FTC Staff Announces Results of Second "Surf" of Web-based Jewelry Advertisers and Sellers

Federal Trade Commission staff today announced the results of their second "surf" of sites that advertise and sell jewelry on the World Wide Web. Although compliance with the FTC's Jewelry Guides increased, as compared to a similar surf conducted in 1998, room for improvement remains. In all, compliance ranged from a high of 75 percent for sites making claims about diamond carat weight, to a low of 12 percent of those sites advertising and selling gemstone jewelry.

"These results show that jewelry retailers still need to review their online ads more carefully to ensure that consumers receive complete and accurate information about the jewelry products they offer," said Elaine D. Kolish, Associate Director of the FTC's Division of Enforcement, in a speech today sponsored by the Jeweler's Vigilance Committee, the industry association for legal and ethical jewelry practices. "Although the surf provides only a snapshot of the industry, these results show that some progress has been made to comply with the Guides."

The 1999 surf was intended to evaluate whether compliance with the Jewelry Guides had improved. The Jewelry Guides, which are formally called the "Guides for the Jewelry, Precious Metals and Pewter Industries," describe advertising claims that the Commission considers to be misleading and explains how sellers can describe jewelry in a way that is truthful and nondeceptive. The Internet review focused on ads for three areas covered by the Guides: pearls, diamond weight claims, and gemstone treatments.

Commission staff revisited the 90 Web sites that were included in the 1998 surf, finding that 71 were still active. Staff did not revisit the 10 auction sites reviewed in 1998, as sellers had likely changed, making a comparison difficult. This year's surf again focused on: 1) pearls, which were advertised on 48 sites surveyed; 2) diamond weight claims, which were made on 56 sites; and 3) gemstones, which were advertised and sold online at 50 of the sites surveyed.

For pearl jewelry, most sold by retailers today do not contain natural pearls, which are very rare, and instead feature either cultured or imitation pearls. The Jewelry Guides state that pearl ads should make clear whether the pearls are cultured or imitation. Of the sites advertising pearls, 44 percent were found in compliance with the Guides. This represented a 15 percent increase in compliance compared with results of the 1998 surf. Commission staff found that although many sites provided the appropriate qualifying information in some parts of their site, they often neglected to inform consumers about whether particular types of pearls, such as black pearls or freshwater pearls, were imitation or cultured.

For sites selling diamond jewelry, many include claims regarding the diamond's carat weight. Weight claims made using decimals must be accurate to the last decimal place. Because of the difficulty in determining if decimal claims made on Web sites were properly rounded, they were presumed to be correct for purposes of the surf. Many times, however, weight claims are made using fractions and the diamond does not weigh exactly the advertised amount. The Jewelry Guides state that sellers should tell consumers that the weight is not exact and provide the tolerance (or weight range) being used for the particular fraction. The agency staff reviewed whether sites that used fractional claims included the necessary disclosures. Of the sites making diamond weight claims, 75 percent were in compliance, as compared with only 58 percent in 1998.

The surf also looked at ads for gemstones, such as emeralds and rubies, which are commonly treated to improve their beauty and durability. Some treatments are not permanent, and sometimes a treated gemstone may require special care. The Guides state that sellers must tell consumers about any nonpermanent treatment and when any treated stone needs special care. These disclosures do not need to be made in all advertising, but must be provided to consumers prior to purchase. Therefore, the disclosures must be made before a consumer purchases jewelry online. In 1999, 12 percent of the 50 sites advertising gemstone jewelry were in compliance, representing an increase from the five percent compliance rate seen in 1998's surf.

While the results of FTC staff surf days are not intended to represent an all-inclusive look at the current state of advertising on the Internet, they do provide a valuable snapshot of the particular industries they are examining, and allow the FTC to identify and contact online businesses that may not currently be complying with existing guidelines.

As it did after the 1998 surf, Commission staff will send e-mail notices or letters to those sites that may contain potentially deceptive claims. Staff also will follow up with these online sellers in the near future to determine if their advertising has been modified to bring it into compliance with the Guides.

NOTE: Information about the Commission's continuing Internet enforcement activities, including copies of the report "Five Years of Protecting Consumers Online," is 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; 877-FTC-HELP (877-382-4357); 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.