Zale To Settle FTC Charges of Selling Imitation Pearls as "Cultured"

If pearl jewelry is on your shopping list for Valentine’s Day, a case just announced by the Federal Trade Commission provides useful shopping information. The FTC said today the nation’s largest jewelry retailer has agreed to settle charges that it deceptively advertised its "Ocean Treasures" line of imitation pearl jewelry as composed of cultured pearls. The FTC cited statements Zale placed in advertising, including "created by nature, enhanced by man," alongside pictures of the Ocean Treasures line, and alleged that this created the impression that the jewelry was composed of cultured pearls. The settlement includes a cease and desist order that would prohibit the challenged claims, require Zale to disclose clearly and prominently the nature of the pearl jewelry it sells, and mandate that company stores display consumer information about the definition of natural, cultured and imitation pearls.

Zale, based in Irving, Texas, operates more than 1,200 locations throughout the United States, Guam and Puerto Rico. These locations include both stand-alone retail stores and in retail space leased from major department stores. The Ocean Treasures line, marketed through the company’s Zales Division, includes bracelets, earrings, pendants, rings and strands of imitation pearls.

According to the FTC’s Guides for the Jewelry Industry, it is deceptive to misrepresent that imitation pearls are cultured pearls. A cultured pearl is formed by a mollusk as a result of an irritant placed in the animal’s shell by humans. An imitation pearl is a manufactured product composed of any materials that simulate the appearance of a pearl. (Natural pearls, few of which are on the general consumer jewelry market today, are formed entirely without human interven tion when a natural irritant intrudes into a mollusk’s shell.) A natural pearl necklace can run into the tens or hundreds of thousands of dollars, while one composed of cultured pearls can be purchased at prices starting in the hundreds. Imitation pearls usually sell for less.

A Consumer Alert titled "Puttin’ on the Glitz: What to Know When Shopping for Jewelry" issued by the FTC today offers information about pearls as well as other common components of fine jewelry, including gold, gemstones and diamonds. The alert suggests that consumers ask their salespersons to write down any information on which they’re relying in making their purchases.

The FTC’s Jewelry Guides do not, themselves, have the force of law, but they offer guidance to the industry about complying with the Federal Trade Commission Act, which prohibits deceptive practices. The FTC charged Zale with violating the FTC Act by falsely claiming that the Ocean Treasures line of jewelry was composed of cultured pearls.

The proposed consent order resolving the FTC charges in this case will be subject to a public comment period before the Commission determines whether to make it final. It would:

• prohibit Zale from representing that imitation pearls are cultured pearls and from otherwise misrepresenting the composition or origin of any imitation, cultured or natural pearl product;
• require Zale to include a word such as "artificial," "imitation" or "simulated" in close proximity to any representation that an imitation pearl product contains pearls;
• require Zale to include a word such as "cultured" or "cultivated" in close proximity to any representation that a cultured pearl product contains pearls; and
• for three years, require Zale to make available to consumers in Zale’s stores an information sheet that describes the origin of the three different kinds of pearls.

The order also contains various employee notification, record keeping and reporting requirements designed to help ensure compliance. The Commission vote to announce the proposed consent agreement for public comment was 5-0. An announcement regarding the agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint detailing the charges, proposed consent agreement, an analysis of the agreement to assist the public in commenting, and the Consumer Alert, "Beloved. . .Bejeweled. . .Be Careful," are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326-2502. Consent agreements subject to public comment also can be obtained by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 962 3118)