FTC warns: Fake gems are just that — fakes
Take steps to prevent being dazzled by diamond scams
Not all diamond sellers have sparkling reputations.
The Federal Trade Commission is ticked off at jewelers who are calling their glittery wares as “eco-friendly” and “sustainable” and misrepresenting simulated diamonds as lab-created or mined ones or lab-created diamonds as mined stones.
Wedding season is soon upon us, and with that, lots and lots of diamonds. That means it’s important to understand that buying diamonds is no longer as simple as the Four Cs – carat, cut, color and clarity. Now, it’s Mother Nature versus science and marketing.
Mined diamonds are the traditional stones dug out of the ground, while lab-created diamonds have the same chemical and physical attributes as mined diamonds but are made in a laboratory using carbon, heat and pressure, according to FTC attorney Robert Frisby. Simulated diamonds might resemble traditional diamonds in some ways, like appearance, but are not chemically the same and may not be as hard or as durable.
Old-school diamonds are the most expensive of the three categories, and that’s where the glitter of marketing comes in. A dishonest jeweler may present the other types as mined and charge more, but unlike other fakes – like a Chanel purse with entwined Cs that actually are Gs – the distinction can rarely be detected by the naked eye.
“It’s very difficult for a layperson to distinguish between lab-grown and mined,” Frisby said. “Simulated ... may depend on the type of simulate it is. Some are tougher than others.”
In warning letters the FTC sent last month, eight jewelry marketers were told not to use the word “diamond” to describe a simulated or labcreated stone “unless that word is immediately proceeded by a clear and conspicuous disclosure that the product is not a mined stone,” the FTC said. The rule also applies to other precious stones, including emeralds and rubies, and pearls.
Some jewelry buyers specifically want lab-created or simulated diamonds, because of concerns that mining can damage the environment and the risks of what are called blood diamonds – stones originating from war-torn areas, where the mines finance the conflicts and may use slave or child labor. Lab-created and simulated diamonds’ lower prices make them attractive to certain shoppers.
The impact diamond mining may have on the environment is what prompts some disreputable jewelry vendors to advertise their non-mined
Thirty-eight percent of home buyers topped their spending limits, up from 32% a year ago, according to the March survey of 1,800 home buyers who made a purchase within the past four years. And they busted their budgets by an average $20,000, up from $16,510 in the early 2018 survey.
“People are going above their budgets more than we expected,” Cardile says.
Among the reasons more buyers are splurging: Despite the cooler market, prices are still climbing and inventory remains relatively low, especially in large coastal cities.
There were 1.83 million existing home listings in April. And while that total is up from 1.67 million a year earlier, it remains below a normal level, according to the National Association of Realtors.
The median price was $267,300, 3.6% higher than in April 2018. Although that price is still rising, it’s less than the 5% to 6% annual price gains a year earlier. Meanwhile, Americans’ average pay increases have accelerated above 3%, seemingly easing the financial strain.
Competition for houses also has eased. Clients of Redfin who made offers on homes faced bidding wars 15% of the time last month, according to the real estate brokerage. That was down sharply from 60% a year earlier.
But it’s still not easy to snag that ideal house in a good neighborhood with topnotch schools that’s a short commute from the office, Cardile says. About half the buyers surveyed said finding the right home was the most challenging part of their hunt, more than those who cited saving up for the down payment.
John Frazier, 71, hunted for a onebedroom condo in downtown Philadelphia for weeks but found nothing suitable within his $250,000 price limit.
“We looked at a bunch of places but couldn’t find anything where I wanted to be and what I wanted,” says Frazier. Some units were too far from his preferred Center City neighborhood while others were older and needed work. So Frazier increased his cap by $50,000 and quickly found a modern, top-floor condo for $300,000 with spectacular views and a health club, and within walking distance of shopping, his doctors and the city’s theaters. The unit had attracted other buyers, and so Frazier offered $5,000 above the list price. He moved in March 22.
Although he’s spending about $200 a month more than he initially intended, the monthly payment is still within his budget, he says.
Millennials aren’t being more frugal, Cardile says. If anything, entrylevel homes favored by people in their 20s and 30s have posted sharper price increases than more expensive tradeup units. Rather, he suggests millennials increasingly are using online tools to narrow down their searches. As a result, he says, they’re savvier about the market, prompting them to set higher spending limits and exceed them by smaller amounts.
Another factor is that just 41% of millennials said finding the right home was their biggest challenge, compared with 52% of Gen Xers and 56% of boomers. Many millennials are still single or childless and less tied to jobs, making them more willing to move to mid-sized markets to buy affordable homes, Cardile says.