, goldoverlay, and rolled gold plate industryproducts, and not to be considered in anyassay for quality, are listed in the Appendix.

§ 23.5 Misuse of the word ‘‘Vermeil.’’(a) It is unfair or deceptive to

represent, directly or by implication,that an industry product is ‘‘vermeil’’ ifsuch mark or description misrepresentsthe product’s true composition.

(b) An industry product may bedescribed or marked as ‘‘vermeil’’ if itconsists of a base of sterling silvercoated or plated on all significantsurfaces with gold, or gold alloy of notless than 10 karat fineness, that is ofsubstantial thickness 7 and a minimumthickness throughout equivalent to twoand one half (21⁄2) microns (orapproximately 100/1,000,000ths of an inch)of fine gold.

Note 1 to § 23.5: It is unfair or deceptiveto use the term ‘‘vermeil’’ to describe aproduct in which the sterling silver has beencovered with a base metal (such as nickel)plated with gold unless there is a disclosurethat the sterling silver is covered with a basemetal that is plated with gold.

Note 2 to § 23.5: Exemptions recognized inthe assay of gold filled, gold overlay, androlled gold plate industry products are listedin the Appendix.

§ 23.6 Misrepresentation as to silvercontent.

(a) It is unfair or deceptive tomisrepresent that an industry product

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8 See footnote 3.

9 Under the National Stamping Act, sterling silverarticles or parts that contain no solder have apermissible tolerance of four parts per thousand. Ifthe part tested contains solder, the permissibletolerance is ten parts per thousand. For full text, see15 U.S.C. 294, et seq.

contains silver, or to misrepresent anindustry product as having a silvercontent, plating, electroplating, orcoating.

(b) It is unfair or deceptive to mark,describe, or otherwise represent all orpart of an industry product as ‘‘silver,’’‘‘solid silver,’’ ‘‘Sterling Silver,’’‘‘Sterling,’’ or the abbreviation ‘‘Ster.’’unless it is at least 925/1,000ths puresilver.

(c) It is unfair or deceptive to mark,describe, or otherwise represent all orpart of an industry product as ‘‘coin’’ or‘‘coin silver’’ unless it is at least 900/1,000ths pure silver.

(d) It is unfair or deceptive to mark,describe, or otherwise represent all orpart of an industry product as beingplated or coated with silver unless allsignificant surfaces of the product orpart contain a plating or coating of silverthat is of substantial thickness.8

(e) The provisions of this sectionrelating to markings and descriptions ofindustry products and parts thereof aresubject to the applicable tolerances ofthe National Stamping Act or anyamendment thereof.9

Note 1 to § 23.6: The National StampingAct provides that silverplated articles shallnot ‘‘be stamped, branded, engraved orimprinted with the word ‘sterling’ or theword ‘coin,’ either alone or in conjunctionwith other words or marks.’’ 15 U.S.C. 297(a).

Note 2 to § 23.6: Exemptions recognized inthe assay of silver industry products arelisted in the Appendix.

§ 23.7 Misuse of words ‘‘platinum,’’‘‘iridium,’’ ‘‘palladium,’’ ‘‘ruthenium,’’‘‘rhodium,’’ and ‘‘osmium.’’

It is an unfair trade practice to use thewords ‘‘platinum,’’ ‘‘iridium,’’‘‘palladium,’’ ‘‘ruthenium,’’ ‘‘rhodium,’’or ‘‘osmium,’’ or any abbreviationsthereof, as a marking on, or asdescriptive of, any industry product orpart thereof, under any circumstance orcondition having the capacity andtendency or effect of deceivingpurchasers or prospective purchasers asto the true composition of such productor part.

Note 1 to § 23.7: Commercial StandardCS66–38, issued by the National Bureau ofStandards of the U.S. Department ofCommerce, covers the marking of articlesmade wholly or in part of platinum.Markings on industry products which are incompliance with the requirements of CS66–38 will be regarded as among those fulfillingthe requirements relating thereto which arecontained in this section.

Note 2 to § 23.7: See also § 23.9 entitled‘‘Additional guidance for the use of qualitymarks.’’

§ 23.8 Misrepresentation as to content ofpewter.

(a) It is unfair or deceptive to mark,describe, or otherwise represent all orpart of an industry product as ‘‘Pewter’’or any abbreviation if such mark ordescription misrepresents the product’strue composition.

(b) An industry product or partthereof may be described or marked as‘‘Pewter’’ or any abbreviation if itconsists of at least 900 parts per 1000Grade A Tin, with the remaindercomposed of metals appropriate for usein pewter.

§ 23.9 Additional guidance for the use ofquality marks.

As used in these guides, the term‘‘quality mark’’ means any letter, figure,numeral, symbol, sign, word, or term, orany combination thereof, that has beenstamped, embossed, inscribed, orotherwise placed on any industryproduct and which indicates or suggeststhat any such product is composedthroughout of any precious metal or anyprecious metal alloy or has a surface orsurfaces on which there has been platedor deposited any precious metal orprecious metal alloy. Included are thewords ‘‘gold,’’ ‘‘karat,’’ ‘‘carat,’’ ‘‘silver,’’‘‘sterling,’’ ‘‘vermeil,’’ ‘‘platinum,’’‘‘iridium,’’ ‘‘palladium,’’ ‘‘ruthenium,’’‘‘rhodium,’’ or ‘‘osmium,’’ or anyabbreviations thereof, whether usedalone or in conjunction with the words‘‘filled,’’ ‘‘plated,’’ ‘‘overlay,’’ or‘‘electroplated,’’ or any abbreviationsthereof. Quality markings include thosein which the words or terms ‘‘gold,’’‘‘karat,’’ ‘‘silver,’’ ‘‘vermeil,’’ ‘‘platinum’’(or platinum group metals), or theirabbreviations are included, eitherseparately or as suffixes, prefixes, orsyllables.

(a) Deception as to applicability ofmarks. (1) If a quality mark on anindustry product is applicable to onlypart of the product, the part of theproduct to which it is applicable (orinapplicable) should be disclosed when,absent such disclosure, the location ofthe mark misrepresents the product orpart’s true composition.

(2) If a quality mark is applicable toonly part of an industry product, but notanother part which is of similar surfaceappearance, each quality mark shouldbe closely accompanied by anidentification of the part or parts towhich the mark is applicable.

(b) Deception by reason of differencein the size of letters or words in amarking or markings. It is unfair ordeceptive to place a quality mark on a

product in which the words or lettersappear in greater size than other wordsor letters of the mark, or when differentmarkings placed on the product havedifferent applications and are indifferent sizes, when the net impressionof any such marking would bemisleading as to the metalliccomposition of all or part of theproduct. (An example of impropermarking would be the marking of a goldelectroplated product with the word‘‘electroplate’’ in small type and theword ‘‘gold’’ in larger type, with theresult that purchasers and prospectivepurchasers of the product might onlyobserve the word ‘‘gold.’’)

Note 1 to § 23.9: Legibility of markings. Ifa quality mark is engraved or stamped on anindustry product, or is printed on a tag orlabel attached to the product, the qualitymark should be of sufficient size type as tobe legible to persons of normal vision, shouldbe so placed as likely to be observed bypurchasers, and should be so attached as toremain thereon until consumer purchase.

Note 2 to § 23.9: Disclosure of identity ofmanufacturers, processors, or distributors.The National Stamping Act provides that anyperson, firm, corporation, or association,being a manufacturer or dealer subject tosection 294 of the Act, who applies or causesto be applied a quality mark, or imports anyarticle bearing a quality mark ‘‘whichindicates or purports to indicate that sucharticle is made in whole or in part of goldor silver or of an alloy of either metal’’ shallapply to the article the trademark or name ofsuch person. 15 U.S.C. 297.

§ 23.10 Misuse of ‘‘corrosion proof,’’‘‘noncorrosive,’’ ‘‘corrosion resistant,’’‘‘rust proof,’’ ‘‘rust resistant,’’ etc.

(a) It is unfair or deceptive to:(1) Use the terms ‘‘corrosion proof,’’

‘‘noncorrosive,’’ ‘‘rust proof,’’ or anyother term of similar meaning todescribe an industry product unless allparts of the product will be immunefrom rust and other forms of corrosionduring the life expectancy of theproduct; or

(2) Use the terms ‘‘corrosionresistant,’’ ‘‘rust resistant,’’ or any otherterm of similar meaning to describe anindustry product unless all parts of theproduct are of such composition as tonot be subject to material damage bycorrosion or rust during the majorportion of the life expectancy of theproduct under normal conditions of use.

(b) Among the metals that may beconsidered as corrosion (and rust)resistant are: Pure nickel; Gold alloys ofnot less than 10 Kt. fineness; andAustenitic stainless steels.

§ 23.11 Definition and misuse of the word‘‘diamond.’’

(a) A diamond is a natural mineralconsisting essentially of pure carbon

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crystallized in the isometric system. It isfound in many colors. Its hardness is 10;its specific gravity is approximately3.52; and it has a refractive index of2.42.

(b) It is unfair or deceptive to use theunqualified word ‘‘diamond’’ todescribe or identify any object orproduct not meeting the requirementsspecified in the definition of diamondprovided above, or which, thoughmeeting such requirements, has notbeen symmetrically fashioned with atleast seventeen (17) polished facets.

Note 1 to paragraph (b): It is unfair ordeceptive to represent, directly or byimplication, that industrial grade diamondsor other non-jewelry quality diamonds are ofjewelry quality.

(c) The following are examples ofdescriptions that are not consideredunfair or deceptive:

(1) The use of the words ‘‘roughdiamond’’ to describe or designateuncut or unfaceted objects or productssatisfying the definition of diamondprovided above; or

(2) The use of the word ‘‘diamond’’ todescribe or designate objects or productssatisfying the definition of diamond butwhich have not been symmetricallyfashioned with at least seventeen (17)polished facets when in immediateconjunction with the word ‘‘diamond’’there is either a disclosure of thenumber of facets and shape of thediamond or the name of a type ofdiamond that denotes shape and thatusually has less than seventeen (17)facets (e.g., ‘‘rose diamond’’).

Note 2 to paragraph (c): Additionalguidance about imitation and laboratory-created diamond representations and misuseof words ‘‘gem,’’ ‘‘real,’’ ‘‘genuine,’’‘‘natural,’’ etc., are set forth in §§ 23.23,23.24, and 23.25.

§ 23.12 Misuse of the words ‘‘flawless,’’‘‘perfect,’’ etc.

(a) It is unfair or deceptive to use theword ‘‘flawless’’ to describe anydiamond that discloses flaws, cracks,inclusions, carbon spots, clouds,internal lasering, or other blemishes orimperfections of any sort whenexamined under a corrected magnifier at10-power, with adequate illumination,by a person skilled in diamond grading.

(b) It is unfair or deceptive to use theword ‘‘perfect,’’ or any representation ofsimilar meaning, to describe anydiamond unless the diamond meets thedefinition of ‘‘flawless’’ and is not ofinferior color or make.

(c) It is unfair or deceptive to use thewords ‘‘flawless’’ or ‘‘perfect’’ todescribe a ring or other article of jewelryhaving a ‘‘flawless’’ or ‘‘perfect’’principal diamond or diamonds, and

supplementary stones that are not ofsuch quality, unless there is a disclosurethat the description applies only to theprincipal diamond or diamonds.

§ 23.13 Disclosing existence of artificialcoloring, infusing, etc.

If a diamond has been treated byartificial coloring, tinting, coating,irradiating, heating, by the use ofnuclear bombardment, or by theintroduction or the infusion of anyforeign substance, it is unfair ordeceptive not to disclose that thediamond has been treated and that thetreatment is not or may not bepermanent.

§ 23.14 Misuse of the term ‘‘blue white.’’It is unfair or deceptive to use the

term ‘‘blue white’’ or any representationof similar meaning to describe anydiamond that under normal, northdaylight or its equivalent shows anycolor or any trace of any color otherthan blue or bluish.

§ 23.15 Misuse of the term ‘‘properly cut,’’etc.

It is unfair or deceptive to use theterms ‘‘properly cut,’’ ‘‘proper cut,’’‘‘modern cut,’’ or any representation ofsimilar meaning to describe anydiamond that is lopsided, or is so thickor so thin in depth as to detractmaterially from the brilliance of thestone.

Note to § 23.15: Stones that are commonlycalled ‘‘fisheye’’ or ‘‘old mine’’ should not bedescribed as ‘‘properly cut,’’ ‘‘modern cut,’’etc.

§ 23.16 Misuse of the words ‘‘brilliant’’ and‘‘full cut.’’

It is unfair or deceptive to use theunqualified expressions ‘‘brilliant,’’‘‘brilliant cut,’’ or ‘‘full cut’’ to describe,identify, or refer to any diamond excepta round diamond that has at least thirty-two (32) facets plus the table above thegirdle and at least twenty-four (24)facets below.

Note to § 23.16: Such terms should not beapplied to single or rose-cut diamonds. Theymay be applied to emerald-(rectangular) cut,pear-shaped, heart-shaped, oval-shaped, andmarquise-(pointed oval) cut diamondsmeeting the above-stated facet requirementswhen, in immediate conjunction with theterm used, the form of the diamond isdisclosed.

§ 23.17 Misrepresentation of weight and‘‘total weight.’’

(a) It is unfair or deceptive tomisrepresent the weight of a diamond.

(b) It is unfair or deceptive to use theword ‘‘point’’ or any abbreviation in anyrepresentation, advertising, marking, orlabeling to describe the weight of adiamond, unless the weight is also

stated as decimal parts of a carat (e.g.,25 points or .25 carat).

Note 1 to paragraph (b): A carat is astandard unit of weight for a diamond and isequivalent to 200 milligrams (1⁄5 gram). Apoint is one one hundredth (1⁄100) of a carat.

(c) If diamond weight is stated asdecimal parts of a carat (e.g., .47 carat),the stated figure should be accurate tothe last decimal place. If diamondweight is stated to only one decimalplace (e.g., .5 carat), the stated figureshould be accurate to the seconddecimal place (e.g., ‘‘.5 carat’’ couldrepresent a diamond weight between.495–.504).

(d) If diamond weight is stated asfractional parts of a carat, a conspicuousdisclosure of the fact that the diamondweight is not exact should be made inclose proximity to the fractionalrepresentation and a disclosure of areasonable range of weight for eachfraction (or the weight tolerance beingused) should also be made.

Note to paragraph (d): When fractionalrepresentations of diamond weight are made,as described in paragraph d of this section,in catalogs or other printed materials, thedisclosure of the fact that the actual diamondweight is within a specified range should bemade conspicuously on every page where afractional representation is made. Suchdisclosure may refer to a chart or otherdetailed explanation of the actual rangesused. For example, ‘‘Diamond weights arenot exact; see chart on p.X for ranges.’’

§ 23.18 Definitions of various pearls.

As used in these guides, the terms setforth below have the followingmeanings:

(a) Pearl: A calcareous concretionconsisting essentially of alternatingconcentric layers of carbonate of limeand organic material formed within thebody of certain mollusks, the result ofan abnormal secretory process causedby an irritation of the mantle of themollusk following the intrusion of someforeign body inside the shell of themollusk, or due to some abnormalphysiological condition in the mollusk,neither of which has in any way beencaused or induced by humans.

(b) Cultured Pearl: The compositeproduct created when a nucleus(usually a sphere of calcareous molluskshell) planted by humans inside theshell or in the mantle of a mollusk iscoated with nacre by the mollusk.

(c) Imitation Pearl: A manufacturedproduct composed of any material ormaterials that simulate in appearance apearl or cultured pearl.

(d) Seed Pearl: A small pearl, asdefined in (a), that measuresapproximately two millimeters or less.

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§ 23.19 Misuse of the word ‘‘pearl.’’

(a) It is unfair or deceptive to use theunqualified word ‘‘pearl’’ or any otherword or phrase of like meaning todescribe, identify, or refer to any objector product that is not in fact a pearl, asdefined in § 23.18(a).

(b) It is unfair or deceptive to use theword ‘‘pearl’’ to describe, identify, orrefer to a cultured pearl unless it isimmediately preceded, with equalconspicuousness, by the word‘‘cultured’’ or ‘‘cultivated,’’ or by someother word or phrase of like meaning, soas to indicate definitely and clearly thatthe product is not a pearl.

(c) It is unfair or deceptive to use theword ‘‘pearl’’ to describe, identify, orrefer to an imitation pearl unless it isimmediately preceded, with equalconspicuousness, by the word‘‘artificial,’’ ‘‘imitation,’’ or ‘‘simulated,’’or by some other word or phrase of likemeaning, so as to indicate definitely andclearly that the product is not a pearl.

(d) It is unfair or deceptive to use theterms ‘‘faux pearl,’’ ‘‘fashion pearl,’’‘‘Mother of Pearl,’’ or any other suchterm to describe or qualify an imitationpearl product unless it is immediatelypreceded, with equal conspicuousness,by the word ‘‘artificial,’’ ‘‘imitation,’’ or‘‘simulated,’’ or by some other word orphrase of like meaning, so as to indicatedefinitely and clearly that the product isnot a pearl.

§ 23.20 Misuse of terms such as ‘‘culturedpearl,’’ ‘‘seed pearl,’’ ‘‘Oriental pearl,’’‘‘natura,’’ ‘‘kultured,’’ ‘‘real,’’ ‘‘gem,’’‘‘synthetic,’’ and regional designations.

(a) It is unfair or deceptive to use theterm ‘‘cultured pearl,’’ ‘‘cultivatedpearl,’’ or any other word, term, orphrase of like meaning to describe,identify, or refer to any imitation pearl.

(b) It is unfair or deceptive to use theterm ‘‘seed pearl’’ or any word, term, orphrase of like meaning to describe,identify, or refer to a cultured or animitation pearl, without using theappropriate qualifying term ‘‘cultured’’(e.g., ‘‘cultured seed pearl’’) or‘‘simulated,’’ ‘‘artificial,’’ or ‘‘imitation’’(e.g., ‘‘imitation seed pearl’’).

(c) It is unfair or deceptive to use theterm ‘‘Oriental pearl’’ or any word, term,or phrase of like meaning to describe,identify, or refer to any industry productother than a pearl taken from a saltwater mollusk and of the distinctiveappearance and type of pearls obtainedfrom mollusks inhabiting the PersianGulf and recognized in the jewelry tradeas Oriental pearls.

(d) It is unfair or deceptive to use theword ‘‘Oriental’’ to describe, identify, orrefer to any cultured or imitation pearl.

(e) It is unfair or deceptive to use theword ‘‘natura,’’ ‘‘natural,’’ ‘‘nature’s,’’ orany word, term, or phrase of likemeaning to describe, identify, or refer toa cultured or imitation pearl. It is unfairor deceptive to use the term ‘‘organic’’to describe, identify, or refer to animitation pearl, unless the term isqualified in such a way as to make clearthat the product is not a natural orcultured pearl.

(f) It is unfair or deceptive to use theterm ‘‘kultured,’’ ‘‘semi-cultured pearl,’’‘‘cultured-like,’’ ‘‘part-cultured,’’ ‘‘pre-mature cultured pearl,’’ or any word,term, or phrase of like meaning todescribe, identify, or refer to animitation pearl.

(g) It is unfair or deceptive to use theterm ‘‘South Sea pearl’’ unless itdescribes, identifies, or refers to a pearlthat is taken from a salt water molluskof the Pacific Ocean South Sea Islands,Australia, or Southeast Asia. It is unfairor deceptive to use the term ‘‘South Seacultured pearl’’ unless it describes,identifies, or refers to a cultured pearlformed in a salt water mollusk of thePacific Ocean South Sea Islands,Australia, or Southeast Asia.

(h) It is unfair or deceptive to use theterm ‘‘Biwa cultured pearl’’ unless itdescribes, identifies, or refers tocultured pearls grown in fresh watermollusks in the lakes and rivers ofJapan.

(i) It is unfair or deceptive to use theword ‘‘real,’’ ‘‘genuine,’’ ‘‘precious,’’ orany word, term, or phrase of likemeaning to describe, identify, or refer toany imitation pearl.

(j) It is unfair or deceptive to use theword ‘‘gem’’ to describe, identify, orrefer to a pearl or cultured pearl thatdoes not possess the beauty, symmetry,rarity, and value necessary forqualification as a gem.

Note to paragraph (j): Use of the word‘‘gem’’ with respect to cultured pearls shouldbe avoided since few cultured pearls possessthe necessary qualifications to properly betermed ‘‘gems.’’ Imitation pearls should notbe described as ‘‘gems.’’

(k) It is unfair or deceptive to use theword ‘‘synthetic’’ or similar terms todescribe cultured or imitation pearls.

(l) It is unfair or deceptive to use theterms ‘‘Japanese Pearls,’’ ‘‘ChinesePearls,’’ ‘‘Mallorca Pearls,’’ or anyregional designation to describe,identify, or refer to any cultured orimitation pearl, unless the term isimmediately preceded, with equalconspicuousness, by the word‘‘cultured,’’ ‘‘artificial,’’ ‘‘imitation,’’ or‘‘simulated,’’ or by some other word orphrase of like meaning, so as to indicatedefinitely and clearly that the product isa cultured or imitation pearl.

§ 23.21 Misrepresentation as to culturedpearls.

It is unfair or deceptive tomisrepresent the manner in whichcultured pearls are produced, the size ofthe nucleus artificially inserted in themollusk and included in culturedpearls, the length of time that suchproducts remained in the mollusk, thethickness of the nacre coating, the valueand quality of cultured pearls ascompared with the value and quality ofpearls and imitation pearls, or any othermaterial matter relating to theformation, structure, properties,characteristics, and qualities of culturedpearls.

§ 23.22 Deception as to gemstones.It is unfair or deceptive to fail to

disclose that a gemstone has beentreated in any manner that is notpermanent or that creates special carerequirements, and to fail to disclose thatthe treatment is not permanent, if suchis the case. The following are examplesof treatments that should be disclosedbecause they usually are not permanentor create special care requirements:coating, impregnation, irradiating,heating, use of nuclear bombardment,application of colored or colorless oil orepoxy-like resins, wax, plastic, or glass,surface diffusion, or dyeing. Thisdisclosure may be made at the point ofsale, except that disclosure should bemade in any solicitation where theproduct can be purchased withoutviewing (e.g., direct mail catalogs, on-line services), and in the case oftelevised shopping programs, on the air.If special care requirements for agemstone arise because the gemstonehas been treated, it is recommended thatthe seller disclose the special carerequirements to the purchaser.

§ 23.23 Misuse of the words ‘‘ruby,’’‘‘sapphire,’’ ‘‘emerald,’’ ‘‘topaz,’’ ‘‘stone,’’‘‘birthstone,’’ ‘‘gemstone,’’ etc.

(a) It is unfair or deceptive to use theunqualified words ‘‘ruby,’’ ‘‘sapphire,’’‘‘emerald,’’ ‘‘topaz,’’ or the name of anyother precious or semi-precious stone todescribe any product that is not in facta natural stone of the type described.

(b) It is unfair or deceptive to use theword ‘‘ruby,’’ ‘‘sapphire,’’ ‘‘emerald,’’‘‘topaz,’’ or the name of any otherprecious or semi-precious stone, or theword ‘‘stone,’’ ‘‘birthstone,’’‘‘gemstone,’’ or similar term to describea laboratory-grown, laboratory-created,[manufacturer name]-created, synthetic,imitation, or simulated stone, unlesssuch word or name is immediatelypreceded with equal conspicuousnessby the word ‘‘laboratory-grown,’’‘‘laboratory-created,’’ ‘‘[manufacturer

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1 Field pieces of lockets are those inner portionsused as frames between the inside edges of thelocket and the spaces for holding pictures. Bezels

are the separable inner metal rings to hold thepictures in place.

2 Oxfords are a form of eyeglasses where a flatspring joins the two eye rims and the tension it

exerts on the nose serves to hold the unit in place.Oxfords are also referred to as pince nez.

name]-created,’’ ‘‘synthetic,’’ or by theword ‘‘imitation’’ or ‘‘simulated,’’ so asto disclose clearly the nature of theproduct and the fact it is not a naturalgemstone.

Note to paragraph (h): The use of the word‘‘faux’’ to describe a laboratory-created orimitation stone is not an adequate disclosurethat the stone is not natural.

(c) It is unfair or deceptive to use theword ‘‘laboratory-grown,’’ ‘‘laboratory-created,’’ ‘‘[manufacturer name]-created,’’ or ‘‘synthetic’’ with the nameof any natural stone to describe anyindustry product unless such industryproduct has essentially the same optical,physical, and chemical properties as thestone named.

§ 23.24 Misuse of the words ‘‘real,’’‘‘genuine,’’ ‘‘natural,’’ ‘‘precious,’’ etc.

It is unfair or deceptive to use theword ‘‘real,’’ ‘‘genuine,’’ ‘‘natural,’’‘‘precious,’’ ‘‘semi-precious,’’ or similarterms to describe any industry productthat is manufactured or producedartificially.

§ 23.25 Misuse of the word ‘‘gem.’’(a) It is unfair or deceptive to use the

word ‘‘gem’’ to describe, identify, orrefer to a ruby, sapphire, emerald, topaz,or other industry product that does notpossess the beauty, symmetry, rarity,and value necessary for qualification asa gem.

(b) It is unfair or deceptive to use theword ‘‘gem’’ to describe any laboratory-created industry product unless theproduct meets the requirements ofparagraph (a) of this section and unlesssuch word is immediately accompanied,with equal conspicuousness, by theword ‘‘laboratory-grown,’’ ‘‘laboratory-created,’’ or ‘‘[manufacturer-name]-created,’’ ‘‘synthetic,’’ or by some otherword or phrase of like meaning, so as toclearly disclose that it is not a naturalgem.

Note to § 23.25: In general, use of the word‘‘gem’’ with respect to laboratory-createdstones should be avoided since fewlaboratory-created stones possess thenecessary qualifications to properly betermed ‘‘gems.’’ Imitation diamonds andother imitation stones should not bedescribed as ‘‘gems.’’ Not all diamonds ornatural stones, including those classified asprecious stones, possess the necessaryqualifications to be properly termed ‘‘gems.’’

§ 23.26 Misuse of the words ‘‘flawless,’’‘‘perfect,’’ etc.

(a) It is unfair or deceptive to use theword ‘‘flawless’’ as a quality descriptionof any gemstone that disclosesblemishes, inclusions, or clarity faults ofany sort when examined under acorrected magnifier at 10-power, withadequate illumination, by a personskilled in gemstone grading.

(b) It is unfair or deceptive to use theword ‘‘perfect’’ or any representation ofsimilar meaning to describe anygemstone unless the gemstone meets thedefinition of ‘‘flawless’’ and is not ofinferior color or make.

(c) It is unfair or deceptive to use theword ‘‘flawless,’’ ‘‘perfect,’’ or anyrepresentation of similar meaning todescribe any imitation gemstone.

Appendix to Part 23—ExemptionsRecognized in the Assay for Quality ofGold Alloy, Gold Filled, Gold Overlay,Rolled Gold Plate, Silver, and PlatinumIndustry Products

(a) Exemptions recognized in the industryand not to be considered in any assay forquality of a karat gold industry productinclude springs, posts, and separable backs oflapel buttons, posts and nuts for attachinginterchangeable ornaments, metallic partscompletely and permanently encased in anonmetallic covering, field pieces and bezelsfor lockets,1 and wire pegs or rivets used forapplying mountings and other ornaments,which mountings or ornaments shall be ofthe quality marked.

Note: Exemptions recognized in theindustry and not to be considered in anyassay for quality of a karat gold opticalproduct include: the hinge assembly (barrelor other special types such as are customarilyused in plastic frames); washers, bushings,and nuts of screw assemblies; dowels;springs for spring shoe straps; metal partspermanently encased in a non-metalliccovering; and for oxfords,2 coil and jointsprings.

(b) Exemptions recognized in the industryand not to be considered in any assay forquality of a gold filled, gold overlay androlled gold plate industry product, other thanwatchcases, include joints, catches, screws,pin stems, pins of scarf pins, hat pins, etc.,field pieces and bezels for lockets, posts andseparate backs of lapel buttons, bracelet andnecklace snap tongues, springs, and metallicparts completely and permanently encased ina nonmetallic covering.

Note: Exemptions recognized in theindustry and not to be considered in any

assay for quality of a gold filled, gold overlayand rolled gold plate optical product include:screws; the hinge assembly (barrel or otherspecial types such as are customarily used inplastic frames); washers, bushings, tubes andnuts of screw assemblies; dowels; padinserts; springs for spring shoe straps, coresand/or inner windings of comfort cabletemples; metal parts permanently encased ina non-metallic covering; and for oxfords, thehandle and catch.

(c) Exemptions recognized in the industryand not to be considered in any assay forquality of a silver industry product includescrews, rivets, springs, spring pins for wristwatch straps; posts and separable backs oflapel buttons; wire pegs, posts, and nuts usedfor applying mountings or other ornaments,which mountings or ornaments shall be ofthe quality marked; pin stems (e.g., of badges,brooches, emblem pins, hat pins, and scarfpins, etc.); levers for belt buckles; blades andskeletons of pocket knives; field pieces andbezels for lockets; bracelet and necklace snaptongues; any other joints, catches, or screws;and metallic parts completely andpermanently encased in a nonmetalliccovering.

(d) Exemptions recognized in the industryand not to be considered in any assay forquality of an industry product of silver incombination with gold include joints,catches, screws, pin stems, pins of scarf pins,hat pins, etc., posts and separable backs oflapel buttons, springs, and metallic partscompletely and permanently encased in anonmetallic covering.

(e) Exemptions recognized in the industryand not to be considered in any assay forquality of a platinum industry productinclude springs, winding bars, sleeves, crowncores, mechanical joint pins, screws, rivets,dust bands, detachable movement rims, hat-pin stems, and bracelet and necklace snaptongues. In addition, the followingexemptions are recognized for productsmarked in accordance with section 23.8(b)(5)of these Guides (i.e., products that are lessthan 500 parts per thousand platinum): pintongues, joints, catches, lapel button backsand the posts to which they are attached,scarf-pin stems, hat pin sockets, shirt-studbacks, vest-button backs, and ear-screwbacks, provided such parts are made of thesame quality platinum as is used in thebalance of the article.

By direction of the Commission.Donald S. Clark,Secretary.

Note: The following appendix will notappear in the Code of Federal Regulations.

APPENDIX—LIST OF COMMENTERS AND ABBREVIATIONS

Abbreviation No. Commenter

A&D Gem ................................................... 187 A & D Gem Corp.

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APPENDIX—LIST OF COMMENTERS AND ABBREVIATIONS—Continued

Abbreviation No. Commenter

A&Z ............................................................ 29 A & Z Pearls, Inc.ADS ............................................................ 197 American Diamond Syndicate.Affro ........................................................... 138 Affro Gems.AGL ............................................................ 230 American Gemological Laboratories.AGS ........................................................... 18 American Gem Society.AGTA ......................................................... 49 The American Gem Trade Association, Inc.Alarama ...................................................... 51 Alarama Jewelry Co., Inc.Alfille .......................................................... 247 E.J. Alfille, Ltd.Alie ............................................................. 106 A.E. Alie & Sons, Inc.Almond ....................................................... 63 Almond Jewelers Inc.AMG ........................................................... 79 AM-Gold Products, Inc.APG ........................................................... 89 American Pewter Guild, Ltd.Argo ........................................................... 17 Argo & Lehne Jewelers.Armel .......................................................... 32 Armel Manufacturing Co.ArtCarved ................................................... 155 ArtCarved.Artisans ...................................................... 124 Artisans Jewelers, Inc.Assael ........................................................ 136 Assael Int’l Inc.Assured ...................................................... 148 Assured Loan Co.Astoria ........................................................ 56 Astoria Jewelry Mfg. Co., Inc.Atlantic ....................................................... 135 Atlantic Gem Corp.Aviv ............................................................ 40 and 41 Aviv Inc.AWA ........................................................... 236 American Watch Association.AWI ............................................................ 116 American Watchmakers Institute.Bales .......................................................... 156 Bales Diamond Center & Mfg. Inc.Bedford ...................................................... 210 Bedford Jewelers, Inc.Benrus ........................................................ 22 Benrus Watch Co., Inc.Best ............................................................ 225 Best Products Co., Inc.Black Hills .................................................. 59 Black Hills Gold Jewelry.Bogo ........................................................... 201 Jerry Bogo Co.Boston ........................................................ 125 Boston Findings & Jewelers Supply Co., Inc.Brant .......................................................... 133 Brant Laird Antiques.Brasilia ....................................................... 143 Brasilia Gems, Inc.Bridge ......................................................... 163 Ben Bridge.Brilliance .................................................... 68 Brilliance-Diamond Importers.Bruce .......................................................... 218 Donald Bruce & Co.Canada ...................................................... 209 Consumer & Corporate Affairs Canada.Capital ........................................................ 19 Capital Mfg./L. Dershowitz Co.Capitol Ring ............................................... 191 Capitol Ring Co., Inc.Catholyte .................................................... 34 Catholyte, Inc.Chatham .................................................... 231 Chatham Created Gems.Cheviot ....................................................... 104 Cheviot Jewelry Co.Citizen ........................................................ 228 Citizen Watch Co. of America, Inc.Classique ................................................... 96 Classique D’Or, Inc.Cockrell ...................................................... 134 Charles Cockrell.Collins ........................................................ 12 Collins Jewelry.Colormasters .............................................. 149 Colormasters Gem Corp.Commercial ................................................ 202 Commercial Mineral Co.Consumers ................................................. 158 Consumers.Courtship .................................................... 36 Courtship Int’l Ltd.CPAA ......................................................... 193 Cultured Pearl Association of America, Inc.Cross .......................................................... 165 A.T. Cross Co.Crystal ........................................................ 24 J.O. Crystal Co., Inc.David .......................................................... 194 W.B. David & Co., Inc.Day ............................................................. 132 Day Co.De’Nicole .................................................... 175 De’Nicole Designs.DeMarco .................................................... 161 Joseph DeMarco.Dendritics ................................................... 167 Dendritics, Inc.Diamonique ................................................ 224 Diamonique Corp.Diastar ........................................................ 99 Diastar Inc.Disons ........................................................ 55 Disons Gems, Inc.DMIA .......................................................... 26 Diamond Manufacturers & Importers Association of America, Inc.Eastern ....................................................... 173 Eastern Gems, Inc.Eaton’s ....................................................... 248 Eaton’s.Eisen .......................................................... 91 Susan Eisen.Emkay ........................................................ 146 Emkay Int’l, Inc.Empire ........................................................ 44 Empire Silver Co., Inc.Estate ......................................................... 23 Estate Jewelers.Evvco ......................................................... 73 Evvco Enterprises, Inc.Fabrikant .................................................... 53 M. Fabrikant & Sons.Faleck ........................................................ 50 Faleck & Margolies Manufacturing, Corp.Fame .......................................................... 102 Fame Jewelry Inc.Fargotstein ................................................. 70 S. Fargotstein & Sons, Inc.

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APPENDIX—LIST OF COMMENTERS AND ABBREVIATIONS—Continued

Abbreviation No. Commenter

Fashion ...................................................... 35 Fashion Line Ltd.Fasnacht .................................................... 4 Fasnacht’s Jewelry.Fine ............................................................ 141 Fine Emerald Inc.Finlay ......................................................... 253 Finlay Fine Jewelry Corp.Fischer ....................................................... 87 Fischer Pewter, Ltd.Flyer ........................................................... 95 J & H Flyer.Foster ......................................................... 100 Foster, Inc.Francis ....................................................... 139 Mrs. James B. Francis.Franklin ...................................................... 250 The Franklin Mint.Friedman .................................................... 234 A.A. Friedman, Co., Inc.G&B ........................................................... 30 Gudmundson & Buyck Jewelers.Gehrkens ................................................... 206 Kenneth A. Gehrkens.Gem Vault .................................................. 147 The Gem Vault.Gem Gallery ............................................... 131 The Gem Gallery.Gemtron ..................................................... 145 Gemtron Corp.General ...................................................... 88 General Findings.GIA ............................................................. 81 Gemological Institute of America.Gold Institute .............................................. 13 Gold Institute.Golden West .............................................. 179 Golden West Manufacturing Jewelers, Inc.Goldman .................................................... 60 Frederick Goldman, Inc.Gray ........................................................... 127 Gray & Co.Green ......................................................... 6 Green Brothers.Guyot ......................................................... 82 Maurice F. Guyot Jr.Handy ......................................................... 62 Handy & Harman.Hansen ....................................................... 174 Dr. Gary R. Hansen.Harten ........................................................ 259 Harten.Harvey ........................................................ 75 E.B. Harvey & Co., Inc.Heritage ..................................................... 215 Heritage Metalworks, Inc.Honora ....................................................... 14 and 15 Honora Jewelry Co., Inc.H.R. Diamonds .......................................... 195 H.R. Diamonds, Ltd.ICT ............................................................. 189 ICT, Inc.IJA .............................................................. 192 Indiana Jewelers Association.Ijadi ............................................................ 171 Ijadi Gem, Inc.Imperial ...................................................... 117 Imperial Jade Mining, Inc.Impex ......................................................... 220 Impex Diamond Corp.ISA ............................................................. 237 and 237A International Society of Appraisers.JA ............................................................... 3 Jewelers of America, Inc.Jabel .......................................................... 47 Jabel Inc.JCWA or Japan Watch .............................. 216 Japan Clock & Watch Association.Jeffery ........................................................ 21 Robert K. Jeffery.Jewelmasters ............................................. 110 N.E.I. Jewelmasters of N.J. Inc.JGL ............................................................ 77 JGL Inc.JMC ............................................................ 1 Jewelry Merchandising Consultants.JVC ............................................................ 212 Jewelers Vigilance Committee, Inc.K’s .............................................................. 45 and 98 K’s Merchandise.Kast ............................................................ 198 Joe Kast.Kennedy ..................................................... 9 Kennedy’s Jewelers.Kimberley ................................................... 227 Kimberley Created Emerald, Inc.King ............................................................ 11 King’s Jewelry.KingStone .................................................. 166 KingStone Gem Importers, Ltd.Kittle ........................................................... 246 Clare Adams Kittle.Knight ......................................................... 256 George R. Knight, Jr.Korbelak ..................................................... 27 and 169 A. Korbelak.Krementz .................................................... 208 Krementz & Co.Kurgan ....................................................... 107 I. Kurgan & Co., Inc.Kwiat .......................................................... 203 Kwiat, Inc.Kyocera ...................................................... 242 Kyocera America, Inc.Lance ......................................................... 84 The Lance Corp.Landstrom’s ............................................... 241 Landstrom’s.Lange ......................................................... 183 M. Lange Co., Inc.Lannyte ...................................................... 65 Lannyte Co.LaPrad ....................................................... 181 Robert E. LaPrad.Leach ......................................................... 257 Leach & Garner Co.Lee ............................................................. 153 Stewart M. Lee.Leer ............................................................ 114 Leer Gem Ltd.Light Touch ................................................ 54 The Light Touch.Limon ......................................................... 235 Robert Limon.Little ........................................................... 164 Little & Co., Inc.Littman ....................................................... 2 Littman & Barclay Jewelers.London Star ............................................... 20 London Star Ltd.LP Gems .................................................... 168 L.P. Gems, Inc.Luria ........................................................... 28 L. Luria & Son.

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APPENDIX—LIST OF COMMENTERS AND ABBREVIATIONS—Continued

Abbreviation No. Commenter

M&L ............................................................ 105 M & L Jewelry Manufacturing Inc.Majestic ...................................................... 115 Majestic Setting Inc.Majorica ..................................................... 240 Majorica Jewelry, Ltd.Manning ..................................................... 159 Manning Int’l.MAR ........................................................... 37 and 42 M.A.R. Creations Inc.Mark ........................................................... 207 Richard C. Mark.Mason ........................................................ 170 Mason-Kay Inc.Mastro ........................................................ 190 Mastro Jewelry Corp.Matlins ........................................................ 205 Antoinette Leonard Matlins.Matthey ...................................................... 213 Johnson Matthey.Mayfield’s ................................................... 185 Mayfield’s Co.McGee ....................................................... 112 McGee & Son.MCM .......................................................... 152 MCM Gems.Mendelson ................................................. 33 Mike Mendelson & Assoc., Inc.Mikimoto ..................................................... 72 Mikimoto (America) Co., Ltd.MJSA ......................................................... 226 Manufacturing Jewelers & Silversmiths of America, Inc.Moon & Star ............................................... 172 Moon & Star.Morton ........................................................ 199 Morton Jewelers.Mueller ....................................................... 151 Ralph Mueller & Assoc.Murray’s ..................................................... 264 Murray’s.Nabavian .................................................... 144 Nabavian Gem Co. Inc.NACAA ....................................................... 90 National Association of Consumer Agency Administrators.NACSM ...................................................... 219 National Association of Catalog Showroom Merchandisers, Inc.Nassau ....................................................... 10 Kurt Nassau, PhD.NAWC ........................................................ 251 North American Watch Corp.New Era ..................................................... 129 New Era Gems.New Castle ................................................ 122 Kings of New Castle, Inc.Newhouse .................................................. 76 Leon M. Newhouse.Nowlin ........................................................ 109 Nowlin Jewelry, Inc.NRF ............................................................ 238 National Retail Federation.NY Gold ..................................................... 39 The New York Gold & Diamond Exchange Inc.Obodda ...................................................... 177 H. Obodda.Ocean ........................................................ 176 Ocean Gem.Odi-Famor .................................................. 58 ODI/FAMOR, Inc.Onyx ........................................................... 162 House of Onyx.Orion .......................................................... 94 and 113 Orion Diamond Manufacturing Co., Inc.Oroco ......................................................... 69 Oroco Manufacturing, Inc.Overstreet .................................................. 8 Overstreet’s Jewelry.PanAmerican ............................................. 57 and 101 Pan-American Diamond Corp.PGI ............................................................. 245 Platinum Guild Int’l U.S.A. Jewelry, Inc.Phillips ........................................................ 204 Phillips Jewelers, Inc.Philnor ........................................................ 93 Philnor Inc.Postal Service ............................................ 244 United States Postal Service.Pounder’s ................................................... 130 Pounder’s Jewelry.Precision .................................................... 121 Precision Design Inc.Preston ....................................................... 229 F.J. Preston & Son Inc.Ransom ...................................................... 184 King’s Ransom.Rapaport .................................................... 233 Rapaport Corp.Raphael ...................................................... 78 Raphael Jewelry Co., Inc.Rare Earth ................................................. 137 Rare Earth Gallery.Renaissance .............................................. 74 Renaissance.Reys ........................................................... 260 Rey’s Jewelers.River ........................................................... 254 River Gems & Findings.Roisen ........................................................ 31 Michal Ferman, Roisen & Ferman, Inc.Ross Simons .............................................. 67 Ross-Simons Jewelers.Rosy Blue .................................................. 108 Rosy Blue Inc.Roubins ...................................................... 128 A. R. Roubins Sons, Inc.Russell ....................................................... 217 Kenneth M. Russell.Salisbury .................................................... 86 Salisbury Pewter, Inc.Sarantos ..................................................... 182 Susan E. Sarantos.Saturn ........................................................ 46 Saturn Rings, Inc.Schaeffer .................................................... 211 H.K. Schaeffer & Co.Schneider ................................................... 119 Wm. Schneider Inc.Schwartz .................................................... 52 Charles Schwartz.SCI ............................................................. 180 Stanley Creations, Inc.SDGL ......................................................... 140 San Diego Gemological Laboratories.Seagull ....................................................... 111 and 120 Seagull Pewter & Silversmiths Ltd.Service ....................................................... 222 Service Merchandise.Sheaffer ..................................................... 249 Sheaffer Inc.Shire ........................................................... 221 Maurice Shire Inc.Shor ........................................................... 258 Russell Shor.Sibbing ....................................................... 5 Sibbing’s Jewelry.

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1 57 FR 24996 (June 12, 1992). The Commissionpublished this Federal Register Notice solicitingcomment, in response to a petition from theJewelers Vigilance Committee (‘‘JVC’’). Amongother revisions, the JVC proposed consolidating allthree Guides into one.

APPENDIX—LIST OF COMMENTERS AND ABBREVIATIONS—Continued

Abbreviation No. Commenter

Siegel ......................................................... 255 Siegel & Assoc., Inc.Simmons .................................................... 71 R.F. Simmons Co., Inc.Sites ........................................................... 123 Sites Jewelers.Skalet ......................................................... 61 Skalet Inc.Soft Wear ................................................... 142 Soft Wear Jewelry.Solid Gold .................................................. 261 Solid Gold Jewelers.Stanley ....................................................... 83 Loyd Stanely.Stern .......................................................... 157 Louis P. Stern Assoc.Stieff ........................................................... 25 Kirk Stieff.Suberi ......................................................... 214 Suberi Brothers Inc.Swezey ...................................................... 92 Swezey of Westport Inc.Swiss Federation ....................................... 232 The Federation of the Swiss Watch Industry.Taylor ......................................................... 186 Taylor Gem Corp.Thorpe ........................................................ 7 Thorpe & Co.TIC ............................................................. 66 Tin Information Center.Timex ......................................................... 239 Timex Corp.TransAmerican ........................................... 43 TransAmerican Jewelry Co., Inc.Tru-Kay ...................................................... 196 Tru-Kay Manufacturing Co.Tsavomadini ............................................... 150 Tsavomadini Inc.Ultimate ...................................................... 243 Ultimate Trading Corp.Ultra Blue ................................................... 160 Ultra Blue Mfg.Union Carbide ............................................ 38 Union Carbide.Univ. Point ................................................. 126 Universal Point.Universal .................................................... 178 Universal Pewter Corp.USWC ........................................................ 118 U.S. Watch Council Inc.Vardi ........................................................... 97 Vardi Stonehouse, Inc.Verstandig .................................................. 154 Verstandig & Sons, Inc.Vijaydimon ................................................. 80 and 103 Vijaydimon (U.S.A.) Inc.Von’s .......................................................... 16 Von’s Diamond Jewelry.Web ............................................................ 85 Web Silver Co., Inc.Weinman .................................................... 263 Weinman Bros, Inc.Weitz .......................................................... 200 Sid Weitz, Inc.Werdiger .................................................... 48 Michael Werdiger, Inc.WGC .......................................................... 223 World Gold Council.Winston ...................................................... 252 Winston Studio & Imports.Woodbury ................................................... 64 Woodbury Pewterers, Inc.Zahm .......................................................... 188 Philip Zahm.

[FR Doc. 96–13524 Filed 5–29–96; 8:45 am]BILLING CODE 6750–01–P

FEDERAL TRADE COMMISSION

16 CFR Part 19

Guides for the Metallic Watch BandIndustry

AGENCY: Federal Trade Commission.

ACTION: Final rule.

SUMMARY: The Federal TradeCommission (the ‘‘Commission’’)announces that it has concluded itsreview of its Guides for the MetallicWatch Band Industry (‘‘Watch BandGuides’’). In a separate documentpublished elsewhere in this issue of theFederal Register, the Commission isconsolidating certain provisions of theWatch Band Guides with the Guides forthe Jewelry Industry, renamed Guidesfor the Jewelry, Precious Metals andPewter Industries. The Commission hasdecided to rescind the Watch Band

Guides. The Commission is taking thisaction to streamline the Guides.EFFECTIVE DATE: May 30, 1996.FOR FURTHER INFORMATION CONTACT:Constance M. Vecellio, Attorney, (202)326–2966, or Laura J. DeMartino,Attorney, (202) 326–3030, Division ofEnforcement, Bureau of ConsumerProtection, Federal Trade Commission,Washington, DC 20580.SUPPLEMENTARY INFORMATION: TheGuides for the Metallic Watch BandIndustry (‘‘Watch Band Guides’’), 16CFR Part 19, address claims made aboutwatch bands that are not permanentlyattached to watchcases. TheCommission requested public commenton the Watch Band Guides, the Guidesfor the Jewelry Industry (‘‘JewelryGuides’’), 16 CFR Part 23, and theGuides for the Watch Industry, 16 CFRPart 245.1 Much of the material in the

Watch Band Guides duplicatesinformation in the Jewelry Guides. Forthe reasons discussed in greater detail inthe Federal Register Notice announcingrevisions to the Jewelry Guides, theCommission is consolidating some ofthe provisions of the Watch BandGuides into the Jewelry Guides.Therefore, the Commission is rescindingthe Watch Band Guides. On the basis ofthe discussion in the Commission’sannouncement of revisions to theJewelry Guides, which is locatedelsewhere in this issue of the FederalRegister, and which is incorporatedherein, 16 CFR Part 19 is herebyrescinded.

List of Subjects in 16 CFR Part 19

Advertising, Watch bands, Tradepractices.

PART 19—[REMOVED]

The Commission under the authorityof Section 5(a)(1) of the Federal TradeCommission Act, 15 U.S.C. 45(a)(1),amends chapter I of Title 16 of the Code