Announced Actions for January 25, 1999

The Federal Trade Commission today announced the results of a surf of 100 Internet websites advertising and selling jewelry, finding that many of the sites were not providing consumers with information required under the FTC's Jewelry Guides. The Jewelry Guides describe the types of jewelry marketing claims the FTC considers false or misleading and provides examples of nondeceptive claims.

The surf, conducted by agency staff during the December holiday shopping season, reviewed websites of major jewelry chains, small retailers and online auction firms. The results of the limited review were announced by Elaine Kolish, Associate Director of the FTC's Division of Enforcement, in a speech today, sponsored by the Jewelers Vigilance Committee, the industry association for legal and ethical jewelry practices, at the JA International Jewelry Show in New York City.

"We looked for advertisements for pearl, diamond and gemstone jewelry and are sending e-mail messages to sites that contained potentially deceptive sales claims," Kolish explained.

The FTC, which enforces the Guides for the Jewelry, Precious Metals and Pewter Industries, has used web surfing as a way to assess how the Internet is being used to market a variety of products and services.

The FTC's surf assessed compliance with disclosure requirements in three areas: pearl jewelry products, diamond weights and gemstone treatments. The Jewelry Guides say that ads for pearl jewelry should make clear whether the pearls are cultured or imitation. Most pearl jewelry being sold today contains cultured or imitation pearls, not natural pearls because natural pearls are very rare. Cultured pearls are created from mollusks, but with human intervention; that is, an irritant introduced into the shell causes a pearl to grow. Imitation pearls are completely man-made. Most retailers and auction site sellers failed to comply with the pearl disclosure requirement -- 56 of the retailer sites had ads for pearl jewelry and only 29% advertised the jewelry correctly; 25 auction site sellers had ads for pearl jewelry and only 20% advertised the jewelry correctly.

The surf also reviewed ads for diamond jewelry products. When diamond jewelry is advertised, the ad usually provides the stone's carat weight, for example, a 1/2 carat diamond ring. Because the stone typically would not weigh exactly the advertised weight, the Jewelry Guides state that consumers should be told the diamond weight represented in the ad is not exact and be told the tolerances the jeweler is using. Some diamond ads represent diamond weight in decimals, for example, a .33 carat diamond ring. The Jewelry Guides state that when decimals are used, the weight should be accurate to the last decimal place using normal rounding rules. Because it was impossible to tell whether sites using decimals were rounding the weights correctly, the FTC staff presumed those sites were advertising the diamond weight properly. When fractions were used to represent the diamond's weight, the agency reviewed the ads to see if the necessary disclosures were made. Of the 90 retailer sites reviewed, 62 had ads for diamond jewelry with weight representations and 58% of those sites appeared to be advertising the weight correctly. Of the 89 auction site sellers, 34 had ads for diamond jewelry and 68% of those sellers appeared to be advertising diamond weights correctly.

The agency's informal surf also looked at ads for gemstone jewelry products, like rubies and emeralds. According to jewelry industry sources, many gemstones are commonly treated or enhanced to improve their beauty and durability. Some of these enhancements are not permanent. Sometimes, even if the treatment is permanent, the stone requires special care as a result of the enhancement. The Jewelry Guides state that consumers should be told about any non-permanent treatments to a stone and when a treatment means a gemstone needs special care. Treatment disclosures don't need to be made in all advertising for jewelry products but consumers should be given this information before they purchase the product.

Most of the sites the FTC reviewed did not have appropriate disclosures about gemstone treatments -- of 64 retailer sites selling gemstone jewelry on-line, only 5% correctly disclosed treatments to consumers prior to sale; of 58 auction site sellers selling gemstone jewelry, only 37% correctly disclosed treatments to consumers prior to sale. Some sites contained treatment disclosures but, if the consumer would not necessarily see the page with the disclosure before purchase, the site was considered not to be in compliance.

The 100 sites surfed represent a snapshot of the industry's advertising on the Internet. The surf covered 90 retail jeweler sites, including major retail jewelry chains, small retailers with a few stores and some retailers who only sell jewelry on the Internet. The sites were selected from among those listed on National Jeweler magazine's 1998 $100 Million Supersellers and located through searches on two search engines. Finally, the surf also included ads from 89 different sellers advertising on 10 auction sites. The auction site sellers ranged from small retailers to jewelry dealers selling many different products to individuals selling personal jewelry.

FTC staff is sending e-mails to all the sites that contained potentially deceptive claims for pearl, diamond or gemstone products, reminding them of the Jewelry Guide requirements. For further assistance in complying with the FTC's Jewelry Guides, the FTC published a Business Guide, "In the Loupe: Advertising Diamonds, Gemstones and Pearls."

Copies of the news release and the Business Guide and Jewelry Guides are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.