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

1 57 FR 24996 (June 12, 1992). The JVC, located

at 401 East 34th Street, NY, NY 10016, is a trade

association that was formed in 1912 to promote

ethical practices in the jewelry industry. Its initial

petition is dated April 15, 1986; additional

proposed revisions were submitted on February 20,

1989.

2 57 FR 34532 (Aug. 5, 1992).

3Because of its 71-page length, the JVC proposal

was not published. But, the proposal, and a

document showing how the current Guides would

be changed by the JVC proposal, was placed on the

public record for inspection and is available in the

Public Reference Room of the Commission.

4 In summary, the comments are from 19 trade

associations, 85 diamond dealers, 53 colored stone

dealers, 37 retail jewelers, 10 synthetic gemstone

manufacturers, 12 pewter manufacturers, 10 watch

manufacturers, 9 general manufacturers, 5

gemologist/appraisers, 7 precious metals firms, 3

catalog houses, 2 manufacturer representatives, 2

writing implement manufacturers, 3 pearl dealers,

and one each from: The Canadian Government, the

U.S. Postal Service, the National Association of

Consumer Agency Administrators, a scientist who

works with laser technology and crystal growth, an

economics professor, an importer, a retired trade

association executive, and an editor of Jewelers

Circular-Keystone, and a trade magazine.

5 Various sections of the Guides that pertain to

particular subject areas are referred to as

‘‘categories,’’ in the Appendix to the current

Guides, i.e., Category I: Jewelry industry products

in 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.

6E.g., Fasnacht (4) p.1 (the Guides have a positive

economic impact by creating a level playing field);

Schwartz (52) (the Guides have a positive impact

on the industry by establishing standards that offer

consumers 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 current

Guides, but thought that the compliance costs

associated with the proposed revisions outweighed

the benefits.

7The commenters are the same as in footnote 6

supra, with the addition of Eisen (91). With regard

to the current Guides, Best (225) stated, at p.2, that

the Guides ‘‘are well developed and provide

protection to consumers and to reputable jewelers

against otherwise false and deceptive practices. The

Guides offer a great measure of certainty to jewelers’

FEDERAL TRADE COMMISSION

16 CFR Part 23

Guides for the Metallic Watch Band

Industry and Guides for the Jewelry

Industry

AGENCY: Federal Trade Commission.

ACTION: Final guides.

SUMMARY: The Federal Trade

Commission (‘‘Commission’’)

announces that it has concluded a

review of its Guides for the Metallic

Watch Band Industry (‘‘Watch Band

Guides’’) and Guides for the Jewelry

Industry (‘‘Jewelry Guides’’). The

Commission rescinds the Watch Band

Guides in a document published

elsewhere in this issue of the Federal

Register. The Commission is

consolidating certain provisions of the

Watch Band Guides with the Jewelry

Guides. The Commission is renaming

the Guides for the Jewelry Industry the

Guides for the Jewelry, Precious Metals

and Pewter Industries. The Commission

also revises the Jewelry Guides by

defining the scope and application of

the Guides and adding new provisions

regarding the use of the terms ‘‘vermeil’’

and ‘‘pewter.’’ The Commission is also

making substantive changes to the

existing provisions of the Jewelry

Guides, as discussed in detail herein.

The Commission is not making any

changes to the provisions regarding the

use of the word ‘‘platinum’’ at this time

and will request additional comment on

possible revisions to this section in a

separate Federal Register notice.

EFFECTIVE DATE: May 30, 1996.

ADDRESSES: Requests for copies of this

document should be sent to the Public

Reference Branch, Room 130, Federal

Trade Commission, Washington, DC

20580.

FOR FURTHER INFORMATION CONTACT:

Constance M. Vecellio, Attorney, 202–

326–2966, or Laura J. DeMartino,

Attorney, 202–326–3030, Division of

Enforcement, Federal Trade

Commission, Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Commission revises the Guides

for the Jewelry Industry and the Guides

for the Metallic Watch Band Industry

(‘‘Guides’’), 16 CFR Parts 23 and 19,

respectively, as described in detail

below. The Commission will announce

the results of its review of the Guides for

the Watch Industry, 16 CFR Part 245,

which was conducted at the same time

as the review of the other Guides, in a

separate notice. The Commission

published a Federal Register Notice

(‘‘FRN’’) soliciting public comment on

amendments to the Guides on June 12,

1992, in response to a petition from the

Jewelers Vigilance Committee, Inc.

(‘‘JVC’’).1 The comment period, as

extended, ended on September 25,

1992.2

The FRN solicited comment on the

JVC’s proposal to revise the Guides.3

The FRN summarized the major

amendments proposed by the JVC, as

well as revisions that Commission staff

was proposing. In addition to requesting

comment on the proposed revisions

generally, the FRN asked for comment

on 34 questions.

The Commission received 263

comments. In the remainder of this

notice, the comments are cited to by an

abbreviation of the commenter’s name

and the document number assigned to

the comment on the public record. A list

of the commenters, including the

abbreviations and document numbers

used to identify each commenter, is

attached as an Appendix.4

The revisions are discussed sectionby-section by category.5 Below, Part II

addresses the standard regulatory

review questions that were included in

the FRN. Part III discusses general

issues regarding the proposed revisions

to the Guides. Part IV analyzes the

proposed revisions to the Jewelry

Guides section-by-section (including the

Watch Band Guides, now consolidated

with the Jewelry Guides).

II. Regulatory Review and Related

Questions

As part of the Commission’s ongoing

program to review all of its rules and

guides periodically, the FRN included

questions about the Guides’ economic

impact and continuing relevance, any

compliance burdens, changes needed to

minimize their economic impact, their

relation to other federal or state laws or

regulations, and the effect of any

changed conditions since the Guides

were issued. The Commission also

solicited comment on general issues

regarding the Guides, such as whether

the JVC’s proposed provisions

accurately reflect accepted practices,

technology or nomenclature used in the

trade; whether proposed changes would

result in a lessening of competition or

increased prices; and whether the JVC’s

petition to revise should be rejected and

the current Guides retained. Because

these questions concern fundamental

issues about whether the Guides should

be retained, deleted or revised, the

Commission addresses them first.

A. Summary of the Comments

All but one of the 37 comments

specifically addressing the economic

impact of the Guides stated that any

compliance costs are far outweighed by

the benefits to the industry and to

consumers.6 None of the comments

provided any figures or estimates of the

monetary costs incurred in complying

with the Guides.

Thirty-eight comments specifically

addressed the continuing need for the

Guides and all agreed that there is a

continuing need, with most stating that

the Guides protect consumers and

industry.7 One comment stated,
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27179

business practices as historical application and

interpretation have better defined the parameters of

acceptable conduct. This certainty has value

because it contributes to an efficient and free flow

of information to consumers in the marketplace.’’

AGTA (49), at p.2, stated: ‘‘If consumers cannot be

confident that what they are paying for is what they

have been told it is, our trade cannot survive. The

FTC guides provide a structure upon which our

industry has built regulations for the consumer’s

protection, which is ultimately our own as a trade.

Therefore, AGTA endorses their continued

existence, timely revision, and a strong

enforcement.’’

8Skalet (61) p.1.

9Fasnacht (4); Honora (15); G&B (30); Lannyte

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

(210).

10Honora (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).

12Argo (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).

15AGTA (49); GIA (81); Bridge (163); Bedford

(210); JVC (212); and Preston (229).

16ArtCarved (155) and Matthey (213).

17Comment 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).

19Estate (23); G&B (30); Jabel (47); AGTA (49);

LaPrad (181); and CPAA (193).

20Comment 244, p.1. The Postal Service enforces

39 U.S.C. 3005, which prohibits persons from

obtaining mail or property through the mail by

means of false representation. The Postal Service

also brings actions under the criminal mail and

wire fraud statutes, 18 U.S.C. 1341, 1342 & 1345.

Id.

21Comment 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); and

Sheaffer (249).

24AGS (18); AGTA (49); GIA (81); Eisen (91);

ArtCarved (155); LaPrad (181); and IJA (192).

25Fasnacht (4); Thorpe (7); Honora (15);

ArtCarved (155); and Preston (229).

26Thorpe (7); Estate (23); ArtCarved (155); IJA

(192); and Preston (229).

27Newhouse (76); ArtCarved (155); Canada (209);

and Preston (229).

28Thorpe (7); Honora (15); and Preston (229).

29ArtCarved (155); LaPrad (181); and Preston

(229).

30Honora (15) and ArtCarved (155).

31ArtCarved (155).

32Comment 207, p.2. In 1957, when the Guides

were last revised, gold cost $35 an ounce. The

current price fluctuates between $350 and $400 per

ounce.

33Matthey (213) p.1 (stating that ‘‘Competition on

a global as well as a national basis make the

establishment of standards and clear definitions of

terminology 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).

35Best (225) p.4 and pp.7–8 and Service (222) p.1

and 5 of letter and p.3 of comment. See also MJSA

(226) p.7 (opposing proposed diamond weight

tolerances as contrary to industry practice).

36For example, AGTA (49) suggested banning

certain terms in use that relate to synthetic

gemstones and plated gold jewelry. See also

Lannyte (65); Eisen (91); CPAA (193); and Matthey

(213). (Their proposals are discussed under the

appropriate categories infra.)

‘‘Without the guides to serve as a

reference manual, every manufacturer or

producer would have their own

interpretation [of what constitutes fair

industry practices].’’ 8

Twenty-nine comments specifically

addressed the burdens of complying

with the Guides. Seven comments stated

there are no compliance burdens.9

Three also stated that, if everyone

complies, the burdens of compliance are

evenly distributed and will not benefit

one business at the expense of

another.10 Ten comments stated that the

burdens are minimal 11 and six thought

the burdens were ‘‘worth it.’’ 12 The

seven comments that itemized the

burdens (‘‘testing and planning,’’

‘‘monitoring suppliers,’’ ‘‘controls,’’

‘‘measurements,’’ ‘‘record keeping,’’

‘‘time,’’ and ‘‘personnel’’), concluded

that the costs are acceptable because of

the benefits received.13 None of the

comments identified the extent of the

costs in money or in time.

Although 29 comments responded to

the question regarding changes needed

to minimize the economic effect of the

Guides, they did not offer detailed

explanations or suggestions. Fifteen

comments stated that no changes are

necessary.14 Six comments stated that

the changes proposed by the JVC are

sufficient to minimize their economic

effects.15 Two comments recommended

simplifying the Guides to avoid

misunderstandings (e.g., about the

proper use of terminology).16 Canada

stated that harmonizing standards with

Canada would minimize the economic

effect on entities subject to the Guides’

requirements, reduce costs and promote

international trade, by not requiring

manufacturers to mark products for

domestic use differently than those

made for foreign use.17

Twenty-seven comments addressed

the relation of the Guides to federal,

state or local laws or regulations.

Twenty-one comments specifically

stated either that there is no conflict or

overlapping or that they are unaware of

any.18 Six stated that if there was any

duplication, it should not deter the

Commission from approving

comprehensive guidelines.19 (No

examples of duplication were provided.)

However, the Postal Service stated that

the Guides ‘‘overlap with Postal

authority, sometimes undermining our

position in false representation and

fraud actions.’’ 20 The Postal Service

stated that the Guides do not adequately

address the situation where the

consumer purchases jewelry before

actually seeing it. The Postal Service

proposed changes to the Guides to help

remedy this problem.21 As discussed

below, the Commission has revised the

Guides to mitigate this problem.

Thirty-one comments discussed

economic or technological changes

since the Guides were issued and the

effect on the Guides. Three comments 22

stated that economic and technological

changes have had no effect on the

Guides and 28 comments stated that

such changes have had an effect on the

Guides.23 The changes the commenters

specified, which they thought should be

reflected in the Guides, are new

gemstone enhancement techniques,24

laser treatment of diamonds,25 fracturefilling of diamonds,26 new methods of

metal plating,27 diffusion-treated

sapphires,28 advanced testing

techniques,29 new synthetic

gemstones,30 and possible new platinum

products.31

On the economic side, Richard C.

Mark commented on the dramatic

increase in the price of gold since the

Guides were most recently revised,

which, he stated, increases the

significance of any rules dealing with

gold.32 Another comment stated that

greater economic advantage to the trade

would occur if national and

international standards are uniform.33

Twenty-four comments addressed

whether proposed provisions accurately

reflect accepted practices, technology or

nomenclature used in the trade.

Fourteen comments stated that there are

no requirements in the JVC proposal

that do not fairly and accurately reflect

trade practices.34 Some comments,

however, identified parts of the

proposed Guides that they contended

are contrary to accepted industry

practices. Specifically, Best and Service

Merchandise stated that the JVC’s

proposed diamond weight tolerances,

restrictions on the use of the term

‘‘point,’’ and proposed disclosures

regarding gemstone enhancement do not

conform with accepted trade practices.35

Other responses to this question were

not directly responsive because they did

not contend the JVC’s proposals were

out of step with current trade practices,

but instead proposed adding new terms

and standards to the Guides.36

Thirty-one comments directly

responded to the question regarding
27180 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

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 the

72 comments supporting a different tolerance for

diamond weights indicated that requiring the

merchant to state more accurately the weight or

weights of diamonds would result in increased

costs to consumers.

38E.g., Service (222) and Best (225)

(implementation of the JVC proposal would result

in lessened competition and higher prices,

particularly for low margin jewelry retailers, which

would be passed on to consumers). The comments

opposing the proposed diamond weight tolerance

and alleging consequential costs are listed and

examined in detail in the discussion of diamonds

below.

39Comment 47, p.2.

40Comment 229.

41Comment 7, p.2.

42Bales (156) suggested that a quality mark be

permitted on a product called Balesium that is 41⁄2

karat gold. See discussion below regarding the 10

karat minimum standard for karat gold.

43Service (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 are

materials made in a laboratory that have the same

chemical, physical and optical properties as a

natural gemstone, contend they should be able to

describe their products as gemstones with

appropriate qualification to indicate that they are

laboratory made.

44E.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).

46Comment 222 and Comment 225.

47Comment 222, p.1.

48These 72 comments, mostly using one of four

form letters, also urged that all proposed changes

be rejected. One writer from this group indicated

that he had a change he would like to suggest but

stated ‘‘my understanding is that it [the JVC

proposal] must be accepted in whole or rejected in

total.’’ Comment 60, p.1. Staff contacted this

commenter, Richard Goldman, president of

Frederick Goldman, Inc., who indicated that the

group to which he belongs was advised, by a person

he did not identify, that the JVC proposal had to

be accepted or rejected in its entirety. Thus, this

group’s opposition to all other proposed revisions

appears 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); and

Murrays (264).

49Statement on Deception, appendix to Cliffdale

Assocs., Inc., 103 F.T.C. 110, 1734–84 (1984) and

Statement on Unfairness, appendix to International

Harvester 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 the

Guides would result in a lessening of

competition, barriers to entering the

industry or increased prices to

consumers. Twenty-five answered ‘‘no’’

or ‘‘probably not.’’ 37 But, numerous

comments regarding the JVC’s proposed

weight tolerances for diamonds believed

a narrow tolerance requirement (as the

JVC proposed) would increase costs to

consumers.38 Jabel stated that

paperwork and the printing of

definitions and descriptions the JVC

proposed as new requirements may

increase consumer prices.39

Preston commented that, although he

was not specifically aware of any

proposals that would lessen

competition, produce barriers to entry

or increase prices to consumers, he

thought these results could occur on a

modest scale.40 Thorpe stated, on the

other hand, but without giving any

reasons, that the JVC proposal would

increase competition based on quality,

value and service, and that the proposal

would lower prices to consumers by

allowing them to shop and compare ‘‘on

a level playing field.’’ 41 Bales

recommended that the Guides allow

products of less than 10 karat gold to be

sold as a karat gold product because it

would increase competition in the

industry.42 Other comments, while not

specifically responding to this question,

stated that the JVC’s proposal to prohibit

the use of the term ‘‘gemstone’’ to

describe synthetic or imitation products

would be anticompetitive.43

One hundred eighty-one comments

responded to the question of whether

the JVC’s petition to revise should be

rejected and the current Guides

retained. Many comments stated that

the petition to revise should not be

rejected.44 For example, AGTA

affirmatively favored revising the

Guides and 56 AGTA members filed

individual comments endorsing the

AGTA position. Twenty three other

comments did not respond specifically

to Question 34, but endorsed revision of

the Guides.45

Service Merchandise and Best

recommended rejecting the petition to

revise in favor of retaining the current

Guides.46 Service Merchandise stated

that the proposed revisions are anticompetitive and offer insufficient

benefit to the affected industries or their

consumers to justify the additional

efforts and costs that they allege will

result.47 Additionally, 72 comments

recommended rejecting the JVC

proposal and retaining the current

Guides, apparently because of their

objection to the JVC’s proposal

regarding diamond weight tolerances.48

B. Conclusion

The comments largely favor retention

of the Guides and state that there is a

continuing need for the Guides. The

comments indicate that the benefits of

the Guides outweigh the costs, and

present no persuasive evidence that the

Guides have outlived their usefulness or

impose substantial economic burdens.

Accordingly, the Commission is

retaining the Guides.

Many comments recommended that

the Guides be revised to reflect changed

technologies, and the Commission has

considered these comments in

amending the specific provisions of the

Guides, discussed below. The comments

that favored rejecting the JVC proposal

and retaining the Guides as they exist

now usually did so because of a

particular JVC recommendation. The

objections to those proposals also are

addressed as they occur in the different

Guide categories.

III. Changes to the Form of the Guides

A. Legal Language Used in the Guides

The legal language in the Guides has

been revised to conform to the

Commission’s view on deception and

unfairness as expressed in its Policy

Statements on Deception and

Unfairness.49 Specifically, the phrase ‘‘it

is an unfair trade practice,’’ generally

has been revised to state ‘‘it is unfair or

deceptive to * * *.’’

B. Consolidation of the Guides

Detachable metallic watch bands are

the subject of the Guides for the Metallic

Watch Band Industry (‘‘Watch Band

Guides’’), 16 CFR Part 19. Metallic

watch bands that are permanently

attached to the watch are included in

the Guides for the Watch Industry, 16

CFR Part 245. The JVC proposed

combining the Watch and Metallic

Watch Band Guides with the Jewelry

Guides and the FRN solicited comment

on this proposal. Thirty comments

addressed this issue, and 22 stated the

Guides should be consolidated.50 Most
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27181

51E.g., Bedford (210) commented, at p.3, that ‘‘as

watch bands are mostly sold and fitted by jewelers,

it would seem appropriate * * * that they be

combined with the jewelry guidelines.’’ However,

no commenters identified themselves as watchband

manufacturers.

52USWC (118); JCWA (216); NACSM (219); Best

(225); Citizen (228); Swiss Federation (232); AWA

(236); and Timex (239). Only one comment from the

affected industry, Benrus (22), favored

consolidation of the Watch Guides.

53Comment 236, p.1. See also Swiss Federation

(232) p.1 (the industries are separate and

consolidating the Guides would make use of the

Guides difficult) and Citizen (228) p.5 (watches and

jewelry are dissimilar and should not be combined).

54See also JCWA (216) p.4 (favoring separate

Guides because the application of materials and

quality demands differ for watches and jewelry);

Timex (239) pp.9–10 (opposing consolidation if

doing so would create any additional compliance

obligations); Swiss Federation (232) p.38 (stating

that jewelry, watch and watch band companies are

separate industries, with separate trade

associations).

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 the

Watch Band Guides separate.

56 ‘‘Fineness’’ refers to the amount of precious

metal in an article.

57For example, the provisions for gold

electroplated metal watch bands in the Watch Band

Guides are the same as those for gold electroplated

metal products included in the Guides for the

Jewelry Industry.

58More than half of the material in the Metallic

Watch Band Guides duplicates material in the

Jewelry Guides.

59Fasnacht (4); Gold Institute (13); Estate (23);

Korbelak (27); G&B (30); Jabel (47); Schwartz (52);

Skalet (61) p.3 (stating that the items are typically

sold in jewelry, department and gift stores, and thus

should be subject to the same standards as jewelry

sold 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 are

not included in the Guides); Cross (165) p.1

(favoring inclusion, because the mislabeling of

these products, ‘‘especially by counterfeiters, has

caused confusion by customers and harmed the

business of legitimate manufacturers’’); IJA (192);

Tru-Kay (196) p.1 (stating that the public would

find different standards for the metal content of

these items as opposed to jewelry confusing); Mark

(207) p.3 (same as Tru-Kay); Canada (209); Bedford

(210); MJSA (226) p.3 (stating that without

inclusion in the Guides, there may be more

misrepresentation of metallic content); Preston

(229); Sheaffer (249) p.2 (favoring inclusion, but

objecting to ‘‘unnecessary and arbitrary limitations’’

on the use of the term ‘Plate’ to describe gold

electroplated articles); Franklin (250); and Knight

(256).

Although no current manufacturers of eyeglass

frames commented, Knight (256) stated, at p.2, that

‘‘We at one time owned the largest manufacturer of

gold filled and rolled gold plate frames in the

U.S.A. and they followed the jewelry guides.’’

60LaPrad (181); Nowlin (109); ArtCarved (155);

Service (222); Franklin (250); and NACSM (219).

61See infra for a discussion of the inclusion of

items made from pewter.

62Comment 250, p.3. The Franklin Mint stated

that ‘‘industry products’’ should be limited to

jewelry, which it defined as an ornamental item

worn on or about one’s person for personal

adornment. (The Franklin Mint primarily markets

objects that are not used for personal adornment,

but which incorporate or are made of precious

metals or gemstones, so that its proposal would

exempt most of the products it carries from the

application of the Guides.)

of those who gave reasons for favoring

consolidation mentioned the Watch

Band Guides rather than the Watch

Guides.51

Six of the eight comments opposing

consolidating the Guides were from

watch manufacturers or trade

associations.52 The reasons given for

opposition were primarily related to the

consolidation of the Watch Guides, not

the Watch Band Guides. The American

Watch Association stated that the

Guides correctly reflect the fact that

watches and jewelry are different

products, ‘‘by imposing substantially

different definitions and standards for

watches and jewelry.’’ 53 For example,

the minimum thickness in the Watch

Guides for gold electroplated watches is

about 100 times thicker than the

minimum thickness for gold

electroplated jewelry in the Jewelry

Guides.54

Based on the comments, the

Commission has determined not to

combine the Guides for the Watch

Industry with the other two Guides. The

Guides for the Watch Industry will

remain as separate Guides and are

discussed in another Federal Register

notice. However, the Commission has

determined to consolidate the Guides

for the Metallic Watch Band Industry

with the Jewelry Guides.55 The Watch

Band Guides primarily concern

‘‘fineness’’ standards for precious

metals, which are the same as those

contained in the Jewelry Guides.56 Thus,

unlike the Guides for the Watch

Industry, the Watch Band Guides share

many common elements with the

Jewelry Guides.57 Therefore,

consolidation of these two Guides

eliminates unnecessary duplication.58

IV. Category-By-Category Explanation

of Revisions

This section discusses specific

proposed revisions on which the

Commission sought comment in the

FRN and additional issues raised by the

comments. This discussion includes a

summary and analysis of the comments

on each issue and a discussion of the

revisions that the Commission has

made. (In some instances there were no

comments on particular proposals.)

A. Pre-Category I—Scope and

Application: § 23.0

Section 23.0 in the current Guides is

captioned ‘‘Definitions,’’ and gives

definitions for: ‘‘diamond,’’ ‘‘pearl,’’

‘‘cultured pearl’’ and ‘‘imitation pearl.’’

In the JVC proposal, section 23.0 is

titled ‘‘Scope and Application,’’ and the

definitions appear in the sections that

specifically address these products. The

Commission has determined that this

organizes the Guides in a more helpful

fashion and adopts these changes.

Part (a) of section 23.0, as proposed by

the JVC, lists industry products to

which the Guides apply and part (b)

defines industry members. The term

‘‘industry products’’ is used throughout

the Guides, but it is not explicitly

defined. To avoid any uncertainty about

their intended coverage, the revised

Guides include a definition of ‘‘industry

products.’’

The JVC petition specifically

suggested that the term ‘‘industry

products’’ include pens, pencils and

optical frames containing gold or silver.

The FRN sought comment on whether

provisions applying to the gold or silver

content of pens, pencils and optical

products should be included in the

Guides, and whether they should be the

same as the current provisions for

jewelry. Thirty-one comments

addressed this issue, and 25 favored

including these products, including two

major manufacturers of writing

implements, Sheaffer and A.T. Cross.59

The six commenters that opposed the

inclusion of these products simply

stated that they saw no need for the

inclusion of these products or that they

were not ‘‘really’’ jewelry products.60

The comments generally indicate that

pens, pencils, and opticals made of

precious metals are viewed by

consumers as similar to jewelry because

of their metallic content and where they

are sold. Thus, consumers would tend

to expect that claims about such

products would be guided by the same

standards that apply to other industry

products. Because consumers’

expectations about the meaning of terms

such as ‘‘gold’’ are likely to be the same

for any product, the Commission is

including these items in the Guides.

These products and detachable metallic

watch bands are now specifically listed

in § 23.0(a) of the revised Guides. The

title of the Guides is now the Guides for

the Jewelry, Precious Metals, and

Pewter Industries to reflect the coverage

of the Guides.61

Although the JVC petition did not list

hollowware or flatware as ‘‘covered

products,’’ section 23.6A of the JVC

petition addresses sterling hollowware

and flatware. The Franklin Mint

objected to this because these items are

not jewelry.62 However, these items are

commonly sold in jewelry stores, and at

least one of the commenters simply

presumed that these items were covered
27182 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

63See Gold Institute (13).

64 ISA (237) p.12 (stating further that the Guides

should ‘‘address all issues of intended disclosure to

resellers of jewelry products so that this

information can accurately and completely be

passed on to the ultimate consumer’’).

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

and ISA (237 and 237A).

66An ‘‘independent’’ appraisal is one done by a

person who has no commercial relationship to the

seller and does not sell competitive merchandise.

In other words, the person who does the appraisal

does not stand to benefit beyond his appraisal fee.

67The Commission is omitting from the list those

who promote the sale, or counsel the purchase or

barter, of industry products, because this language

is unnecessarily specific, and because such persons

are already covered by the language of the Guides

(e.g., persons who sell or offer for sale industry

products).

68 JMC (1); Sibbing (5); Thorpe (7) p.2 (stating that

appraisals are sometimes used to make a sale by

showing the consumer ‘‘a signed document stating

an inflated value’’); King (11); Estate (23); G&B (30)

p.7 (noting that ‘‘you are going to have to

understand appraisals are subjective’’); Jabel (47);

Skalet (61) p.3 (suggesting that ‘‘appraisers should

be certified or licensed and should have no

connection with those who are making the sale’’);

Lannyte (65) p.4 (proposing that the Guides state

that ‘‘an appraisal has to be qualified as to the

purpose of appraisal and the market level of the

value quoted’’); Eisen (91) p.1 (suggesting that the

Guides should provide for ‘‘a statement on no

conflict of interest, disallowance of a percentage

fee, and a resume with the appraiser’s

qualifications’’); McGee (112); ArtCarved (155);

LaPrad (181); AGL (230) pp.4–6 (proposing that the

Guides state that it is unfair for a seller to provide

an appraisal to a consumer when the appraiser is

also the supplier of the item being appraised, and

recommending that the Guides specify certain

required content of appraisals of diamonds or

colored stones (e.g., ‘‘appropriate tolerance

information for each element that impacts on the

value of the gemstone’’); and ISA (237) and (237A)

p.5 (stating that important problems are

misrepresentation of qualifications and overstating

of value to justify the selling price). Only one

comment, LaPrad (181), proposed standards to use

(those of the Appraisal Foundation).

69 ISA (237A) noted, at p.18, that a New York City

ordinance requires that appraisals state that ‘‘the

opinions of appraisers can vary up to 25%.’’ ISA

stated that the opinions of appraisers, ‘‘depending

on marketplace, variances in grading, and

geographical market locations, as well as various

purposes and functions and the method of value

conclusion can cause appraisers to vary in their

opinions of value for amounts potentially greater

than 25%.’’ Id.

70AGS (18); AGTA (49); GIA (81); IJA (192);

Fasnacht (4); Honora (15); Bridge (163); Mark (207);

Bedford (210); Matthey (213); MJSA (226); and

Preston (229) p.6 (stating that there are different

formats and standards used for jewelry appraisals

and that ‘‘[t]here is no overall agreement within the

industry on precisely what does or does not

constitute the ultimate desirable appraisal’’).

71 ISA (237) noted, at p.2, that its members are

appraisers in more than ‘‘130 subspecialty areas of

the major personal property disciplines * * *.’’ It

stated, at p.7, that while it prefers to have its own

industry guide, it favors the inclusion of appraisals

in the Guides, because ‘‘many times we serve as

expert witnesses in court and rely on the content

of the guides to inform the court as to what is or

is not acceptable.’’ The Commission believes ISA’s

concerns will be satisfied by the language added to

the Guides.

72Comment 238, p.1.

by the Guides.63 As with pens and

pencils made of precious metal, the

Commission believes that consumers

would tend to expect that claims about

silver or gold hollowware or flatware

would be guided by the same standards

that apply to other industry products.

Therefore, these products also are

included in the list of industry products

covered by the Guides.

The Guides also refer to ‘‘industry

members,’’ but do not define this term

or give examples. The JVC proposed that

the Guides state they apply to ‘‘every

firm (a person, group of persons, or

corporation) engaged in the business of

selling’’ industry products. One

commenter noted that the Guides need

to clarify that purchasers at all levels of

the industry are protected by the

Guides, since it is commonly assumed

by courts that merchants are experts

who should know better than to rely on

suppliers’ representations as being

accurate.64

The Commission agrees that it would

be useful to clarify that retailers, as well

as consumers, are meant to be protected

from deceptive practices addressed by

the Guides. Therefore, the revised

Guides state that they apply to persons,

partnerships, or corporations at every

level of the trade.

The JVC also proposed, in section

23.0(b), including in the description of

industry members (in addition to

sellers) those who are engaged in

‘‘identifying, grading, appraising,

promoting the sale of or counseling the

purchase or barter of industry

products.’’ The FRN specifically

requested comment on whether the

Guides should be expanded to include

appraisals of jewelry in addition to sales

and offers to sell jewelry.

Thirty-five comments addressed this

question.65 The comments generally

favored including appraisers of jewelry

industry products among those subject

to the Guides. The main effect of

including appraisers (or those

‘‘identifying’’ and ‘‘grading’’ industry

products) among those covered by the

Guides would be to ensure that they

would be guided by the same

definitions and standards as those

selling the products. To confirm the

value of an intended purchase,

consumers often seek an appraisal

because they rarely independently have

the knowledge to determine the quality

or value of jewelry.66 The Commission

has concluded that it would be unfair or

deceptive for appraisers to ascribe

meanings to standard terms that are

used in the jewelry industry that are

different from the meanings attached to

those terms by the sellers of the

products. Thus, appraisers and those

‘‘identifying’’ and ‘‘grading’’ industry

products are advised to follow the

admonitions of the Guides.67

However, 29 of the comments also

recommended that the content of

appraisals be covered by the Guides.

Fifteen of these stated this change

should be effective with this revision.68

However, if the Guides were to

regulate the content of appraisals,

standards for establishing a value would

be needed.69 Fourteen comments,

including those of the American Gem

Society, the American Gem Trade

Association, and the Gemological

Institute of America, recommended

including appraisals in the Guides when

there is adequate agreement on what the

standards for appraisals should be.70

Although the Commission has

determined that for the sake of

consistency for consumers purchasing

industry products, the Guides will state

that those who appraise, identify or

grade industry products should follow

the Guides, they do not otherwise

purport to guide these industries.71

The JVC proposal included, in section

23.0(c), a description of the behavior

(claims and representations) to which

the Guides apply. It is similar to

§ 23.1(b) of the current Guides, but does

not list the specific forms of advertising

(periodicals, radio, television) that are

described in § 23.1(b). The

Commission’s authority, however, is

broader than the items currently listed

as advertising in the Guides, and

therefore the specific list unnecessarily

limits the scope of the Guides. The

National Retail Federation comment

stated that such specifically enumerated

limitations are helpful as they may

prevent other representations, such as

in-store signs or flyers, from being

treated as advertising.72 However, that is

not the intent of that section.

Accordingly, § 23.0(c) of the revised

Guides encompasses express and

implied claims in all types of

advertising and promotion.

B. Category I: §§ 23.1–23.4

Guides in this part apply to all

industry products regardless of their

composition.

Section 23.1(a) of the current Guides

contains a list of attributes, such as

origin and durability, which industry

members are advised not to

misrepresent. The JVC proposal omits

‘‘manufacture’’ from the list (possibly in

error). The Commission has found no

basis in the record for deleting

‘‘manufacture’’ from the list of items not

to be misrepresented.

The JVC proposed adding the

following attributes to the list of
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27183

73 The JVC also proposed expanding this section

by adding ‘‘investment broker’’ and ‘‘independent

testing laboratory’’ to the list of examples of trade

designations that firms are not to use falsely. ISA

(237) recommended adding ‘‘gemological

laboratory’’ and ‘‘appraisal facility’’ to the list.

74 Comment 90, p.2.

75The JVC also proposed requiring the disclosure

of any business relationship between the certifier

and 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 eliminate

many smaller jewelers); NACSM (219); Service

(222); and Franklin (250).

With respect to the issue of whether there should

be a disclosure that there is subjectivity in the

grading and appraising of diamonds and colored

stones, a comment form AGTA (49) and 56

individual AGTA members opposed disclosure,

stating at p.6, that the degree of subjectivity is

‘‘better addressed by those in the business of

operating laboratories for certificates * * * and to

those associations governing appraisers.’’ However,

ISA (237A) stated at p.21, that appraisal reports

should disclose that diamond and colored stone

gradings are subjective in nature. Thorpe (7), AGS

(18), Schwartz (52), Skalet (61), NACAA (90), Bruce

(218), and Preston (229) were also in favor of the

disclosure of the degree of subjectivity in grading.

77 Certificates have no accepted meaning in the

industry and are not defined in the standard

dictionary for the industry [‘‘Jewelers’ Dictionary’’

(3d ed. 1976)]. See AGTA (49) p.5 (favoring the

proposal, but stating that since ‘‘there are no

nationally accepted standards for certification,’’ the

requirement that a certificate state the name of the

certifier ‘‘is no assurance of either expertise or

quality’’); NACSM (219) p.24 (stating that the

proposed section was ‘‘vague and broad in that it

could be construed to make any sales slip

identifying the product a certification’’); Service

(222) p.2 (stating that the current Guides ‘‘are

sufficient to prevent deception with certifications

and appraisals’’).

78Rapaport (233) p.1 (stating that misuse of GIA

color and clarity terminology by sellers (as opposed

to appraisers or graders) is a major problem and

suggesting that the Guides state that it is unfair to

misuse GIA grading terminology); Thorpe (7) p.2

(stating that an identification of the grading system

used ‘‘is necessary to make accurate quality

comparisons’’); Shor (257) p.1 (suggesting that the

Guides state that it is unfair to describe diamonds

by color and clarity grades developed by GIA or

other recognized gem labs ‘‘unless they conform

exactly to the standards set forth by those

institutions’’).

79 Richard T. Liddicoat, Jr. & Lawrence L.

Copeland, ‘‘The Jewelers’ Manual’’ 29–32 (1967);

AGL (230); Rapaport (233) p.1. The Gemological

Institute of America (GIA) and the American Gem

Society (AGS) employ different grading systems,

and some diamond graders have their own ‘‘inhouse’’ grading systems. The letter ‘‘D’’ designates

the best color in the GIA grading system. Some inhouse grading systems have grades that start with

‘‘A,’’ ‘‘AA,’’ or ‘‘AAA’’ and consequently ‘‘D’’ in

their 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 be

misrepresented: ‘‘clarity,’’

‘‘enhancement,’’ ‘‘future value,’’ and

‘‘prospects of resale.’’ The Commission

believes that the term ‘‘clarity’’ is

unnecessarily specific, as it is already

covered by the current Guides under

‘‘grade’’ and ‘‘quality.’’ Therefore, this

term has not been included.

‘‘Enhancement’’ is the term used by the

trade to describe the treatment of

gemstones to improve their color or

otherwise improve their appearance.

However, the Commission has

determined that a more accurate term is

‘‘treatment’’ and has added this term, in

lieu of ‘‘enhancement,’’ to the list of

attributes that should not be

misrepresented. The Commission has

determined that the third term, ‘‘future

value’’ should not be added to the

Guides, because the Guides already list

‘‘value,’’ and ‘‘future value’’ is

subsumed in value. The Commission

also has determined that ‘‘prospects of

resale’’ should not be added to the

Guides. Representations regarding the

prospects of resale go to the investment

of gems, and the Commission has

concluded that the sale of investment

gems is unsuitable for treatment in

guides.

The JVC proposed adding five

additional parts to § 23.1, which would

be designated as follows:

Misrepresentation of the character or

identity of business; Misuse of the term

‘‘certified,’’ etc.; Deception (as to

gemstone investments); Misuse of the

term ‘‘investment quality’’; and

Deception as to warranties on gemstone

investments. Discussion of each of these

proposed additions follows.

Misrepresentation of the character or

identity of business was the caption of

a section of the Jewelry Guides that was

in effect from 1957 to 1979. This section

admonished sellers from, for example,

misrepresenting themselves as

wholesalers or as offering wholesale

prices.73 NACAA commented that it is

important to prohibit such a

misrepresentation, noting that ‘‘retailers

use phrases such as ‘factory direct’ to

imply that items are less expensive,

when in fact they obtain their

merchandise through jobbers and other

outside sources.’’ 74 However, § 23.1

warns against misrepresentation as to

the ‘‘manufacture’’ or ‘‘distribution’’ of

industry products and this provision

would encompass misrepresentations

about the nature of the seller’s business.

Misuse of the term ‘‘certified,’’ etc.

was the caption of a section in the

Guides that were in effect between 1957

and 1979 and which the JVC proposed

reinstating. This section stated that it

was an unfair trade practice to refer to

an industry product as ‘‘certified’’

unless the identity of the certifier and

the specific matter to be certified is

disclosed; the certifier examines the

product, makes the certification, and is

qualified to certify; and the certifier

makes available a certificate that

includes certain information about the

certifier and the certification.75

Thirty-two comments favored

requiring the seller to make available to

the purchaser a certificate disclosing the

name of the certifier and the matters and

qualities certified.76 The term

‘‘certified’’ or certificates of authenticity

are likely to be used as a way of giving

credence to a quality claim. If, in fact,

the product is not ‘‘certified’’ in a valid

manner or a certificate misrepresents

the qualities of the item, the seller is not

complying with the Guides’ admonition

in § 23.1 not to misrepresent important

qualities or otherwise deceive

purchasers. For this reason, the

Commission is not including a

provision relating to certificates in the

Guides.77

However, some commenters suggested

that the Guides address

misrepresentation of the system of

grading that was used in any certificate

or grading report.78 There are several

different diamond color grading systems

in general use, each having its own

standards and terminology, and several

grading systems for colored stones.79

The Commission is persuaded that a

representation that a stone is a specific

grade could be deceptive if the identity

of the grading system used is not

disclosed. Section 23.1 states that it is

unfair or deceptive to misrepresent the

grade of an industry product. The

Commission has added a Note to § 23.1

that states that, if any representation is

made regarding the grade assigned to an

industry product, the identity of the

grading system used should be

disclosed.

The FRN solicited comment on the

JVC’s proposed subsections 23.1(d)

through (f), which address deception

involving gemstone investments.

Section 23.1(d) would require, in the

sale of gemstones as investments, a

disclosure that profit or appreciation

cannot be assured, that no organized

market exists for the resale of gemstones

by private owners, and that the seller is

in compliance with all applicable laws

and regulations governing securities

dealers. In general, the comments

favored these disclosures.80
27184 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

(favoring the proposal for sales to consumers but

opposing the proposal for inter-trade transactions

(e.g., a sale by a dealer to a retailer).

Opposed to this provision: Onyx (162) and

Rapaport (233) p.4 (stating that ‘‘there are regular

ongoing markets for the resale of diamonds and

colored stones by private owners’’ such as auction

houses, jewelry stores, estate jewelry shows, and

pawnshops). But see Shire (221) p.3 (stating that

these examples do not constitute a ready market,

since auction houses, for example, only want

specific items and do not take everything for sale).

The Commission believes that most consumers

know that they, as individuals, would not have

access to a market comparable to the stock market;

hence, a disclosure would not be necessary to

prevent deception in the absence of an affirmative

misrepresentation as to the nature of the market.

There is no evidence indicating that consumers

believe that sellers of investment gemstones are

governed by laws and regulations covering

securities dealers.

81See comments cited in note 80, and NACAA

(90) and LaPrad (181). These comments are mostly

from retail jewelers who would not usually sell

gemstones as investments. Ethical sellers of

gemstones for investment purposes may provide

gemstones that are a higher grade then those

commonly sold as jewelry.

82See comments cited in note 80. Rapaport (233)

stated, at p.4, that it would be acceptable to deliver

the product in a sealed container with a warranty

that becomes void if the seal is broken, if the sealing

agency allows the re-sealing of the product at a

reasonable cost and discloses this at the time of

sale.

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).

84Fasnacht (4); AGTA (49); Bales (156); LaPrad

(181); Bedford (210); and ISA (237A).

85Sibbing (5); Thorpe (7); Honora (15); Bridge

(163); and MJSA (226).

86The Postal Service (244) stated that mail order

purveyors of jewelry sometimes use deceptive

photographs to sell their wares. This section notes

that such a practice is unfair or deceptive, and a

following Note specifically states diamonds should

not be depicted in greater than actual size without

a disclosure that the depiction is an enlargement.

The JVC proposed expanding the Note to include

depictions of gemstones other than diamonds, and

the Commission has made this change. In addition,

because television shopping programs or computer

images also may contain misleading images of

jewelry, the Commission has added ‘‘televised or

computer image’’ to the list of covered ‘‘visual

depictions’’ in this section.

87See The Tariff Act of 1930, as amended, 19

U.S.C. 1304, and Customs’ implementing

regulations, 19 CFR 134.11.

88 The Watch Band Guides contain very detailed

instructions as to the labeling of watchbands

assembled in the U.S. of foreign components. 16

CFR 19.4(b), note 2. Several Commission orders,

from the 1960’s or earlier, require similar detailed

disclosures. However, the Commission recently

issued a ‘‘Sunset Rule’’ that terminates

administrative orders automatically after 20 years.

60 FR 58514 (Nov. 28, 1995).

89More specific guidance on when industry

products can be marked ‘‘Made in the U.S.A.’’ is

likely to be addressed further by the Commission

later this year.

The comments favoring these

disclosures also generally favored the

proposed sections 23.1(e) and (f).

Proposed part (e) would prohibit the

seller from implying that a gemstone

sold for investment purposes is more

desirable or different than gemstones

marketed for use in jewelry.81 Proposed

part (f) states that it is an unfair practice

to limit a purchaser’s opportunity for an

independent examination of an industry

product by delivering a product in a

sealed container with a warranty that

becomes void if the seal is broken.82

This practice makes it impossible for the

consumer to examine the product or

retain an independent expert to examine

or appraise the product to determine

whether the seller has fairly represented

it. On the other hand, a consumer can

refuse to buy a product sold under these

conditions.

The FRN asked if there would be

voluntary compliance with the

proposed guidelines for sellers of

investment gemstones. Thirteen

comments stated that voluntary

compliance could not be expected.83 Six

comments stated that compliance could

be expected only from legitimate

operators.84 Five comments anticipated

voluntary compliance by all

concerned.85

An industry guide is not appropriate

if there is an indication that the

violations are willful or wanton and will

not be voluntarily abandoned. The

experience of the Commission in

bringing cases against sellers of

investment gemstones indicates that

most of the sellers have been engaged in

fraud. Thus, they are unlikely to comply

with practices that would be likely to

put them out of business. The

Commission has concluded that a caseby-case approach is a more appropriate

way to address the problem of gemstone

investment claims than inclusion in the

Guides.

The JVC did not propose any

substantive changes in the last three

sections in Category I (23.2, 23.3, 23.4),

and there were no comments pertaining

to these sections. The Commission has

decided to retain sections 23.2 and 23.4.

Section 23.2 states that it would be

deceptive to use depictions that would

materially mislead consumers about the

product shown.86 Section 23.4 states

that it would be deceptive to use the

term ‘‘handmade’’ unless the item is

entirely handmade or made by manually

controlled methods consistent with

consumer expectations.

However, the Commission has

determined to delete section 23.3. The

admonition in section 23.3(a) against

misrepresenting the origin of a product

repeats the general guidance provided

in section 23.1 (which provides a list of

characteristics, including origin, which

should not be misrepresented). Section

23.3(b) states that a disclosure of foreign

origin should be made only when it is

deceptive not to do so. A Note following

this section explains that it is not

necessary to disclose the foreign origin

of small and functional parts, or other

items (such as diamonds) which are

primarily obtained from sources outside

the United States. U.S. Customs requires

products being imported into the U.S. to

be marked with the country of origin

unless they will be substantially

transformed in the United States.87

Thus, the Commission has concluded

that this section of the Guides is

unnecessary.

The Commission also has deleted

§ 19.4(b) of the Watch Band Guides,

which states that it is unfair to fail to

disclose that a metallic watchband, or a

substantial part thereof, is of foreign

origin.88 No commenters identified

themselves as watchband manufacturers

or marketers, and very few commenters

even addressed the existence of the

Watch Band Guides. It is unclear

whether the fact that a watchband is

made abroad is material to consumers,

or whether consumers currently expect

that any unmarked metallic watchband

was made in the U.S.A. However, as

noted, U.S. Customs requires imported

watchbands (and other items of

commerce) to be marked with the

country of origin. Therefore, the

Commission has concluded that this

section is unnecessary.89

C. Metals (Category II): §§ 23.5–23.8

Guides in Category II, in both the

current Guides and the JVC petition,

apply to industry products composed in

whole or in part of precious metal. In

the JVC petition, this category also

includes a proposed standard for

pewter.

1. Inclusion of Metallic Watchbands

As noted previously, the Guides for

the Metallic Watchband Industry have

been combined with the Jewelry Guides.

The Commission believes that, in most

respects in which the Watch Band

Guides differ from the Jewelry Guides,

the Watch Band Guides are

unnecessarily restrictive or no longer

represent the Commission’s views of

how the law should be applied. For

example, unlike the Jewelry Guides, the

Watch Band Guides state that it is unfair

to fail to disclose the metallic

composition of a product which has the

appearance of gold but is not gold

(§ 19.2(A)(2)). There is no evidence that

suggests that consumers today will infer

that a gold-colored metal watch band is

gold. The prices for gold-colored
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27185

90To the extent that sellers purposely inflate the

price of their gold-colored products to lead

consumers to believe they are purchasing a gold

item, they are probably engaging in fraud and are

likely to misrepresent the item as gold when it is

not, which would be a deceptive practice under

§ 23.5(a).

91Only one comment specifically addressed the

proposed definitions. Finlay (253) stated at p.1 that

it did not object to the proposed definitions of

‘‘gold.’’

92For example, the JVC proposed defining ‘‘fine

gold’’ 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 JVC

proposed 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 metals

generally) is clearer and more accurate. See

discussion regarding quality marks below.

93Lee (153); NRF (238) p.1.

94For example, the phrase ‘‘solid 10 karat gold’’

is not likely to lead consumers to believe the item

is 24 karat gold. See Advisory Opinion, ‘‘Solid’’ and

‘‘karat’’ used together, 71 F.T.C. 1739 (1967).

95This safe harbor provision simply states that an

industry product composed throughout of an alloy

of gold of not less than 10 karat fineness, may be

described as ‘‘Gold’’ when the word ‘‘Gold’’ is

immediately preceded by a correct designation of

the karat fineness. The JVC suggested following the

words ‘‘an alloy of gold of not less than 10 karat

fineness’’ with ‘‘less tolerance set out in 15 U.S.C.

294, et seq.’’ [the National Stamping Act] and

footnoting that statement with a detailed

explanation of the tolerance. The tolerances are set

forth in § 23.5(d) of the current Guides and are more

easily understood in the current format.

96Comment 253, p.1 (stating that this ‘‘will not

mislead consumers where all other requirements of

the guidelines have been met and where

information as to karat fineness is given at the point

of sale’’). See NRF (238) p.1 and discussion infra,

regarding the scope and application of the Guides.

97A Note following this section provides

guidance for the use of the word ‘‘gold’’ as applied

to certain words (Duragold, Diragold, Noblegold,

Goldine). The JVC proposed adding ‘‘Layered Gold’’

to this list, and the Commission has done so.

98Comment 156, pp.5–8. LaPrad (181) stated at

p.2 that ‘‘gold plated items should include any item

that is not at least 10 karat solid gold in fineness

throughout the item.’’ This suggests that an alloy

that contained less than 10 karat gold could be

described as ‘‘plated.’’ However, ‘‘plated’’ has been

used for many years to refer to a base metal product

with a coating of gold. Extending the meaning of

the term to low-karat alloys would be confusing.

99The 10 karat minimum standard has been used

at least since 1933, when it first appeared in

Commercial Standard CS 67–38, promulgated by

the then Bureau of Standards of the U.S.

Department of Commerce. It was incorporated into

the Trade Practice Rules for the Jewelry Industry,

16 CFR Part 23, in 1957. In 1977, the Commission

proposed permitting sellers to market gold of less

than 10 karat and silver of less than 92.5% if the

quality was accurately disclosed. This proposal was

published for public comment. Over 1200

comments were received, many from consumers,

and over 98% of the comments opposed lowering

the 10K standard. The Commission found, based on

articles and test reports, that articles of less than 10

Continued

metallic watch bands compared to what

gold watch bands (or other gold jewelry)

would sell for is at least one way

consumers are alerted that a goldcolored band is not gold.90 Thus, the

Commission has omitted this provision

from the Guides.

Other differences between the Watch

Band Guides and the Jewelry Guides are

noted at appropriate portions below.

2. Misrepresentation as to Gold Content:

§ 23.5

Section 23.5(a) of the current Guides

states that it is an unfair trade practice

to sell or offer for sale any industry

product by means of any representation

that would deceive purchasers as to the

gold content. Section 23.5(b) identifies

specific practices that may be

misleading and section 23.5(c) lists

markings and descriptions that are

consistent with the principles described

in the section. These latter provisions

are ‘‘safe harbors’’ (i.e., examples of

ways of avoiding misrepresentations).

a. General provision as to

misrepresentation: § 23.5(a). As noted,

§ 23.5(a) of the current Guides contains

a general provision admonishing against

misrepresenting the gold content of

industry products. The JVC proposed

adding definitions of ‘‘karat,’’ ‘‘gold,’’

‘‘karat gold,’’ ‘‘fine gold,’’ ‘‘mark,’’ and

‘‘apply or applied’’ to this section.91 No

evidence indicating confusion as to the

meaning of the terms was presented. In

some cases, the terms are already

defined very succinctly in the current

Guides.92 For these reasons, the

Commission has not included the

proposed definitions in the Guides.

The JVC also proposed including a

statement that no mark other than the

quality mark (e.g., 14 K) shall be applied

to an article indicating that it contains

gold or as to the quality, fineness,

quantity, weight, or kind of gold in an

article. The Commission found no

justification or need for such a broad

statement. Section 23.5(a) already states

that misrepresentations about the gold

content of an article are unfair or

deceptive.

b. Specific provisions and ‘‘safe

harbors’’: § 23.5(b)-(c). Section 23.5(b) in

the current Guides identifies specific

practices that may be misleading.

Subsection (1) states that the

unqualified use of the word ‘‘gold’’ is

limited to 24 karat gold. The JVC

proposed adding that the unqualified

use of ‘‘solid gold’’ is limited to 24 karat

gold. There were two comments on this

issue, one favoring the JVC proposal

because ‘‘solid gold should mean that

the product is 100% gold,’’ and one

against the proposal, since fineness

must be disclosed for all gold other than

24 karat gold.93 The Commission

believes that the term ‘‘solid gold’’ is not

inherently deceptive or unfair.94

Accordingly, the Commission has

rejected this proposal.

Subsection (2) in the current Guides

advise that (except for 24 karat gold),

the karat fineness be stated when the

word ‘‘gold’’ is used. The JVC did not

suggest any changes in this section, and

only suggested minor changes in the

corresponding ‘‘safe harbor’’ provision

in § 23.5(c)(1).95 However, Finlay argued

that the word ‘‘gold’’ should be allowed

in product advertising without a

designation as to karat fineness.96

Including karat fineness in advertising,

however, helps consumers make basic

comparisons among competing products

offered by different retailers. Therefore,

the Commission has not changed this

provision.

A Note following the first ‘‘safe

harbor’’ provision, § 23.5(c)(1) in the

current Guides, deals with hollow

products and advises that there be a

disclosure that these products, whatever

their gold content, have hollow centers,

when the failure to make such a

disclosure would be deceptive. It also

states that these products should not be

referred to as solid gold. The JVC

proposed revising the note to drop the

guidance that there be a disclosure that

the product is hollow. However, the

Commission has determined that this

disclosure is useful because, otherwise,

consumers would be unaware that the

product is only hollow. Thus, the

Commission has not deleted this

provision. The JVC also suggested that

the note be changed to state that

products that are filled with cement or

some other filler may not bear a quality

mark. However, such products are

essentially ‘‘gold plated’’ products, and

as long as they conform with the

Guides’ provisions about how to mark

such products, consumers are not likely

to be deceived. Thus, the Commission

has decided not to adopt this proposal.

Subsections (3)–(5) advise against

particular uses of the word ‘‘gold’’ (e.g.,

plated, filled, rolled, overlay) unless

they are so qualified as to be nondeceptive. Subsection (6) advises

against representing that one gold

product is superior to another unless the

representation is true.97

Subsection (7) advises against the use

of the word ‘‘gold’’ on any product of

less than 10 karat fineness. Bales

proposed in its comment that the

Guides be amended to permit gold

alloys containing less than 10 karats of

gold (less than .416 percent gold) to be

marketed as containing gold. Bales has

a patent on a product in which the gold

content varies from four to six karats

and which is alleged to have good

corrosion resistance.98 This issue was

addressed comprehensively by the

Commission in 1977.99 Thus, the
27186 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

karat fineness tend to tarnish and corrode. The

Commission ultimately retained the 10 karat

minimum fineness for gold and the 92.5% standard

for silver. 42 FR 29916, 29917 (1977).

100Canada (209) suggested, at p.4, that gold plated

articles ‘‘be prohibited from using the quality mark

‘karat’* * *’’ because such use confuses the

consumer as to the value of the article. In fact, the

current Guides (in §§ 23.5(b)(5) and (c)(3)) appear

to prohibit a quality mark on gold electroplated

items. However, a designation of karat fineness has

been recommended in the Guides for mechanically

plated articles for many years, and Commission

staff is not aware of complaints from consumers

who were deceived by this representation. No other

commenters suggested that the Guides advise

against the use of a quality mark on mechanically

plated items. Hence, the revised Guides, in

§§ 23.4(b)(5) and (c)(3), continue to recommend that

items identified as mechanically plated contain

quality marks.

101The Watch Band Guides contain almost

identical provisions for mechanically plated watch

bands, but they contain a section (§ 19.2(e)(2))

entitled ‘‘Examples of Proper Markings for

Expansion Bands of Specified Composition and

Construction.’’ The main point made by the

‘‘Examples’’ is that quality marks on gold-filled

portions of a watchband should not imply that base

metal portions of the band are gold. The

Commission believes the section of the current

Jewelry Guides dealing with quality marks (§ 23.8)

adequately addresses this issue. See discussion of

quality marks, infra. Therefore, the Commission is

not including the ‘‘Examples’’ in the revised

Guides.

102NACSM (219) p.24; Leach (258) p.9 (stating

that the tolerance is ‘‘by far too liberal’’); Korbelak

(27) p.4 of attached letter of April 23, 1982 to

Susanne S. Patch (stating that the proposal is

‘‘unsupportable’’ and ‘‘contrary to the spirit of the

recent amendment of the Marking Act which

tightened tolerances on karat goods’’). [The National

Stamping Act was amended in 1976.]

103A ten percent tolerance is found in Voluntary

Product Standard PS 67–76, ‘‘Marking of Gold

Filled and Rolled Gold Plate Articles Other than

Watchcases.’’ The tolerance is apparently meant to

apply to weight claims, such as ‘‘10% 14 karat

gold’’.

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 applicable

to the tolerance when a test for metal content is

being performed (e.g., excluding ‘‘joints, catches,

screws’’ etc.) Other Voluntary Product Standards

are also referred to in the current Guides for the

same reason (i.e., a list of parts of jewelry exempt

from assay.) The JVC recommended including in

the Guides the full text of all five Voluntary Product

Standards for precious metals that are referred to in

the current Guides as ‘‘Commercial Standards.’’

Commercial Standards were promulgated by the

U.S. Department of Commerce and administered by

the National Bureau of Standards (‘‘NBS’’). Later

renamed by the NBS as Voluntary Product

Standards (‘‘VPS’’), they had the same legal

significance as FTC guides. The Department of

Commerce and the NBS, which is now called the

National Institute of Standards and Technology

(‘‘NIST’’), withdrew these and all other VPS, as an

economy measure, on January 20, 1984. The JVC

proposed preserving the material in the VPS by

incorporating it into the Jewelry Guides.

Only one comment addressed the issue of

whether to include the VPS in the Guides. The Gold

Institute (13) agreed that the VPS should be

incorporated, but gave no reasons. The Commission

has included the material pertaining to exemptions

from assay (with some changes, discussed infra) in

the Appendix. However, the Commission has

concluded that it is not necessary to include other

portions of the VPS. The VPS state the standards

that must be met for each product, if the product

is represented to be in compliance with the VPS.

However, the VPS have been withdrawn so such a

representation is obsolete.

104The Postal Service (244) p.2, commented that

the use of ‘‘gold flashed’’ or ‘‘gold washed’’ is

misleading to consumers, particularly where items

are ordered by mail and not seen by the consumer

until after purchase. However, the terms ‘‘gold

flashed’’ and ‘‘gold washed’’ have been in common

use for many years. The Commission does not have

sufficient evidence at this time to advise against the

use of these terms in all circumstances.

Commission has not changed this

provision.

The JVC petition also included an

admonition against applying a quality

mark (e.g., 9 karats) to any article of less

than 10 karat fineness regardless of

whether the word ‘‘gold’’ is used.

Because the word ‘‘karat’’ is so clearly

associated with gold content (even

without the use of the word ‘‘gold’’), the

use of the term ‘‘9 karat’’ is likely to

represent that the item is 9 karat gold.

The Commission has determined that

advising against this use is consistent

with and clarifies the Guides.

On the basis of comments received in

response to questions in the FRN, the

Commission has revised current

§§ 23.5(b)(3), (4), and (5). These changes

are explained in detail below, along

with the changes to the corresponding

‘‘safe harbor’’ provisions in subsection

23.5(c) of the current Guides.

i. Mechanically or electrolytically

‘‘plated’’ products. There are two basic

kinds of ‘‘plated’’ gold. Mechanically

plated gold has a layer of gold alloy

bonded to a base metal by heat and

pressure. Gold electroplate has a layer of

gold alloy electrolytically deposited on

a base metal. Section 23.5(b)(3) of the

current Guides states that a surfaceplated or coated article can only be

referred to as ‘‘gold’’ when the term is

adequately qualified so as to disclose

that the product or part is only surfaceplated or coated with an alloy of gold.

However, for mechanically plated

articles, it adds that the word ‘‘gold’’

should be preceded by a designation of

the karat fineness.100

Section 23.5(b)(4) states that certain

terms (‘‘gold-filled,’’ ‘‘rolled gold plate,’’

‘‘rolled gold plated,’’ ‘‘gold overlay,’’

‘‘gold plated,’’ or ‘‘gold plate’’) should

only be used for mechanically-plated

items (i.e., not gold electroplate) and

that the gold on these items should be

of ‘‘such thickness and extent of

coverage that the terms will not be

deceptive.’’ It also states that the karat

fineness should be included with these

terms. The safe harbor provision in

§ 23.5(c)(2) states that these terms are

not deceptive when used for

mechanically-plated items if the karat

fineness is stated and the gold is of

‘‘substantial thickness’’ and constitutes

5% of the weight of the item. Section

23.5(c)(2) also creates a safe harbor for

all these terms except ‘‘gold filled’’

when the gold weight is less than 5% if

they are preceded by a fraction

indicating the gold weight (e.g., 1⁄40 12

Kt. Rolled Gold Plate). ‘‘Gold filled’’ is

reserved for items with a gold weight of

5% 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-filled

and rolled gold plate articles shall not

be less than the gold content indicated

by the quality mark by more than ten

percent.’’ Only three comments

addressed this issue, all opposing the

provision.102 Section 23.5(d) of the

current Guides provide that ‘‘the

requirements of this section relating to

markings and descriptions of industry

products and parts thereof are subject to

the tolerances applicable thereto under

the National Stamping Act (15 U.S.C.

294, et seq.) * * *.’’ The National

Stamping Act provides that, for articles

made of gold, ‘‘the actual

fineness * * * shall not be less by

more than three one-thousandths parts

than the fineness indicated by the

mark * * *.’’ 15 U.S.C. 295 (1993). No

reason was offered for the much larger,

proposed tolerance. Accordingly, the

Commission has not adopted this

change.103

Section 23.5(b)(5) states that the terms

‘‘gold electroplate’’ or ‘‘gold

electroplated’’ can only be used when

the plating ‘‘is of such karat fineness,

thickness, and extent of surface

coverage that the use of the term will

not be deceptive.’’ The safe harbor

provision in § 23.5(c)(3) states that these

terms are not unfair or deceptive when

used for items with a coating of seven

millionths of an inch of fine (24 karat)

gold, or the equivalent. [If the gold

coating is, for example, 12K (half as

fine), the coating should be 14

millionths of an inch thick (twice as

thick).] ‘‘Heavy gold electroplate’’ may

be used for a coating equivalent to 100

millionths of an inch of fine gold. This

subsection also states that the terms

‘‘gold flashed’’ or ‘‘gold washed’’ may be

used to describe an electroplated

coating that is thinner than seven

millionths of an inch of fine gold or its

equivalent (the minimum thickness for

the use of the term ‘‘gold

electroplate’’).104

The FRN sought comment on how

‘‘gold plate’’ should be defined in the

Guides. (As noted, current § 23.5(b)(4)

allows ‘‘gold plate’’ to be used to

describe only mechanically plated

items.) Six comments opposed allowing
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27187

105 Gold Institute (13) p.2 (defining ‘‘gold plate’’

as an optional term to describe a mechanically

plated article); Handy (62); Newhouse (76); Mark

(207); MJSA (226) p.4 (limiting ‘‘gold plate’’ to

mechanically plated articles is ‘‘generally consistent

with terminology used in the trade’’); and Knight

(256) p.2 (stating that consumers know electroplate

is inferior to mechanically plated gold).

106Fasnacht (4) p.1 (stating that ‘‘gold plate’’ has

historically been used in the trade ‘‘for any

application of a karat gold to a base’’); Benrus (22);

Estate (23); Korbelak (27) p.3 (stating that the trade

now uses ‘‘gold plate’’ to mean gold applied

electrolytically); G&B (30); ArtCarved (155); LaPrad

(181); Matthey (213); Bruce (218) p.7 (stating that

the trade now uses the term ‘‘gold plate’’ to mean

gold applied electrolytically); Citizen (228) p.3

(stating that the term should not ‘‘be restricted to

any particular method of applying the gold

covering’’ and noting that ‘‘the vast majority of gold

coverings are applied electrolytically’’); Sheaffer

(249); and Leach (257). Four of these (Fasnacht,

G&B, Matthey, and Estate) stated that the method

should be disclosed.

107Comment 249, p.2. Section 23.5(c)(2) states

that ‘‘adequate abbreviations’’ are not unfair or

deceptive for mechanically plated gold, which is

also referred to as ‘‘gold filled’’ and abbreviated as

G. F. Section 23.5(c)(3) makes no such provision for

electrolytically plated gold. Moreover, in an

advisory opinion issued in 1971, the Commission

stated that ‘‘gold electroplate’’ could not be

abbreviated. Advisory Opinion, Designation of gold

content on ball point pens, 79 F.T.C. 1052 (1971).

However, the Commission currently has no

information that consumers would understand

abbreviations for mechanically plated gold but not

for electrolytically plated gold. Thus, the

Commission has revised the Guides to state that

adequate abbreviations are not unfair or deceptive

for electrolytically plated gold (e.g., 12 Kt. G. E. P.).

Therefore, the advisory opinion is withdrawn.

108Matthew Runci from MJSA.

109Comment 249, p.3 (noting that ‘‘silverplate’’ is

allowed under the current Guides regardless of the

method of application and that this has not misled

consumers).

110Comment 209, p.4.

111Benrus (22) p.2 (stating that ‘‘The science of

gold plating has improved greatly in the past 15

years and the requirements in the current Guides

. . . are simply not in tune with today’s technology

or market practices’’); Alan Foster,

‘‘Electrodeposited and Rolled Gold,’’ Gold Bulletin

64 (1982), attached to comment 27 (indicating that

the electroplating of gold was greatly improved

about 30 years ago). Korbelak (27) (attached letter

of April 23, 1982 to Susanne S. Patch) states that

the current Guides ‘‘perpetuate an economic

advantage to one method of manufacturing

[mechanical] over another.’’

112Catholyte (34) p.1 (stating that when corrosion

is the quality criterion, ‘‘mechanically cladded

material is not the present day choice because

machining processes which produce the desired

designs will destroy the starting clad stock and

yield ‘raw’ or cut edges which will have little or no

clad matter present. (This procedure necessitates

the use of electroplate to ‘cover’ those edges which

are exposed.)’’). Other comments indicate that

mechanically plated gold normally has a surface

coating of electroplate. Korbelak (27) (see articles

attached to comment); Tru-Kay (196) p.1 (stating

that its major product was mechanically-plated

jewelry, and noting the existence of ‘‘the surface

coating of gold electroplate’’ on gold filled items);

Mark (207) p.3 (owned and operated a gold-filled

manufacturer and distributor for 25 years and

referred to the ‘‘surface coating of gold electroplate’’

on gold filled (i.e., mechanically-plated) items).

113Matthew Runci, Executive Director, MJSA

(226); George Knight, former president of the Gold

Filled Manufacturers Association (256); Irving

Ornstein, Vice President, Leach & Garner (258);

Howard Solomon, Vice President, Donald Bruce &

Co. (218); I.L. Wein, President, Benrus (22); Barry

Sullivan, President, ArtCarved (155); Kenneth

Genender, U.S. Watch Council (118). Only Mr.

Knight stated that gold electroplate is inherently

inferior to mechanically plated gold.

114Consumers can determine for themselves

whether they like the appearance of the product,

but the consumer has no way of determining

durability.

115Although the evidence indicates that the term

‘‘gold plate’’ has not been frequently used, because

plating generally has been in use for many years,

consumers reasonably would expect a certain

minimum level of durability from an item so

labeled. The Commission believes it is appropriate

to create a safe harbor with a numerical standard

for a specific term such as ‘‘gold plate’’ when

consumers would expect certain qualities from

products described by the term and products at or

above the standard would have such qualities.

electroplated items to be described as

‘‘gold plate.’’ 105 Most gave no reason

other than stating that there should be

a distinction between products that are

mechanically plated and those that are

electroplated.

Twelve commenters favored letting

electroplated items be designated as

‘‘plate.’’ 106 Sheaffer noted that ‘‘gold

electroplate,’’ the designation currently

advised by the Guides, is too lengthy for

many of its products and is unknown to

consumers in foreign countries, who are

familiar with the term ‘‘plate.’’ 107

Sheaffer stated that most foreign

countries permit ‘‘plate’’ or ‘‘plated’’ to

be used to describe an article coated

with gold, regardless of the method of

application, and that a change in U.S.

requirements would allow them to stock

inventory of items marked as ‘‘gold

plate.’’ Further, one commenter

interviewed by Commission staff stated

that some manufacturers would like to

market items that are the product of

both mechanical plating and electrolytic

plating, that could be labeled ‘‘gold

plate.’’ 108

Some comments stated that the

relevant issue for consumers is

durability, and not the method of

plating. Sheaffer stated that ‘‘[t]he

normal consumer is totally unconcerned

about the process which a manufacturer

might use to apply gold or silver plate

to an article so long as the precious

metal plate meets all appropriate

required standards.’’ 109 Canada

commented that ‘‘gold plate’’ is ‘‘simply

a layer of gold placed over a base

substance’’ and that the ‘‘important

reference should inform the consumer

of the thickness of the plate.’’ 110

Although the comments indicate that

there are differences of opinion in the

industry regarding industry custom and

usage of the term ‘‘plate,’’ under the

current Guides the term ‘‘gold plate’’

can only be used for mechanically

plated gold. Historically, mechanically

plated gold has contained a thicker

coating of gold and has been more

durable than gold electroplate, both

because it was thicker and because it

was less porous.

However, the comments indicate that

electroplating has been significantly

improved in recent years.111 Other

comments indicate that gold

electroplate could now be as desirable,

or more desirable, than mechanically

plated gold.112 Commission staff

conducted telephone interviews of

seven commenters, who, with one

exception, indicated that gold

electroplate can be made as thick and as

durable as mechanically plated gold.113

Furthermore, all of the commenters

whom Commission staff interviewed

stated that mechanically plated gold has

usually been marketed as ‘‘filled gold,’’

‘‘rolled gold,’’ or ‘‘gold overlay’’ (instead

of ‘‘gold plate’’).

Based on the comments, the

Commission has determined that the

current Guides reflect the now-outdated

belief that gold electroplate is inherently

inferior to mechanically plated gold.

The Guides may thus unfairly give

mechanical plating a competitive

advantage and may make international

trade more difficult. Further, the

comments indicate that the term ‘‘gold

plate’’ has not been used extensively for

mechanically plated items, and

therefore, consumers may not expect an

item labeled as ‘‘gold plate’’ to have

been mechanically plated. Moreover,

the Commission agrees with the

comments that state that consumers are

unlikely to distinguish between

products on the basis of the method of

plating used and are more concerned

with the durability.114 Thus, the

distinction between mechanically

plated and electroplated products no

longer serves a useful purpose.

Therefore, the Commission has

concluded that the term ‘‘gold plate’’

would not be inherently deceptive when

applied to electroplated items with a

sufficient layer of gold that assures

reasonable durability. This will allow

products composed of a combination of

types of plating, or newer methods of

plating that are developed, to be called

‘‘gold plate.’’

For these reasons, the Commission

has created a safe harbor that would

allow ‘‘gold plate’’ to be used for gold

applied by any process so long as the

coating is sufficiently durable to satisfy

consumer expectations that the plated

product would retain its appearance for

a reasonable period of time.115 The

Commission believes that a standard

based on thickness, rather than weight

of the gold coating, is more relevant to
27188 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

116Sheaffer (249) p.4 (stating that a standard

based on a weight ratio (e.g., 1/20th) can

‘‘encourage the production of inferior articles

lacking strength and rigidity as the thickness, and

thus, the cost of the plate can readily be reduced

by 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 in

determining the esthetic qualities and durability of

the electroplating process,’’ that different

technologies produce varying thicknesses, all of

which provide durable coverage, and that

establishing a threshold standard for ‘‘gold flashed’’

or other similar terms creates an arbitrary standard

that distorts the marketplace); and NAW (251).

However, because of the other comments discussed

in the text, the Commission believes that

identifying a minimum thickness and fineness is

appropriate for a safe harbor for ‘‘gold plate’’ claims

for jewelry.

117The Trade Agreements Act of 1979 states that

federal agencies must, in developing standards,

‘‘take into consideration international standards

and shall, if appropriate, base the standards on

international standards.’’ 19 U.S.C. 2532(2)(A)

(1980). A ‘‘standard’’ is defined as ‘‘a document

approved by a recognized body that provides, for

common and repeated use, rules, guidelines, or

characteristics for products or related processes and

production methods, with which compliance is not

mandatory.’’ 19 U.S.C. 2571(13) (1995). An

international standard is defined as a standard

promulgated by an organization engaged in

international standards-related activities, the

membership of which is open to representatives,

whether public or private, of the United States and

all members of the World Trade Organization

(‘‘WTO’’). 19 U.S.C. 2571(5), (6), and (8) (1995). A

WTO member is ‘‘a state or separate customs

territory (within the meaning of Article XII of the

WTO Agreement), with respect to which the United

States applies the WTO Agreement. 19 U.S.C.

3501(10) (1995).

ISO is, according to the ‘‘foreword’’ sections in

several ISO standards attached to the Swiss

Federation comment (232), ‘‘a worldwide federation

of national standards bodies. The work of preparing

International Standards is normally carried out

through ISO technical committees.’’ ISO is open to

representatives from the United States and to

representatives from members of the WTO, and

qualifies as an international standards organization.

However, the Trade Agreements Act also

explicitly states several reasons why basing a

standard on an international standard may not be

appropriate, including the prevention of deceptive

practices and fundamental technological problems.

19 U.S.C. 2532(2)(B)(i).

118This is reflected in the current Guides.

Watches marked ‘‘gold electroplate’’ should be

plated with at least three-fourths one thousandths

of an inch of 10 karat gold (or 750 millionths of an

inch) whereas jewelry should be plated with at least

7 millionths of an inch of 24 karat gold or the

equivalent.

The American Watch Association (236) stated at

p.1, that standards for gold plating should be

similar for watches and jewelry because

‘‘consumers can be confused when faced with

jewelry and watch products subject to entirely

different definitions and standards.’’ However,

watches may be subjected to more wear than most

jewelry (because they are usually worn daily), and,

based on past practice, consumers may expect

watches to have a thicker coating of gold plate than

jewelry. Moreover, there are different ISO standards

for plated jewelry and plated watches.

119Other commenters interviewed by Commission

staff stated that 1⁄2 micron was not very durable

[Irving Ornstein from Leach (257); Kenneth

Genender from U.S.W.C. (118)]. Catholyte, (34) p.1

(a ‘‘quality’’ product would contain 5 microns).

120Benrus (22); USWC (118).

121Telephone interview with I. L. Wein,

President, Benrus. Bruce (218), in discussing

vermeil (which is gold plate over sterling silver),

stated that one micron of plating would be

sufficient for some items such as earrings, two

microns for other such as necklaces, but that an

item like a ring would require three microns.

122 ‘‘Substantial thickness’’ is defined in a

footnote which is similar to the present footnote 1

in the current Guides.

consumer expectations.116 For the

reasons discussed below, the

Commission has established a safe

harbor for products with a minimum

thickness of one half micron of gold

coating.

In developing this safe harbor, the

Commission has considered the

standard for gold plated jewelry

established by the International

Organization for Standardization

(‘‘ISO’’): ‘‘ISO International Standard

10713 Jewellery [sic]—Gold alloy

coatings.’’ 117 This standard sets a

minimum thickness of half a micron of

fine gold (or its equivalent) for both

mechanically plated and electrolytically

plated gold jewelry.

The Commission also considered the

ISO standard for gold plated watches,

which sets a minimum thickness

standard of 5 microns, and comments

submitted as to the current standard in

the Watch Guides, to determine a

sufficiently durable coating of gold for

plated jewelry. Watches have

historically been assumed to be

subjected to more wear than other

articles of jewelry.118 The comments

that address gold-plated watches

indicate that a one micron thickness

may be durable. Benrus commented that

thicknesses of up to 1⁄2 micron ‘‘are

unsubstantial and wear very quickly’’

but that there is ‘‘a new industry

‘standard’ of a minimum of 1 micron of

gold plating (40 millionths of an inch)

which has substantial durability and

reliability and gives years of satisfactory

service.’’ 119 The U.S. Watch Council

also noted that the watch industry has

adopted 1 micron of thickness

(described as 40 millionths of an inch of

23 karat gold) as a standard for gold

plating.120 Two commenters interviewed

by Commission staff, Benrus and U.S.

Watch Council, stated that watches with

a one micron coating of gold, if worn

every day, could be expected to last

between two and four years.

Because most jewelry gets less wear

than watches, the Commission believes

that the ISO standard of half a micron

of fine (24 karat) gold plating for jewelry

constitutes a ‘‘floor’’ of sufficient

durability, so that consumers are

unlikely to be misled about the

durability of an item marked ‘‘gold

plate.’’ However, the Commission

recognizes that some commenters

indicated that half a micron is not very

durable. Also, certain items of jewelry

receive more wear than others, and

some items, such as rings, might

actually receive more wear (and more

friction with skin) than watches.121

Therefore, to ensure that consumers

are not deceived by the implied claims

of durability arising from the term ‘‘gold

plate,’’ the ‘‘safe harbor’’ in the revised

Guides (§ 23.4(c)(2)) reflects the

Commission’s view that the term ‘‘gold

plate’’ is not inherently deceptive or

unfair when used for gold applied to an

industry product (excluding watches) by

any process so long as the following two

conditions are met: (1) The product

contains a coating of half a micron, or

20 millionths of an inch, of fine gold or

the equivalent; and (2) The coating is

‘‘of substantial thickness,’’ 122 which for

items that are subject to a great amount

of wear, such as rings, should be more

than half a micron of fine gold or the

equivalent. This second provision

ensures that products that are subject to

greater wear should have a coating of

greater thickness than the minimum half

micron. Moreover, it ensures that

products that are subject to a great

amount of wear in certain areas would

have a more substantial coating in those

areas.

The Commission has indicated that

the thickness of the gold plating may be

marked in microns on the item itself if

it is followed in close proximity by a

gold quality mark (e.g., 2 microns 12 K.

G. P.). A note following this section

recommends that if a product has a

thicker coating in some areas than

others, the area of least thickness should

be marked. This allows manufacturers

to inform consumers of the minimum

thickness of the plating, and consumers

may therefore shop for items with more

or less plating depending on their needs

and budget.

The ISO standard, in section 5.4,

prohibits quality marks on gold plated

items. However, the Commission does

not believe it is appropriate to include

this portion of the international

standard in the revised Guides. The

quality mark in combination with an

indication of the thickness of the gold

plate, can communicate important

information to consumers. The ISO

standard also sets up a system whereby

gold plated products can be labeled

‘‘A,’’ ‘‘B,’’ or ‘‘C,’’ with A indicating

products that have a minimum of 5

microns of 14 karat gold (or the

equivalent), B indicating a minimum of

3 microns of 14 karat gold (or the

equivalent), and C indicating a half

micron of 24 karat gold (or the

equivalent). However, American
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27189

123 ISO standard 17013 also provides a similar

system of marking mechanically plated gold items

(e.g., ‘‘A’’ indicates a thickness of 5 microns), based

on the thickness of the gold plate. However, the

Guides allow marking of mechanically plated items

(e.g., gold-filled or rolled gold plate), based on the

weight of the gold in the item. The current system

in the Guides has been used for many years and the

ISO system of marking may be confusing to

consumers. Thus, the Commission has not included

the ISO system in the revised Guides. The

Commission believes that omitting the ISO system

of marking mechanically plated gold from the

Guides will not pose a barrier to international trade,

because manufacturers can mark the product ‘‘gold

plate’’ according to the new provisions for gold

plated items, discussed above.

124The JVC petition suggests revising the sections

pertaining to electroplate by substituting the word

‘‘electroplate’’ for the word ‘‘plate’’ and

‘‘electroplating’’ for ‘‘plating.’’ This revision

clarifies that products coated with gold by a process

other 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), a

former executive in the watch industry who stated

that he has been retired since 1971, said he was not

aware of any new techniques. Handy, Mark,

Matthey and MJSA stated the techniques can be

adequately dealt with by the existing provisions in

the Guides.

126Bruce (218) (stating that it produces this type

of jewelry); Bales (156) p.8 (stating that such

jewelry is often sold by weight and that ‘‘[m]any

times, the manufacturer leaves a measurable

amount of residue inside the shell and weighs it,

and actually sells [it] as gold or silver’’); Canada

(209) (stating that the problem of foreign substances

left inside plated articles deserves review). Section

23.5(a) of the Guides makes clear that overstatement

of the quantity of gold in a product is unfair and

deceptive.

127Comment 249, p.3; ArtCarved (155) (stating

that ‘‘gold plate’’ should be allowed for all

methods). Two comments, Estate (23) and G&B (30),

stated that the method of application should be

revealed, but gave no reasons.

128The JVC proposed this provision to prevent

‘‘the occasional expediency, in the manufacturing

of finished products, to ‘hot nickel’ or use some

other non-precious electroplating over the

mechanical precious metal surface and then merely

to apply a flash of precious metal electroplating.’’

Petition Section 23.5 C(2), Footnote 2. ArtCarved

(155) suggested, at p.3, that ‘‘on some surfaces

nickel serves as a leveling agent.’’ Korbelak (27)

stated, at p.4, that ‘‘nickel is apparently used to

prevent corrosion of the unavoidably exposed

copper alloy base of the mechanically coated

stock.’’

129Fasnacht (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), favored

allowing the insertion of nickel with a disclosure,

but G&B noted that there may be a need to ‘‘have

a new term.’’

130Tru-Kay (196) p.1.

131Handy (62); ArtCarved (155); and Sheaffer

(249).

132Mark (207) p.4.

133 Id.

134The Commission rendered an advisory opinion

on this issue in 1966, stating that ‘‘a purchaser of

such an article would not get the type of

performance expected from gold filled articles

because points of wear would expose the coating of

white nickel at a very early stage and the

ornamental 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).

135The Gold Institute stated, that ‘‘Nickel is a

recognized skin irritant,’’ and urged that the use of

nickel 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 this

system, and the Commission does not

believe it is appropriate to include it in

the Guides at this time.123

The safe harbor for ‘‘gold plate’’

(§§ 23.4 (b)(4) and (c)(2)) will be in

addition to those already contained in

the Guides. Thus, §§ 23.4 (b)(5) and

(c)(3) of the revised Guides indicate that

mechanically plated gold can be called

‘‘gold filled,’’ ‘‘rolled gold plate,’’ or

‘‘gold overlay.’’ However, items

mechanically plated with gold also can

be referred to as ‘‘gold plate,’’ in

accordance with the guidance of § 23.4

(c)(2) of the revised Guides.

Electroplated items can be marked as

‘‘gold electroplate’’ or ‘‘GEP,’’ in

accordance with the guidance of

§§ 23.4(b)() and (c)(4) of the revised

Guides,124 or as ‘‘gold plate,’’ in

accordance with § 23.4(c)(2).

c. New methods of plating. The FRN

solicited comment on whether newer

methods of plating should be included

in the guides and how they should be

addressed. Nineteen comments

addressed this issue, and of this group,

only one commenter stated that he was

unaware of new techniques.125 The most

frequently mentioned new method was

‘‘electroforming,’’ a process in which

gold is deposited over materials that are

removed, leaving a hollow item.126 (If all

of the foreign material is removed, the

product is not actually plated.) Citizen

Watch (228) described a process called

‘‘ion plating,’’ and Sheaffer (249)

described ‘‘vapor deposition,’’

‘‘sputtering,’’ and ‘‘electroless

immersion.’’ However, Sheaffer stated

that these processes could be handled in

the same basic manner as mechanical

plating and electroplating and noted

that the terms ‘‘plate’’ or ‘‘plated’’

should be available to describe products

coated by any of these methods.127 As

discussed supra, the Commission has

revised the Guides to indicate that it is

not misleading to describe an item as

gold plate, whatever method is used to

apply the gold, so long as it meets the

suggested minimum thickness and

fineness standards. The Commission

does not have enough information at

this time to provide more detailed

guidance regarding the newer methods

of plating.

d. Nickel in gold-filled jewelry. The

FRN solicited comment on whether the

Guides should advise against the use of

the term ‘‘gold-filled’’ to describe a

product in which nickel is inserted

between the gold-filled item and a

surface coating of gold electroplate. The

FRN also asked if it would be acceptable

to permit the insertion of nickel so long

as the lessened durability of such an

item is disclosed, and asked what type

of disclosure should be made.128

Most of those who commented

believed that jewelry made in this way

should not be called ‘‘gold-filled.’’ 129

Tru-Kay (which stated that gold-filled

jewelry is its major product line) noted

that the insertion of nickel would

adversely affect durability and

quality.130 Three comments contended

that nickel should not lessen

durability.131

Mark stated that if a layer of nickel

‘‘has covered the basic material, it will

show up as soon as any gold surface

coloration has worn through* * *.’’ 132

This is particularly important since the

metal color would change from yellow

to white. Mark also stated that ‘‘[t]o

cover the mechanically bonded layer of

gold [with nickel] which is the essence

of the gold-filled product defeats the

purpose of the gold-filled standard to

the consumer.’’ 133

The Commission agrees with the

argument of the majority of the

commenters that a thin wash of gold

could wear away and reveal the nickel.

Thus, the use of the term ‘‘gold-filled’’

to describe such a product does not

comport with § 23.4(b)(5) of the revised

Guides, which states that the product

should contain ‘‘a surface-plating of

gold alloy applied by a mechanical

process which is of such thickness and

extent of surface coverage that

reasonable durability is assured.’’ The

Commission has concluded that the use

of ‘‘gold-filled’’ or other terms to

describe mechanically plated gold

covered with nickel that is washed with

gold involves a misleading use of the

word ‘‘gold’’ because it does not

disclose that this product has only a

thin wash of gold over a surface layer

of nickel.134 To clarify this point in the

revised Guides, the Commission has

added a provision, § 23.4(b)(6), that

states that such a product should not be

described as ‘‘gold plate’’ or ‘‘goldfilled’’ unless it contains a disclosure

that the primary gold coating is covered

with a base metal, which is gold

washed. Such a product comports with

the guidance in the current and revised

Guides for ‘‘gold washed’’ or ‘‘gold

flashed’’ and, if the seller wished to do

so, the seller could so describe it.135
27190 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

require the disclosure of its presence in all jewelry,

not just rolled gold jewelry. This was not proposed

in the FRN and there is not an adequate basis at

this 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 with

a ‘‘silver-gold’’ glow, which has been on the market

for a long time). However, no provisions pertaining

to vermeil have ever been included in the Jewelry

Guides.

137Fasnacht (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).

138Newhouse (76) and Impex (219).

139 Korbelak (27) p.4 (stating that ‘‘a floor of 100

millionths of an inch was established by the trade

many years ago’’); Tru-Kay (196) p.2 (stating that

the proposed standard was ‘‘quite excessive’’ and

not necessary ‘‘in order to give the consumer a

quality product’’); Bruce (218) p.8 (stating that the

proposed standard was ‘‘very heavy’’ and noted that

‘‘the nature of the product and the wear it is

subjected to would be a more appropriate guide for

plating thickness’’). Bruce (218) suggested that the

proposed standard was appropriate for items such

as rings (which receive a lot of wear) but suggested

40 millionths of an inch for earrings and pendants

and 80 millionths of an inch for bracelets and neck

chains.

140MJSA (226) pp.4–5 (stating that the JVC

recommended 120 millionths of an inch simply

because it is higher than the 100 millionths of an

inch required for heavy gold electroplate); G&B (30)

p.8 (indicating that the point was simply to set

some standard); ArtCarved (155) p.4 (stating that ‘‘if

vermeil is the standard word used for 120

millionths of an inch, this would be okay’’); Canada

(209) p.4 (noting that it has a quality mark for

vermeil but has yet to establish a minimum

standard for plating).

141Comment 226, pp.4–5.

142 ‘‘Jewelers’ Dictionary’’ 253 (3d ed. 1976).

143The JVC recommended the addition of a note

that states that a diffusion barrier (typically of

nickel) may be electrolytically applied, in a

thickness of no more than 50/1,000,000ths of an

inch, under the layer of gold.

144The comments indicate that the sterling silver

base is part of the common understanding of the

term ‘‘vermeil.’’

145See also Advisory Opinion, Impropriety of

description ‘‘14K’’ for item not entirely gold, 69

F.T.C. 1212 (1966) (stating that an earring post with

a 14K gold base, electroplated with copper, nickel

and then karat gold, could not be described as 14

karat gold, because it would ‘‘contains substantial

electroplatings of base metals’’).

146Franklin Mint (250) p.4 (objecting to the

proposal and stating that their own tarnish testing

indicates the need for a barrier of 150/1,000,000ths

of an inch).

e. Provisions relating to vermeil.

Vermeil, a product made of sterling

silver with a coating of gold, is a special

form of gold plate.136 The JVC proposed

including provisions for vermeil in the

Guides and the FRN solicited comment

on whether a recommended minimum

plating of 120 millionths of an inch of

fine gold, or its equivalent, over sterling,

was appropriate.

Eighteen comments addressed this

issue.137 Two comments stated the

proposed standard was not appropriate;

one offered no reason and the other

stated that the standard should be up to

the manufacturers.138 Three comments

stated that the proposed standard was

thicker than necessary.139 Other

commenters offered various opinions on

the proposed standard.140 Most of the

other comments simply said the

proposed standard was appropriate but

offered no reasons.

MJSA supported the proposed

standard stating that it ‘‘assures an

extremely high level of durability and

low porosity.’’ However, MJSA stated

that ‘‘it is possible to establish a highly

durable coating of gold over silver at

substantially lesser thicknesses,’’ and

noted that many manufacturers

currently produce such a product.141 In

the Jeweler’s Dictionary, modern usage

of ‘‘vermeil’’ is defined as ‘‘Heavy gold

electroplate over sterling silver * * * or

a substantial layer of karat gold

mechanically applied over sterling

silver.’’ 142 The current Guides identify

the minimum thickness for heavy gold

electroplate as the equivalent to 100/

1,000,000ths of an inch of fine gold.

The JVC petition indicates that

vermeil is susceptible to discoloration,

presumably because the silver might

tarnish.143 Because gold itself deters

tarnishing, the thicker the coating of

gold, the less likely the underlying

silver will tarnish. However, Korbelak

(27) p.4, stated that ‘‘gold coatings are

permeated by sulfides in the average

atmosphere up to thicknesses of 10

microns (0.0004 inch).’’ Thus, even a

gold coating of 120 millionths of an inch

(or 0.00012 inch), or about 3 microns

would not completely solve this

problem.

The Commission believes it is

appropriate to reference a numerical

thickness in the Guides when

consumers have come to expect certain

qualities from products described by the

term and products below the standard

would not have such qualities. The

comments indicate that there are items

sold as ‘‘vermeil’’ that have the qualities

consumers associate with ‘‘vermeil,’’

and that have a gold coating of less than

120 millionths of an inch. Furthermore,

the definition of vermeil in the Jeweler’s

Dictionary is consistent with Korbelak’s

comment (27) that many years ago, the

trade established a floor of 100

millionths of an inch for vermeil.

Therefore, the Commission has

concluded that a thickness of 100

millionths of an inch, or 2.5 microns, of

fine gold is an appropriate thickness

‘‘floor’’ for vermeil.

Because there may be items currently

sold as ‘‘vermeil’’ that do not comport

with the generally accepted meaning

(i.e., gold over silver), the Commission

has added a general provision stating

that it would be unfair or deceptive to

describe an article as ‘‘vermeil’’ if it

misrepresents the product’s true

composition. The Commission has also

added a section, 23.5(b), which provides

guidance on when a product may be

described as ‘‘vermeil.’’ This section

states that a product may be described

as ‘‘vermeil,’’ ‘‘if it consists of a base of

sterling silver,144 coated or plated on all

significant surfaces, with gold or gold

alloy of not less than 10 karat fineness,

which is of substantial thickness and a

minimum thickness throughout which

is 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 revised

Guides), ‘‘substantial thickness’’ is

defined in a footnote which is similar to

the present footnote 1 in the current

Guides.

With respect to the problem of the

tarnishing of the silver base, the JVC

recommended the addition of a note

allowing a nickel barrier. However, the

nickel is placed over the silver base, and

it is the silver that distinguishes vermeil

from other gold plated items. Moreover,

vermeil is by definition composed

completely of precious metal alloys.145

Although the note indicates that the

purpose of the ‘‘diffusion barrier’’ is to

prevent premature discoloration, there

was no discussion of the effect a

‘‘diffusion barrier’’ over the silver would

have on the unique coloration of

vermeil. Moreover, no explanation was

offered for limiting the thickness of the

barrier to 50/1,000,000ths of an inch.146

Although there may be a need for such

a barrier, in the absence of adequate

information on this issue (including

whether it changes the appearance of

the product in a manner that would be

objectionable to consumers), the

Commission has determined not to add

this note to the Guides. Instead, the

Commission has added a Note which

states that such a product should not be

described as vermeil unless there is a

disclosure that the sterling silver is

covered with a base metal, which is

gold-plated.

The JVC petition suggested several

other qualifications of the use of

‘‘vermeil’’ that the Commission has not

included in the revised Guides. The

petition suggested that the application

of the gold must be either by mechanical

bonding or electroplating. However,

comments have indicated that some

new methods of application have been

developed, and no reasons were offered
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27191

147 Franklin (250), at p.4, objected to the

exclusion of ‘‘alternative descriptions and markings

. . . such as ‘sterling silver electroplated with 24 kt.

gold’’ and noted that ‘‘no evidence has been

produced that such designations would mislead the

public.’’ The Commission believes that alternative

truthful descriptions of a vermeil product (e.g.,

sterling silver electroplated with 24 kt. gold) are

acceptable.

148 Franklin (250) commented at p.5, that the

presumption implicit in allowing sterling to be

abbreviated on other products ‘‘is that buyers of the

other products named therein for which ‘ster.’ is an

acceptable usage understand its meaning; it defies

logic to assume that the term ‘ster.’ is not

recognized and understood by the hollowware and

flatware buying public.’’

149The Watch Band Guides differ from the

Jewelry Guides in that they state that when an

industry product is marked as ‘‘silver plate’’ all

significant surfaces ‘‘shall have a plating or coating

of silver of a high degree of fineness and such

plating or coating shall be of substantial thickness.’’

16 CFR 19.2(b) (emphasis added). The Jewelry

Guides simply state that such a product should

contain a ‘‘plating or coating of silver which is of

substantial thickness.’’ The Jewelry Guides state

that ‘‘silver’’ means sterling silver (i.e., unless

qualified by the word ‘‘coin’’). Thus, the Jewelry

Guides appear to limit the use of ‘‘silver plate’’ to

sterling silver plate, whereas the Watch Band

Guides appear to allow coin silver to be used on

an item marked ‘‘silver plate.’’ Because no one

objected to the current provision in the Jewelry

Guides, the Commission has retained the provision

as it appears in the Jewelry Guides for both jewelry

and 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). The

one dissenter was the JCWA (216), which stated at

p.3 that ‘‘there is insufficient data to determine an

‘acceptable’ thickness of silver plating, and because

related ISO standards have not been established, it

is difficult to determine the durability of specific

levels of silver plating. Therefore, it is not practical

to define ‘durability’ in numerical terms. The

existing definition is appropriate.’’

151 G&B (30); Handy (62); Canada (209); and

MJSA (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 infra

for a discussion of these comments.)

The JVC also proposed that a vermeil

industry product only be represented by

the word ‘Vermeil’ standing alone,147

and proposed prohibiting use of the

words ‘‘gold’’ or ‘‘silver’’ to modify

‘‘vermeil.’’ However, no reasons were

offered as to why the terms ‘‘gold

vermeil’’ or ‘‘silver vermeil’’ would be

deceptive. The use of the terms ‘‘gold’’

and ‘‘silver’’ are covered by other

sections of the revised Guides, and the

Commission believes these sections are

adequate to prevent the deceptive use of

these terms in connection with vermeil.

Finally, the JVC suggested including a

requirement that when ‘‘vermeil’’ is

used as a quality mark, it must be

accompanied by the name or trademark

of the manufacturer or importer

according to the provisions of the

National Stamping Act. The National

Stamping Act creates such a

requirement for any quality mark

indicating the presence of gold or silver.

Thus, the requirements of the Act may

apply to a ‘‘vermeil’’ quality mark.

However, there is currently a Note in

the Guides, following the section

dealing with quality marks, referring to

the requirements of the National

Stamping Act. Instead of creating a

second note, the Commission has added

‘‘vermeil’’ to the list of quality marks in

that Note (and in § 23.9 of the revised

Guides).

3. Misrepresentation as to Silver

Content: § 23.6

Section 23.6(a) of the current Guides

cautions against misrepresenting the

silver content in any industry product.

The JVC proposed adding the

abbreviation ‘‘Ster.’’ to § 23.6(b) of the

Guides, which states that the use of the

terms ‘‘silver,’’ ‘‘solid silver,’’

‘‘Sterling,’’ or ‘‘Sterling Silver’’ is

deceptive unless the product is 925/

1000ths pure silver. Because consumers

are likely to believe this term stands for

‘‘Sterling,’’ the Commission has added

the abbreviation ‘‘Ster.’’ to this section.

The JVC proposed stating that

abbreviating the term ‘‘Sterling’’ was not

allowed when used to describe

hollowware or flatware. No reason was

offered for prohibiting this practice, and

the Commission has no reason to

conclude that this practice is inherently

unfair or deceptive.148 The JVC also

proposed stating that ‘‘Sterling’’ or

‘‘Ster.’’ was not allowed to be applied to

a silverplated article. This proposed

addition to § 23.6(b) essentially restates

§ 23.6(d) of the current Guides, which

states that it is unfair to apply the terms

‘‘Sterling’’ or ‘‘Coin’’ to any silver-plated

article or the plating thereon. In fact, the

National Stamping Act states that

silverplated articles shall not ‘‘be

stamped, branded, engraved or

imprinted with the word ‘sterling’ or the

word ‘coin,’ either alone or in

conjunction with other words or

marks.’’ 15 U.S.C. 297(a). However, the

Commission has determined that

§ 23.6(d) of the current Guides may

unnecessarily inhibit the use in

advertising of phrases such as ‘‘sterling

silver plated’’ or ‘‘coin silver plated.’’

Thus, the Commission has deleted

§ 23.6(d) and has added a Note referring

to the requirements of the National

Stamping Act.

Section 23.6(c) states that the use of

‘‘coin’’ is deceptive unless the product

is at least 900/1000ths pure silver. The

JVC proposed adding a prohibition

against abbreviating the term ‘‘coin.’’

There is no evidence that ‘‘coin’’ is

being abbreviated or, if it were, that it

would be misleading to consumers.

Accordingly, the Commission has not

adopted this proposal.

a. Silverplate. Section 23.6(e) of the

current Guides state that it is an unfair

trade practice to represent an industry

product as plated with silver unless all

significant surfaces are coated with

silver ‘‘which is of substantial

thickness.’’ 149 The JVC proposed

continuing the use of the ‘‘substantial

thickness’’ standard but adding a

footnote stating this means thickness

sufficient to assure durable coverage of

the base metal. (The current Guides

contain such a footnote in § 23.5(c)(2)

with respect to gold-filled items.) The

FRN solicited comment on whether this

addition should be made or whether the

thickness should be defined

numerically.

All but one of the 16 pertinent

comments indicated that giving a

numerical value to ‘‘substantial

thickness’’ would be desirable.150

However, four of these suggested that

additional data were needed.151

Moreover, only a few made specific

recommendations. Sheaffer noted that it

was ‘‘not aware of any problems

resulting from the current definition of

‘substantial thickness’’’ but nevertheless

proposed a coating five microns (200

millionths of an inch) thick. Mr.

Korbelak suggested 500 millionths of an

inch where it is functionally

necessary.152

The Gold Institute made detailed

recommendations, but only for silver

plated flatware and hollowware.153

However, without more evidence of the

need for, and desirability of, these

particular standards, the Commission

does not believe it is appropriate to

adopt specific standards for flatware

and hollowware. Moreover, the amount

of wear received by jewelry is different

from the amount of wear received by

flatware and hollowware. Therefore, the

proposed standards for flatware may not

be appropriate for jewelry. Indeed, the

amount of wear received by different

kinds of jewelry varies greatly (e.g.,

earrings as compared to bracelets) and

manufacturers may need flexibility in

any silver plate standard for jewelry.

Based on the comments, the

Commission does not believe that there

is currently a consensus in the industry

as to what would constitute an

appropriate minimum numerical

thickness for the purpose of identifying

a safe harbor for the term silverplate.154

However, the Commission has added a

note to § 23.6(e) to provide some

guidance to the industry regarding

‘‘substantial thickness’’ in connection
27192 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

155Rhodium, a member of the platinum group

metals, is very hard.

156Comment 13, p.2.

157Comment 250, p.5.

158Footnote 2 in the current Guides references

former Commercial Standard CS 51–35 (‘‘Marking

of Articles Made of Silver in Combination with

Gold’’) but only to note that it sets out exemptions

from an assay in quality. See discussion, infra,

regarding Commercial Standards generally.

159The VPS provides that articles where the gold

and silver are visually indistinguishable (e.g., where

the gold covers the entire article, or where white

gold is combined with silver) may be marked, e.g.,

‘‘Sterling and 1⁄5 10 K,’’ where the fraction

represents the proportion of the weight of the

alloyed gold to the weight of the entire metal in the

article. It also provides that the karat mark can only

be used if the gold alloy is 1⁄20 of the weight of the

entire metal in the article. For articles where the

gold and silver are visually distinguishable, the

karat mark must always follow the Sterling mark,

e.g., ‘‘Sterling and 10 K,’’ and there is no

requirement that the proportion of the weight of the

alloyed gold to the weight of the entire metal in the

article be disclosed. The JVC also proposed that

articles so marked must not contain any metal other

than Sterling silver and 10 karat or better gold.

160 In an advisory opinion, Marking of jewelry

produced from a 14 karat gold sheet laminated

upon sterling, 89 F.T.C. 651 (1977), the Commission

stated that the mark ‘‘Sterling and 14K’’ was

deceptive as applied to an article in which a 14K

gold sheet was laminated on sterling, and the gold

constituted at least 5% of the weight of the article.

The Commission noted that the different metals

were visually distinguishable ‘‘but casual

inspection cannot determine the relative thickness

of the gold layer and the silver.’’ Id. at 651. The

Commission stated that the suggested markings

‘‘could suggest to consumers that the amount of

gold and silver. . . are approximately equal or, at

least, would suggest more than five percent 14K

gold.’’ Id.

In an advisory opinion involving two visually

indistinguishable metals, Marking of 18 karat white

gold ring with platinum baguette prongs, 74 F.T.C.

1686 (1968), the Commission stated that a white

gold ring with platinum baguettes could not be

marked ‘‘18K—10% Plat.’’ The Commission

reasoned that ‘‘the consumer might conclude that

all of the prongs, including those for the center

stone, are of platinum composition. Under these

circumstances, it is not enough to merely say that

the ring contains 10% platinum and 90% gold

without disclosing the true composition of the

various parts of the ring.’’ Id. The Commission

suggested that the ring could be marked ‘‘18Kbaguette prongs Plat.’’

with the use of the term silverplate. This

note is similar to footnote 1 in the

current Guides, which annotates the use

of the phrase ‘‘substantial thickness’’ in

connection with ‘‘gold plate.’’

Finally, the JVC recommended adding

a section to the Guides that would allow

items with an inner core of base metal

to be referred to as sterling or coin

(instead of silverplate) as long as the

item as a whole contained 925 or 900

parts silver per thousand. A literal

reading of the sections of the current

Guides pertaining to sterling and coin

[§§ 23.6 (b) and (c)] indicates that this

practice is not currently perceived as

misleading. However, the actual

practice in most of the industry is only

to label an item sterling if it is a uniform

mixture throughout of 92.5% silver and

a base metal (or, for coin, 90% silver

and the rest base metal). Without more

information as to consumer beliefs, the

Commission is not adopting this

specific provision at this time.

b. Diffusion barrier on sterling silver.

The JVC recommended adding a note to

the Guides that states that a diffusion

barrier (typically of nickel) may be

electrolytically applied, in a thickness

of no more than 50/1,000,000ths of an

inch, under a layer of rhodium, to deter

premature tarnishing on sterling silver

products.155

Although this note refers to ‘‘sterling

silver products,’’ it follows the section

on silver plate, and it is unclear whether

this note is meant to apply to sterling

silver products or silver plated products

or both. In either event, the described

product would have no silver on the

surface, and thus, strictly speaking, it

would not fall within the definitions in

the Guides of either sterling silver or

silver plate. John Lutley, Executive

Director of the Silver Institute and

President of the Gold Institute, stated,

‘‘[s]ome jewelry manufacturers plate

pure silver over a nickel flash on

sterling silver to achieve a mirror finish

and reduce the rate of tarnishing.’’ 156

This may be the practice the note was

designed to address. However, in the

absence of adequate information on this

issue (e.g., how such products are

described to consumers), the

Commission has not included this Note

in the revised Guides.

c. Quality marks. The JVC proposed

adding three subsections dealing with

quality marks. Two subsections [23.6

Section I(g) and I(h) in the JVC petition]

reiterate the general provisions

concerning 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 not

restating these provisions in another

section.

The third proposed section dealing

with quality marks [section 23.6 Section

I (i) of the JVC petition] states that no

quality marks shall be used ‘‘other than

those herein specified.’’ The Franklin

Mint commented that this ‘‘inexplicably

prohibits use of such universally

recognized numerical terms as ‘.925’ in

conjunction with other applicable

quality marks such as ‘ster.’ or

‘sterling.’ ’’ 157 The Commission does not

believe that a marking such as ‘‘.925

ster.’’ is inherently deceptive, and is not

including this proposal in the Guides.

d. Tolerances and exemptions for

testing purposes. Footnote 2 of the

current Guides notes that the tolerances

of the National Stamping Act are

applicable to claims made with respect

to silver content. The JVC suggested

reorganizing this information, and the

Commission believes that this change

will be helpful to industry members

who are using the Guides. Footnote 2 of

the current Guides also refers to the

exemptions recognized in an assay for

quality (to determine the amount of fine

silver in the item which is assayed),

which are taken from Commercial

Standard CS 118–44 [Marking of Jewelry

and Novelties of Silver] and Commercial

Standard CS 51–35 [Marking Articles

Made of Silver in Combination with

Gold]. The JVC suggested identifying

these exemptions in an additional

subsection. Because the exemptions

apply to both silver and gold, and

because the lists of exemptions distract

from the main points of the text of the

Guides, the Commission has included

this information as an appendix to the

Guides. A Note following the silver

section refers to the Appendix. 4.

Marking of Articles Made of Silver in

Combination With Gold

The current Guides do not contain a

separate section addressing how

products which are a combination of

silver and gold can be nondeceptively

described. The JVC proposed including

in the Guides most of the text of

Voluntary Product Standard PS 68–76,

‘‘Marking of Articles Made of Silver in

Combination with Gold.’’ 158 The

proposed section defines the covered

products as sterling silver in

combination with gold.159

The JVC’s proposals, at least in the

case of products with distinguishable

components, result in markings that the

Commission has already identified as

deceptive.160 However, claims as to

silver content are covered by the silver

section and claims as to gold content are

covered by the gold section.

Furthermore, the marking of articles

which are a combination of silver and

gold is adequately addressed by

§ 23.8(a) of the current Guides. That

section provides that it is unfair to place

a quality mark on a product when the

mark would deceive purchasers as to

the metallic composition of the product

or any part thereof. Moreover,

subsection (a)(2) notes that, when a

quality mark applies to one part of a

product but not another part of a similar

appearance, it should be accompanied

by an identification of the part to which

it applies. The JVC offered no evidence

regarding why additional guidance on

these issues was needed or that any

combination gold and silver products
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27193

161The Franklin Mint (250) stated at p.4, that

there is no evidence that a gold karat mark is

misleading on a gold and silver item when the gold

constitutes less than 1⁄20 of the total metal weight.

Moreover, it also noted that the JVC did not propose

any such prohibition for vermeil products, ‘‘which

are but another form of gold and silver item. . . .’’

162Nowlin (109); LaPrad (181); Sheaffer (249); and

Leach (258).

163NACSM (219) p.7; Bales (156) p.9.

164Christopher R. Mellott, counsel for the Pewter

Guild, compiles voluntary statistical reports from

samplings of pewter manufacturers and, over the

period from 1983 to 1990, found a six-fold increase

in the value at wholesale of pewter jewelry sales.

165Comment 86, p.1.

166Comment 89 (also stating that pewter has been

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

167Stieff (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 for

pewter are: Fasnacht (4); Estate (23); G&B (30); Jabel

(47); Bales (156); Canada (209); Bruce (218); MJSA

(226); and Preston (229).

168The Watch Band Guides differ from the

Jewelry Guides with respect to quality marks in that

they 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 on

quality marks, reach the same practices by stating

that quality marks ‘‘include those in which the

words or terms ‘gold,’ ‘karat,’ ‘silver,’ ‘platinum,’ (or

platinum related metals), or their abbreviations, are

included, either separately or as suffixes, prefixes,

or syllables.’’ The Commission has added this

sentence of this Note to the introductory paragraph

of this section in the revised Guides (§ 23.9). The

Commission does not believe it is necessary to add

the words duragold, diragold, noblegold, and

goldine to the examples of quality marks listed in

current § 23.8.

169This is consistent with the references to such

marks in the National Stamping Act, which applies

to articles ‘‘having stamped, branded, engraved, or

printed thereon, or upon any tag, card, or label

attached thereto, or upon any box, package, cover,

or wrapper in which said article is incased or

inclosed, any mark or word indicating or designed

or intended to indicate’’ the degree of fineness of

the gold or silver in the article. 15 U.S.C. 294. A

quality mark does not have to be placed on a

product, but, if it is, it must be accurate within the

tolerances prescribed by the National Stamping Act.

15 U.S.C. 294–296. The National Stamping Act goes

beyond embossing quality marks on products to

things 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 that

deceived consumers as to their metallic

content.161

Finally, the JVC’s proposal to permit

quality marks only for sterling and gold

items is unduly restrictive. For example,

an article made of coin silver combined

with gold could not contain a quality

mark under the JVC proposal, nor could

an article which contains any metal

other than sterling silver or gold. For all

these reasons, the Commission has not

included in the Guides, the proposed

provisions relating to articles made of

silver in combination with gold.

5. Platinum: § 23.7

Section 23.7 of the current Guides

states that it is an unfair trade practice

to use the words ‘‘platinum,’’ ‘‘iridium,’’

‘‘palladium,’’ ‘‘ruthenium,’’ ‘‘rhodium,’’

or ‘‘osmium,’’ or any abbreviations

thereof, in a way likely to deceive

purchasers as to the true composition of

the product. The JVC and a number of

commenters proposed changes to this

section. However, the Commission

recently received a request for an

advisory opinion from the JVC and

Platinum Guild International for

markings of platinum products. This

request indicated that members of the

platinum industry are interested in

simplifying current Commission

guidance regarding platinum

descriptions and bringing this guidance

into closer accord with international

standards. The comments submitted in

response to the FRN do not address

some of these issues. Therefore, the

Commission has decided that it would

be beneficial to solicit additional

comment from the entire industry on

markings and descriptions of platinum

products before making any changes in

this section. A request for comment on

these issues will be published in a

separate Federal Register notice.

6. Pewter

The current Guides do not pertain to

products made from pewter. The JVC

recommended including a section on

pewter and the FRN solicited comment

on whether the guides should include a

provision, and whether the standard of

any alloy consisting of at least 900 parts

per thousand Grade A Tin is

appropriate.

Thirty comments addressed this issue,

and most thought pewter should be

included in the Guides and that the

proposed standard was appropriate.

Four opposed the change, stating that

the Guides should only address

precious metals.162 One comment stated

that there was no apparent need for

regulation of pewter but another stated

that there are ‘‘many companies that are

abusing the representation of pewter

products.’’ 163

It appears that pewter has been

increasingly utilized in costume or

fashion jewelry. Nellie Fischer of the

American Pewter Guild advised staff in

a telephone interview that over the past

five years her company’s sales of pewter

jewelry to the trade have increased by

40 percent.164 Pewter jewelry and other

pewter products are sold by at least

some of the same entities that sell other

products covered by the current Guides.

The Commission has concluded that

inclusion of a provision for pewter may

prevent misrepresentations.

With respect to the proposed

standard, Salisbury Pewter stated that

‘‘a 90% tin requirement is justified by

the metallurgical restraints for strength

and hardness.’’ 165 The American Pewter

Guild, a trade association, attached a list

of historical references to pewter which

indicate that pewter has virtually

always had a tin content of at least

90%.166 Ten pewter producers also

supported the proposed standard.167

Because pewter has historically

contained at least 90% tin, consumers

presumably expect pewter to have the

qualities that are associated with an

alloy containing at least 90% tin. Thus,

the Commission has included a section

on pewter in the Guides. Section 23.8(a)

states that it is unfair and deceptive to

describe a product as ‘‘pewter’’ if the

description misrepresents the product’s

true composition. Section 23.8(b) states

that a product may be described as

‘‘pewter’’ if it contains at least 90% tin,

with the remainder composed of metals

appropriate for use in pewter.

7. Additional Guidance Relating to

Quality Marks: § 23.8

The JVC proposed several changes in

§ 23.8 of the current Guides. The

introductory paragraph of this section

defines ‘‘quality mark’’ and gives

specific examples of words (e.g., ‘‘gold,’’

‘‘karat,’’ ‘‘silver,’’ etc.) that are

considered to be quality marks. (As

noted previously, the Commission has

added the word ‘‘vermeil’’ to this list of

words that constitute quality marks.) 168

Part (a) of this section addresses the

use of quality marks on articles that are

made from more than one metal. The

JVC suggested that the title be changed

from ‘‘Deception as to applicability of

marks’’ to ‘‘Deception as to application

of marks’’ and that a definition of

application be added. The definition of

application suggested by the JVC

includes bills, invoices, orders,

statements, letters, and advertisements.

However, this definition is

inappropriate in the context of part (a)

of this section, which is limited to

deception in the use of quality marks,

which do not encompass bills, invoices,

etc. The term ‘‘quality mark’’ is defined

as a mark ‘‘which has been stamped,

embossed, inscribed, or otherwise

placed, on any industry product and

which indicates or suggests that such

product is composed throughout of any

precious metal or any alloy thereof or

has a surface or surfaces on which there

has been plated or deposited any

precious metal or any alloy thereof.’’ 169

Section 23.8 contains specific guidance

for marks on the products themselves
27194 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

170There is no requirement that there be a quality

mark; however, it may be deceptive to place an

illegible mark on a product, because consumers

might interpret such a mark to mean the product

is of higher quality than it actually is.

171The Watch Band Guides differ from the

Jewelry Guides in their treatment of quality marks

in two respects (in addition to that discussed in

note , supra). Section 19.2(g)(3) of the Watch Band

Guides, dealing with the marking of watch bands

composed of two metals of similar appearance, is

adequately addressed by § 23.8(a) of the current

Jewelry Guides, discussed above. Section 19.2(g)(1)

of the Watch Band Guides provides that if a quality

mark is concealed by packaging, it should appear

on the outside of the packaging if the failure to so

display it would deceive consumers. The Jewelry

Guides do not require that products contain quality

marks and, thus, do not require that a quality mark

be visible in spite of packaging. The Commission

believes it is neither unfair nor deceptive to fail to

include a quality mark; hence, it is neither unfair

nor deceptive to allow packaging to conceal a

quality mark. Thus, the Commission has not

included this provision in the revised Guides.

172The Guides contain no exemptions for

products which are never assayed. This includes

products made of gold or silver electroplate. (Such

articles are not sold with the representation that

they contain a specific percent by weight of

precious metal.)

173The current Guides use the Appendix to list

and classify the Guides. The JVC proposed placing

this material first as a Table of Contents. The

Commission believes that the existing list of section

numbers and titles in the table of contents is

sufficient and has omitted this classification from

the revised Guides.

174 In addition, because the revised Guides cover

items other than jewelry, the exemptions are stated

as applying to industry products, not to jewelry

industry products.

The JVC proposed exemptions from assay for

optical products, which are based on the VPS, with

some additions. There were no comments opposing

this proposal, and the Commission has included

this list of exemptions for optical products in the

Guides.

175Comment 196, p.2.

176 Id.

177 Id.

178Silver is relatively soft. Hence, it is logical for

the exemptions for gold-filled items to apply also

to silver items.

179Comment 88, p.1.

180Footnote 2 to current Guides.

181Comment 218, p.3.

(or attached thereto). Other sections of

the Guides apply to claims made in

bills, invoices, orders, statements,

letters, and advertisements. Thus, the

Commission has not included the

proposed definition of application in

the Guides.

Part (b) of this section addresses

deception by reason of the difference in

the size of letters or words in quality

marks (e.g., GOLD electroplate). A Note

following this section, entitled

‘‘Legibility of markings,’’ recommends

that quality marks be of sufficient size

to be legible and be so placed as to be

likely to be observed. The JVC has not

suggested any changes to this section, or

to the Note following it. The

Commission agrees that the portion of

the Note pertaining to legibility should

remain unchanged.170 However, the

second sentence of the Note implies that

quality marks should normally be

engraved on products and that tag or

labels can only be used when ‘‘such

marking cannot be achieved without

injury to the appearance of the

product.’’ The National Stamping Act

indicates that quality marks can be

applied by means of tags or labels,

regardless of whether engraving would

damage the product. The Commission

has therefore modified this Note to

clarify the fact that if a quality mark is

used, it may be either engraved on the

product or placed on a tag or label.

The second Note following this

section currently states that it is the

consensus of the members of the

industry that quality marks on such

items should be accompanied by

identification of the manufacturer,

processor, or distributor. The

Commission has changed this Note to

reference the requirements for

identification contained in the National

Stamping Act.171

8. Exemptions From Assay

Some functional parts of gold alloy,

gold-filled, silver and platinum items

may need to be made of other sturdier

metals to function properly, and thus,

are exempt from any assay for quality.

(An assay is a test made to determine

the quantity of precious metal in a

product compared to the weight of the

whole product.) The current Guides

include the exemptions for these parts

that are set out in the various Voluntary

Product Standards. Since trade practice

for many years has been to make such

parts of base metals, it is unlikely that

consumers would expect them to be

made of precious metal; hence, a claim

that an item was silver would not be

deceptive because the screws and rivets

were made of base metal.

The current Guides list the

exemptions for gold and gold-filled

items in section 23.5(e) and (f) and for

silver and for silver in combination with

gold, in footnote 2.172 However, the

Commission believes that detailed

listings of the exemptions need not

appear in the body of the Guides and

has included the list of exemptions for

all covered metal products in an

Appendix.173

The list includes all exemptions from

the current Guides and, based on the

comments, includes some additions.174

Tru-Kay stated that there is a significant

inconsistency in the Guides between the

exemptions recognized in the

manufacture of gold-filled jewelry and

those which are exempted in the

manufacture of silver jewelry. Tru-Kay

stated that ‘‘industry trade practice over

many years has been to apply the

exemptions as listed for gold-filled to

both gold-filled and sterling silver,’’

because the same reasons that certain

parts are exempt in gold-filled jewelry

are also applicable in silver jewelry.175

Tru-Kay explained that when the

exemptions were first written, ‘‘many

articles that were being produced in

gold-filled, were not at that time being

produced in sterling silver.’’ 176 Since

this is no longer the case, Tru-Kay urged

that ‘‘these exemptions be standardized

in a consistent manner.’’ 177 The

Commission agrees with this proposal

and has expanded the list of exemptions

for silver items to include all

exemptions listed for gold-filled

items.178

General Findings, which makes small

functional components of jewelry,

suggested that there should be two

additions to the gold exemptions.179

First, it suggested the exemptions for

karat gold jewelry include ‘‘metallic

parts completely encased in nonmetallic

covering.’’ This would include basemetal pegs used in gluing pearls or

stones to the findings. (According to

General Findings, ‘‘the pegs are

completely encased within the stone or

pearl.’’) The current Guides exempt

‘‘metallic parts completely encased in

nonmetallic covering’’ when they are

included in articles made of silver in

combination with gold.180 On the basis

of the comment, the Commission has

determined that such parts should be

added to the list of exemptions for gold

alloy jewelry (and to the list of

exemptions for silver items, under the

rationale advanced by Tru-Kay). The

second suggestion was that ‘‘bracelet

and necklace snap tongues, i.e., clasps’’

(sometimes referred to as springs)

should be added to the exemptions for

rolled gold plate jewelry. Bracelet and

necklace snap tongues are already an

exemption for articles made of

platinum, and the Commission has

added this to the list of exemptions for

rolled gold plate jewelry (and to the list

of exemptions for silver items).

Donald Bruce also suggested that the

mechanical parts of lockets be added to

the lists of exemptions for silver and

gold alloy jewelry. These are already in

the list of exemptions for gold-filled

jewelry (which exempt ‘‘field pieces and

bezels for lockets’’), and Bruce stated

that ‘‘the trade practice has interpreted

this for Silver and Gold as well’’

because a base metal hinged frame

‘‘offers stability and strength to the

moving parts.’’ 181 Adding these to the

list of exemptions for silver is logical

because silver is relatively soft. Gold
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27195

182As a result, the list of exemptions in the

current Guides is much shorter for gold items than

for silver items.

183The following were added to each list of

exemptions: (1) karat gold: metallic parts

completely and permanently encased in a

nonmetallic covering, and field pieces and bezels

for lockets; (2) gold-filled: bracelet and necklace

snap tongues; (3) silver: field pieces and bezels for

lockets; bracelet and necklace snap tongues; any

other joints, catches, or screws; metallic parts

completely and permanently encased in a

nonmetallic covering. There were no additions to

the exemptions for silver in combination with gold

or for platinum.

184AGTA (49) p.15 (commenting that either

information should be added to the proposed JVC

definition or the last sentence of that definition and

the following Note should ‘‘be struck,’’ adding that

‘‘AGTA prefers that both be struck from the

guides’’); NACSM (219) pp.25–26 (stating that the

proposed addition to the definition is ‘‘not an

improvement on the clarity of the mandates of the

law’’).

185Comment 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 diamonds

can be called perfect, ‘‘it would open vast

opportunities for deceptive advertising and many

consumers would be hurt’’); Argo (17); AGS (18) p.3

(favoring the prohibition because ‘‘[t]he potential

for 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’’ should

not 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 word

as ‘‘mere puffing.’’ One comment noted, ‘‘‘Perfect’

pertaining to anything is a dumb word and should

arouse suspicion.’’ Jabel (47) p.2.

189One comment stated that limiting the use of

the term ‘‘perfect’’ as a synonym for ‘‘flawless’’ to

those situations in which the diamond described is

not ‘‘of inferior color or make’’ is meaningless

because ‘‘inferior color or make’’ cannot be defined.

Limon (235) p.2. The Commission agrees that the

definition is not precise, but nevertheless believes

that the word can be used in a non-deceptive

manner.

alloy, however, is relatively hard.182

Nevertheless, because trade practice has

interpreted this exemption as applying

to gold lockets for some time, it is

unlikely that consumers would believe

that the field pieces and bezels of a

locket advertised as 14 karat gold were

14 karat gold. Therefore, the

Commission has added these

exemptions to the list of exemptions of

silver 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 of

the terms ‘‘corrosion proof,’’

‘‘noncorrosive,’’ ‘‘corrosion resistant,’’

‘‘rust proof,’’ ‘‘rust resistant,’’ or any

word or term of equivalent import. The

JVC did not recommend any changes in

this section. Thus, the Commission has

included this provision, unchanged, in

the revised Guides as the last section

pertaining to metals (§ 23.10).

D. Diamonds (Category III): §§ 23.9–

23.14

The current Guides address diamonds

in the definition section, § 23.0, and in

§§ 23.9–23.14. Section 23.9 describes

practices which are unfair uses of the

word ‘‘diamond.’’ Sections 23.10–23.14

deal with misuse of the terms ‘‘perfect,’’

‘‘blue white,’’ ‘‘properly cut,’’

‘‘brilliant,’’ ‘‘full cut,’’ and ‘‘clean.’’ In

addition, artificial coloring, imitation

and synthetic diamonds, and the words

‘‘reproduction,’’ ‘‘replica,’’ ‘‘gem,’’

‘‘real,’’ ‘‘genuine,’’ and ‘‘natural’’ are

addressed in §§ 23.18–23.21.

1. Definition

The Commission has moved the

definition of ‘‘diamond’’ from § 23.0 to

the beginning of the substantive sections

that deal with diamonds (§ 23.11, which

is renamed ‘‘Definition and misuse of

the word ‘diamond’ ’’). The JVC

proposed adding the following sentence

to the definition of the word diamond:

‘‘It is the hardest natural substance and

in 1818 was arbitrarily given 10 on the

Mohs relative scratch hardness scale.’’

The JVC also proposed adding, after the

definition of diamond, a ‘‘Note’’

regarding the Mohs scale and the

standards for determining mineral

‘‘hardness.’’

A definition of diamond is helpful to

the extent that it makes clear what can

nondeceptively be represented to be a

diamond. However, there is no

indication that the current definition of

diamond has ever failed to serve its

purpose, and some comments indicated

the current definition is better.184 The

Commission, therefore, is not adopting

this proposal.

The Postal Service stated that mail

order jewelry promoters sell ‘‘tiny,

unattractive, industrial grade

diamonds’’ as jewelry which ‘‘no one

would buy if they saw them.’’ It

suggested that the Guides be modified to

prohibit ‘‘advertisers from representing

expressly or impliedly, that industrial or

other non-jewelry quality diamonds are

of jewelry quality.’’ 185 The Commission

agrees that such a practice is unfair and

deceptive, and has included a Note that

states the practice of advertising

industrial grade diamonds as jewelry is

unfair and deceptive. The provision

advising against misrepresenting

products visually, in § 23.2, also would

apply to this practice.

2. Misuse of the Word ‘‘Diamond’’

Section 23.9 of the current Guides

deals with misuse of the word

‘‘diamond.’’ Neither the JVC nor any of

the commenters proposed a change in

this section, and there is no other

information indicating a need for

changing this section.

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

‘‘Flawless’’

Section 23.10 of the current Guides,

and the accompanying Note, deal with

the use of the words ‘‘perfect’’ and

‘‘flawless’’ to describe a diamond. The

JVC proposed revising this section to

focus on the use of the term ‘‘flawless,’’

with a subsection stating that it is unfair

to use the word ‘‘perfect’’ with respect

to any diamond which is not flawless,

or which is of inferior color or make.

The organization of the current section

is convoluted and difficult to

understand. The Commission has

determined that the proposed change

will improve the clarity of the Guides,

and has revised this section accordingly.

To determine whether there was

evidence that the term ‘‘perfect’’ has

been used to mislead consumers, the

FRN sought comment on whether the

Guides should advise against use of the

term ‘‘perfect.’’ Thirty-two comments

addressed this issue.

Seven comments indicated that the

term ‘‘perfect’’ is acceptable as defined

in the current Guides.186 Twenty-eight

commenters stated that the term

‘‘perfect’’ should be prohibited, and one

stated it should be allowed only as a

synonym for flawless.187 However, the

current Guides allow diamonds to be

called ‘‘perfect’’ if they are flawless and

not of inferior color or make, and there

is no evidence that large numbers of

consumers have been deceived by the

use of the word ‘‘perfect.’’ 188 The

Commission has determined that the

scheme in the current Guides

adequately explains the type of

diamond that nondeceptively may be

described as ‘‘perfect’’ and that

guidance that in effect totally bars the

use of the word ‘‘perfect’’ would be an

unwarranted infringement on free

speech.189

The JVC also proposed changing

current § 23.10 to state that it is unfair

to use the word ‘‘flawless’’ to describe

a diamond ‘‘which discloses blemishes,

inclusions, lasering, prominent

reflective whitish or colored grain lines,

or clarity faults of any sort when

examined under a corrected magnifier at

10-power, with adequate illumination,

by a person skilled in diamond

grading.’’ With the exception of the

addition of ‘‘lasering,’’ the changes

appear to be simply a change in

terminology. No reasons for the changes
27196 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

190Preston (229) stated, at p.10, that the word

‘‘internal’’ should precede the word ‘‘lasering’’ in

this section, apparently to clarify that ‘‘lasering’’ in

this section is not meant to include the use of lasers

to cut diamonds but rather the use of lasers to

remove blemishes. The Commission agrees with

this comment and has included this clarification in

the revised Guides.

191 ICT (189) also suggested, at p.2, a modification

of § 23.10, i.e., that the word ‘‘flawless’’ should

always be accompanied by the magnification level

at which no flaws are visible [for example,

‘‘flawless under 15X loupe’’]. However, there is no

evidence that such detailed information is material

to consumers.

192Eisen (91) stated, at p.1, that ‘‘commercially

flawless’’ should not be allowed but did not offer

any reasons.

193The JVC also proposed adding a Note that

states that the term ‘‘internally flawless’’ may be

used to describe a diamond ‘‘which meets the

requirements set forth . . . but possesses only

minor surface blemishes such as grain lines, polish

or burn marks, scratches, nicks, or small naturals.’’

No reasons were offered for this change. However,

Lannyte (65) p. 5, stated ‘‘Do not play games with

the word ‘internally.’ Any surface blemish has to

exist on or in the surface to exist at all.’’ Based on

this comment, and the lack of other explanation for

this provision, the Commission has not included

this Note in the Guides.

194 ISA (237A) proposed, at p.53, changing

‘‘internal use of laser beam’’ to ‘‘the penetration of

a laser drilling technique and/or acid bath(s) which

is customarily used by the trade to change the color

of ‘black’ inclusions to ‘white.’’’ It also suggested

that ‘‘infusion of any foreign substance’’ should be

followed by the words ‘‘fracture filled.’’ However,

the Commission believes that the words used in the

JVC proposal adequately identify the processes that

are 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.

197Comment 26, pp.1–2.

198Comment 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 World

Federation of Diamond Bourses require strict

punishment of a member who fails to disclose

treatment of a diamond, such as irradiation or

infusion of a foreign substance. See the text of the

joint resolution of the World Federation of Diamond

Bourses and the International Diamond

Manufacturers Association, as described in the

in terminology are apparent (e.g.,

changing the terms ‘‘flaws, cracks,

carbon spots, clouds or other blemishes

or imperfections’’ to ‘‘blemishes,

inclusions, lasering, prominent

reflective whitish or colored grain lines,

or clarity faults’’). Thus, the

Commission has not adopted these

changes. However, the numerous

comments which addressed lasering of

diamonds in the context of a related JVC

proposal, discussed below, indicate that

lasering leaves channels or surface

openings in a diamond that are similar

to grains or other clarity faults. The

Commission believes that it would be

deceptive to describe a diamond that

discloses internal lasering under the

conditions specified in that section as

‘‘flawless,’’ and therefore has revised

this section.190

The Commission also has included

the JVC’s descriptions of when the flaws

are visible—i.e., ‘‘when examined under

a corrected magnifier at 10-power, with

adequate illumination, by a person

skilled in diamond grading.’’ This is an

updating of the current Guides (which

refer to an examination ‘‘in normal

daylight, or its equivalent, by a trained

eye under a ten-power, corrected

diamond eye loupe or equal magnifier’’)

to reflect changes in available

equipment.191

In the current Guides, the Note

following § 23.10(a) also states that the

use of a phrase such as ‘‘commercially

perfect’’ for a diamond that has flaws is

‘‘regarded as misleading and in

violation of this section.’’ The JVC

proposed expanding this portion of the

Note to also cover the phrase

‘‘commercially flawless.’’ 192 The

Commission believes that the provision

in the revised Guides, which applies to

use of the words ‘‘perfect,’’ ‘‘flawless,’’

or ‘‘any representation of similar

meaning,’’ is sufficient to prevent

deception. The current Note is

superfluous, and the Commission has

deleted it.193

Section 23.10(b) states that it is unfair

to describe a ring or other article of

jewelry with a ‘‘perfect’’ center stone

and side stones which are not ‘‘perfect,’’

as ‘‘perfect,’’ without disclosing that the

description applies only to the center

stone. The JVC proposed modifying this

to apply to representations that stones

are ‘‘flawless,’’ and also proposed

changing the reference to ‘‘center stone

or stones’’ to ‘‘principal diamond or

diamonds.’’ Such a change

appropriately includes jewelry in which

the principal stone is not the center

stone.

4. Disclosure of Treatments

Section 23.18 of the current Guides,

entitled ‘‘Deception as to precious and

semi-precious stones,’’ contains a Note

which states that any artificial coloring

or tinting of a diamond or precious or

semi-precious stone by ‘‘coating,

irradiating, or heating, or by use of

nuclear bombardment, or by any other

means’’ should be disclosed and the fact

that the coloring is not permanent, if

such is the fact.

The JVC proposed moving the portion

of this section that applies to diamonds

into the diamond category, modifying it

to apply to any diamond that has been

treated (rather than colored) by certain

methods, and adding the following

treatments to this list of those that

should be disclosed: the internal use of

a laser beam, the introduction or the

infusion of any foreign substance, or

treatment ‘‘by any other means, without

disclosure of the fact that the inherent

quality and/or appearance of such

diamond has been enhanced, and the

result of this enhancement is not or may

not be permanent, if such is the

case.’’ 194

Internal laser treatment and the

infusion of a foreign substance are

treatments that did not exist in 1959

when the Guides were last substantively

revised. A laser treatment involves the

use of a laser beam to improve the

appearance of diamonds having black

inclusions by directing the laser beam at

the black inclusion and then forcing

acid through the tunnel made by the

laser beam to remove the inclusion or to

alter it so that the inclusion is not

visible to the naked eye. ‘‘Infusion’’

treatment, also known as ‘‘fracturefilling,’’ conceals cracks in diamonds by

filling them with a foreign substance.

Thirteen comments opposed the

disclosure of laser treatment stating that

it is ‘‘a common practice’’ and ‘‘an

extension of cutting, since soaking out

surface black leaves no evidence of

soaking. The channel left by the laser is

often just one of several or numerous

‘natural’ cracks, inclusions, or grain.’’ 195

Verstandig stated that the other

treatments which the JVC proposed

should be disclosed ‘‘are hardly-if at allnoticeable under a 10X magnification’’

but that lasering is obvious under such

magnification. It also noted that while

lasering produces a small surface

opening, the majority of diamonds sold

in the U.S. have similar surface

imperfections, and disclosure of these is

not required.196

DMIA noted that lasering is

‘‘irreversible, does not add a foreign

substance, is readily detectable with a

ten power loupe, and does not require

disclosure any more

than * * * cutting an additional facet

to improve the purity of a diamond.’’ It

also noted that GIA, which it described

as a world-renowned diamond grading

lab, refuses to grade diamonds infused

with a foreign substance but does grade

lasered diamonds, indicating on the

grading report ‘‘inclusions, naturals,

extra facets, as well as lasering.’’ 197 In

addition, it noted that resolutions have

been adopted on ‘‘a world-wide basis

requiring full disclosure of any

‘‘treatment’’ of diamonds such as

irradiation which changes the color and

atomic structure or the infusion of a

foreign substance which produces a

product no longer a pure diamond, but

a ‘‘composite’’ material.’’ It stated that

‘‘[l]asering, on the other hand, is not a

‘‘treatment’’ * * * .’’ 198
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27197

Rapaport Diamond Report, July 17, 1992, p.5

(attached to Rapaport (233)).

199Rapaport Diamond Report, July 17, 1992, p.6,

attached to Rapaport (233); see also Preston (229)

p.3; ISA (237A) p.51.

200Rapaport 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 all

disclosure of diamond treatments, and did not

specifically discuss fracture-filling. Best (225)

opposed all the changes proposed by the JVC, but

stated that fracture-filling ‘‘may justify some future

study and potential regulation by the FTC.’’

202 International Harvester Co., 104 F.T.C. 949,

1051 (1984). NACSM (219), at p. 26, pointed out

that the process can sometimes be reversed by heat.

For example, it is not uncommon for a diamond to

be remounted and the heat from that process may

partly melt out the foreign material used to fill the

fracture. This adversely affects the appearance of

the diamond and it may not be possible to remove

the 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 describe

the color of a diamond. As frequently abused, it

includes anything from a Jager to a Silver

Cape. . . . [n.b., Jager refers to a fine white diamond;

Silver Cape is a yellow one.] Better Business

Bureaus recommend avoidance of the term and the

American Gem Society prohibits its use.’’ ‘‘Jewelers’

Dictionary’’ 28 (3d ed. 1976). However, the

proprietor of Solid Gold (261) stated, at p.2, that he

has seen ‘‘many diamonds which are accurately

described as having a bluish-white color.’’

204Rapaport (233) p. 2 (stating that the ‘‘guides

should not outlaw any terminology used by the

trade’’ but instead should define it ‘‘so that it is not

misleading’’).

205 ISA (237A) recommended, at p.53, the

addition of a definition of ‘‘normal north daylight’’

and an addition which would limit the use of the

term blue white to ‘‘a diamond which is totally

natural and free from any man induced treatments

which exhibits a partially white body color and a

partially blue body color. . . . The term blue body

color is not to be blue caused by visible

fluorescence . . . ’’ However, no evidence was

provided that either of these additions were

necessary, and the Commission has not included

them in the Guides.

206 This section does allow certain other cuts

(emerald, pear-shaped, heart-shaped, oval-shaped,

and marquise) meeting the above-stated facet

requirements to be described as ‘‘brilliant cut’’ or

‘‘full cut’’ if ‘‘disclosure is made of the fact that the

diamond 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 (which

differ from ISA’s proposed numerical standards)).

208 Comment 230, p.5. AGL also suggested that

the Guides state that it is unfair for any diamond

or colored stone quality assessment reports or

appraisals to fail to contain adequate tolerance

information for each element that impacts on the

value. Id. at 4. However, the Commission believes

such a proposal, which would involve providing

guidance on the manner in which appraisers and

graders prepare reports, is beyond the scope of

these Guides.

209 Comment 230, p.5. Preston (229) stated, at p.6,

that ‘‘AGS attempts to train its members to specify

cutting grades rather precisely. GIA, on the other

hand, does not specify a cutting grade at this time.’’

On the other hand, one comment

contained an attachment that argued

that internal lasering should be

disclosed because it adversely affects

the value of the diamond.199 The

attachment stated that lasered stones are

inferior because they ‘‘are worth less

than normal non-lasered stones of the

same grade.’’ It further stated that a

diamond purchaser who is unaware of

the lasering, will be upset ‘‘when the

appraisal indicates laser treatment, or

upon resale when the buyer offers a

lower price due to lasering.’’ 200

However, the comments (including

eleven comments from diamond dealers

and a diamond trade association)

indicated that lasering is a common

practice and not an extraordinary

process that would be deceptive to

conceal from the consumer. Moreover, a

consumer acting reasonably under the

circumstances would be on notice of

laser treatment before sale. A grading

report would indicate that the diamond

had been laser-cleaned, and, if the buyer

chose to examine the diamond under

standard ten-power magnification, the

laser tunnels would be obvious to the

buyer. Thus, the Commission has

determined not to include lasering

among the treatments that always

should be disclosed to avoid misleading

consumers.

By contrast, twelve of the thirteen

comments that opposed disclosure of

lasering stated that the fracture-filling

process is a treatment of a diamond that

should be disclosed to the consumer.201

As previously noted, several of these

comments stated that the rules of the

World Federation of Diamond Bourses

require disclosure of fracture-filling.

Because fracture-filling is not the norm

or what consumers acting reasonably

under the circumstances would expect,

it would be deceptive to fail to disclose

fracture-filling. Consumers will not

likely expect, in the absence of

disclosure, that the stone was so treated.

Thus, the absence of disclosure is also

unfair in that it is likely to cause injury

to consumers by affirmatively

misleading their informed choice and so

causing substantial, unavoidable injury

that is not outweighed by any

countervailing benefits.202 Accordingly,

the revised Guides advise sellers to

disclose this treatment.

The JVC also proposed that this

section require the disclosure of

treatment of a diamond ‘‘by any other

means.’’ However, the Commission

believes that phrase is sufficiently vague

to imply, for example, that removal of

blemishes by lasering always should be

disclosed, and thus, has not included

this phrase in the section.

5. ‘‘Blue White’’: § 23.11

Section 23.11 of the current Guides

prohibits the use of ‘‘blue white’’ to

describe a diamond ‘‘which under

normal, north daylight or its equivalent,

shows any color or any trace of color

other than blue or bluish.’’ The JVC

proposed prohibiting the use of this

term.

The term ‘‘blue white’’ has apparently

been misused in the past to describe

poorer quality or ‘‘off color’’

diamonds.203 The use of blue white

appears to have diminished because

most of the industry now uses formal

diamond grading systems. One

comment suggested that ‘‘blue white’’ be

restricted to ‘‘a diamond that has strong

blue fluorescence and is of the D–G

color range [in the GIA grading

system].’’ 204 However, the current

Guides describe a proper use of bluewhite and discourage its misuse. The

Commission therefore has retained this

section of the Guides.205

6. Cuts of Diamonds and ‘‘Clean

Diamonds’’: §§ 23.12– 23.14

Section 23.12 of the current Guides

states that it is unfair to describe a

diamond as ‘‘properly cut,’’ ‘‘well

made,’’ or ‘‘modern cut’’ or words of

similar meaning, if it is ‘‘lopsided, or so

thick or so thin in depth as materially

to detract from the brilliance of the

stone.’’ Section 23.13 restricts the use of

the terms ‘‘brilliant,’’ ‘‘brilliant cut’’ or

‘‘full cut’’ to a round diamond having at

least 56 facets.206

The JVC did not propose any changes

to these sections, but several comments

did propose revisions. Two comments

proposed certain numerical standards

for describing ‘‘properly cut’’

diamonds.207 AGL proposed that the

Guides state that it is unfair for ‘‘a

diamond quality assessment report to

itemize a series of percentages and nonintegrated cutting details without

reference to a meaningful and

comprehensive evaluation of cutting in

order to facilitate a consumer’s

understanding of these critical value

components.’’ 208 However, AGL also

indicated that such reports do not

usually contain such an evaluation of

cutting.209 No other comments

addressed this issue. Because there is

insufficient information in the record to

evaluate the proposals, the Commission

has not changed these sections.

Section 23.14 states that it is unfair to

use the terms ‘‘clean,’’ ‘‘eye clean,’’

‘‘commercially clean,’’ ‘‘commercially

white,’’ or similar terms to mislead or

deceive consumers. The JVC did not

propose any changes to this section.

Unlike other provisions of the Guides,

this section does not provide guidance

regarding the use of these terms, other
27198 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

210 Rapaport (233) stated, at pp.2–3, that the

terms ‘‘clean,’’ ‘‘eye clean,’’ and ‘‘commercial

white’’ are ‘‘regularly used by the diamond trade to

describe diamonds,’’ noting specifically that the

term ‘‘eye clean’’ is ‘‘commonly used to describe

diamonds that do not have inclusions that are

visible to the naked eye.’’

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

212 Limon (235) p.3 (stating that the proposal

‘‘was inspired by a nationally published

advertisement for an item containing a diamond

weighing ‘.25 pt.’[which was] universally misread

as ‘.25 ct.’’’); Skalet (61) p.4 (stating that

‘‘considerable deception has been leveled at the

consuming public to make a ‘point .25 carat’ or ‘.25

point’ gemstone appear to be describing a 1⁄4 carat

gemstone’’); Bedford (210) p.2 (stating ‘‘I have had

some people come in thinking they were going to

win a .25ct. diamond and they were actually getting

a .025 point diamond’’); Bruce (218) p.10 (noting

that ‘‘we have seen advertisements where people

confuse points with carats (pt. with ct.)’’).

213 Honora (15); Lannyte (65); NACAA (90); and

Postal 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 fractional

definitions of diamond weights as used in the past.’’

However, other comments (discussed below), stated

that fractions are currently in wide use, and are not

deceptive.

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 read

it as 0.25 ct.’’).

219 However, one comment noted that problems

also occur in television advertising. Sibbing (5) p.1

(stating ‘‘No more ‘quarter point diamonds’ as can

be found on TV advertisements’’).

220Apparently the proposal was limited to new

products because, as one comment noted, ‘‘it is

impossible to get exact measurements of a diamond

weight 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 carat

should be exempt [Skalet (61) and ArtCarved (155)],

and one stated that the minimum weight

information should only be required on the invoice

[Honora (15)].

222 Argo (17); Schaeffer (211); NACSM (219);

Service (222); Best (225); Sheaffer (249); and

Franklin (250). (Solid Gold (261) also opposed this

provision, but apparently did not understand that

it would only apply to new jewelry.) Several of

these comments stated that this requirement would

increase costs.

223Comment 81, p.2.

than to state that they should not be

used to deceive purchasers. Although

one comment indicated that these terms

are still in use,210 the Commission has

concluded that the admonition in § 23.1

not to misrepresent material

characteristics of a product adequately

encompasses misrepresentations

regarding these terms. Therefore, the

Commission has deleted this provision

from the Guides.

7. Proposals Relating to Diamond

Weight

a. Misrepresentation of weight.

Section 23.16 of the JVC petition deals

with misrepresentations of diamond

weights, an issue which is not

specifically addressed in the current

Guides. The JVC’s proposed preamble to

this section states that the standard unit

of weight for diamonds is the carat,

defines the terms carat and point, and

states that the abbreviation for carat is

ct. The Commission has not included

this preamble in the revised Guides. As

discussed below, the Commission has

included a provision relating to the use

of ‘‘points’’ in the revised Guides, and

that provision contains an explanation

of the meaning of ‘‘carat’’ and ‘‘point.’’

The JVC suggested adding a section

stating that it is unfair to misrepresent

the weight of a diamond. Section 23.1

of the current Guides provides that it is

unfair to misrepresent various material

characteristics of industry products,

including weight. However, the

Commission has included this

admonition against misrepresenting the

weight of diamonds in section 23.17 of

the revised Guides, and has provided

additional guidance for diamond weight

representations in that section, as

discussed in detail below.

b. Use of ‘‘points’’. The JVC, in section

23.16(a), proposed that a section be

added to the Guides stating that the use

of the term ‘‘points’’ 211 to represent the

weight of a diamond is unfair except ‘‘in

direct conversations.’’ In some

instances, according to the comments,

consumers perceive a representation

that a diamond is ‘‘.25 pt.’’ to mean ‘‘.25

ct.’’ 212 The latter is 1⁄4th carat; the

former (.25 pt.) is 1/400th carat. To

obtain more information about this

issue, the FRN asked whether the use of

‘‘points’’ to describe diamond weights

should be limited to oral

representations.

Thirty-five comments addressed this

issue. Four comments, including ones

from the Postal Service and NACAA,

supported eliminating use of the term

‘‘points’’ in either oral or written

representations.213 Twenty-two

comments supported limiting the use of

the term ‘‘points’’ to oral

representations.214 Nine comments

stated that the use of the term should be

permitted in written as well as oral

representations, contending that the

term can be used in writing in a manner

that is not unfair or deceptive.215

One comment noted that ‘‘points’’ is

‘‘a term that the layman is not familiar

with.’’ 216 The Postal Service favored a

prohibition, stating that, in many

situations, consumers do not actually

see the jewelry before purchasing it, and

the term point (i.e., .25 pt.) is used to

misrepresent the value of a diamond.217

The comments clearly believe that the

term ‘‘pt.’’ is being used to deceive the

public, particularly in mail order

transactions.218 The deception described

in the comments appears to arise

primarily when the abbreviation for

point (‘‘pt.’’) appears in writing.219

Nevertheless, the term ‘‘point,’’ with

adequate disclosure, could be used in a

non-deceptive manner. Therefore, the

Commission has added a provision to

the Guides which states that if the term

‘‘point’’ is used in advertising

(including television) or in point of sale

materials to describe the weight of a

diamond, the weight should also be

given in decimal parts of a carat (e.g.,

.25 pt. is .0025 ct.). The admonition to

include the carat weight in decimals

should deter sellers from attempting to

mislead consumers. Furthermore, § 23.2

of the Guides addresses the use of

misleading visual representations of

diamonds.

c. Disclosure of minimum total

weight. The JVC also proposed adding

provisions to the Guides stating that it

is unfair to fail to mark new industry

products containing one or more

diamonds with the minimum weight of

the diamonds in the product and that it

is unfair to refer to the weight of a

diamond or diamonds in advertising for

new industry products without

disclosing the minimum total weight.220

The FRN solicited comment on this

proposal.

Thirty-nine comments addressed this

issue. Thirty-one comments approved

marking jewelry, or tags or invoices

attached to it, with the minimum weight

of the diamonds set in it.221 Eight

comments opposed the proposal.222

Generally, the comments indicated a

belief that marking new jewelry with the

minimum diamond weight would

prevent misrepresentation of weight by

the manufacturer or other sellers farther

down in the line of commerce. GIA

stated that there was a tendency for

‘‘multistone rings and other jewelry sold

as a given weight to weigh less than the

indicated weight,’’ especially where the

ring is not stamped with the minimum

weight.223 GIA further stated that ‘‘[i]n

our experience, if the total weight is

stamped on the jewelry, the

manufacturer usually makes sure that
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27199

224Comment 81, p.2. AGS (18) p.2 (stating, ‘‘The

market place is replete with purveyors of diamond

jewelry who overstate the total carat weight of

multi-diamond items’’).

225Comment 90, pp.1–2.

226 Indeed, if this practice is unfair or deceptive

for ‘‘new’’ jewelry, logically it is also unfair or

deceptive for ‘‘old’’ jewelry and for jewelry

containing gemstones other than diamonds. LaPrad

(181) p.2, and Limon (235) p.4, each suggested that

the weight marking requirement should apply to

colored stones as well as diamonds.

227This figure is exclusive of comments that

simply favored all the changes suggested by the

JVC.

228Bruce (218); Limon (235); and Schwartz (52).

229NACSM (219); Service (222); Diamonique

(224); Best (225); MJSA (226); Rapaport (233); and

NRF (238) submitted individual comments. The

other 74 were form letters. In the interest of brevity,

the 74 commenters are listed here by their comment

number 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.

230Rapaport (233) p.4. Diamonique (224) pp.1–2

(stating that current measuring devices are not

adequate and the present tolerance is .01 carat). But

see Fasnacht (4) p.2 (stating that weighing is fast

and accurate with today’s electronic scales).

231Commission staff interviewed 5 jewelers

(Boone and Sons Jewelers, Fleisher Jewelers, Kings

Jewelry, Loubons, and Jewelry by Design) in the

Washington area about what kind of scales they use.

No store utilized a scale that was not accurate

enough to meet the proposed .005 carat tolerance.

Staff also interviewed Ben Fine, who sells Melter

Scales; Gaston Lopez, a sales representative of

Gemological Institute of America, which sells

several different makes of scales; and a

representative from Dendritic Scales. All confirmed

that they sell scales that are accurate to within 1⁄2

point.

232 Comment 226, p.8.

233Comment 226, p.8. NACSM (219) pp.20–21

(explaining that rough diamonds ‘‘are purchased

most often from DeBeers * * * [and] sold to

manufacturers * * * in parcels containing certain

grade and quantities such as ‘one fifths,’ ‘quarters,’

‘one thirds,’ ‘halves,’ ‘carats,’ etc. The fractions refer

to the approximate sizes of the diamonds contained

in the parcels’’); Goldman (60) p.3 (stating that the

international market ‘‘sells as a fifth of a carat,

goods (diamonds) from 18 to 23 points’’).

234Comment 218, pp.2–3 (also stating that ‘‘if

people in the trade buy a single stone they will pay

for it by its exact weight’’).

235Comment 222, p.3. Numerous comments also

indicated that there would be high demand for

stones close enough to the fractions to be

designated as fractions, and other stones could not

be used by mass retailers. ‘‘If retailers were no

longer allowed to sell 18 points as a fifth, then what

would happen to all the 18 and 19 pointers * * *?’’

Goldman (60) p.2. London Star stated, ‘‘This

standard would considerably lessen the availability

of stones within each size and therefore drastically

increase the price to the consumer.’’ Comment 20,

p.2. Of course, diamond weights can be, and often

are, expressed in the decimal system. However, the

mass marketers, for the reasons described above,

state that it is more efficient for them to describe

diamond weights as fractions.

236Attachment B to NACSM (219). Best (225)

pp.4–5 (stating that these standards ‘‘have been

widely used and accepted for many years and have

effectively become the national and international

industry standard’’); NACSM (219) p.11 (stating that

these GIA ranges ‘‘merely recognize industry

standards which have resulted from longstanding

accepted custom and usage’’).

237Attachment B to NACSM (219). The booklet

notes that the ranges ‘‘may vary slightly from one

firm or organization to another.’’ Id. This is borne

out by the comments.

the weight is accurate,’’ and believed

that ‘‘requiring stamping of a minimum

weight on the jewelry (particularly in

combination with trademark stamping)

would provide a strong deterrent against

underweighting diamond content.’’ 224

NACAA commented that its members

received complaints about exaggeration

of the weights of stones (not limited to

diamonds) and stated that it would be

‘‘helpful to consumers’’ for the Guides

to require marking of minimum total

weight on new items.225 However, the

Guides already state that it is unfair to

misrepresent the weight of a diamond

(or any other jewelry). Moreover, none

of the comments explained why it

would be unfair or deceptive to fail to

mark new jewelry containing diamonds

with the minimum total weight of the

diamonds, nor is there any obvious

reason why a failure to so mark the

jewelry, or to include this in

advertising, would be unfair or

deceptive.226 Therefore, the Commission

has not included this provision in the

revised Guides.

d. Weight tolerance. The JVC also

proposed adding provisions to the

Guides setting forth specific tolerances

for diamond weight representations.

The JVC proposed in sections 23.16(c)–

(e) of its petition, a tolerance of .005

carat for weight representations for

individual diamonds, whether mounted

or unmounted, and a tolerance of .01

carat for weight representations

pertaining to ‘‘two or more diamonds in

a single product.’’ This proposal

generated 84 comments.227 Three

comments specifically supported the

JVC’s proposed tolerance.228 Eighty-one

commenters opposed the proposed

tolerances.229

One comment stated that the

proposed tolerance was too small

because few diamond scales are so

finely calibrated, and that the tolerance

should be .01 ct.—one hundredth of a

carat.230 However, Commission staff

telephoned several companies, and

determined that most have scales that

can weigh diamonds to .005 carats.231

Numerous other comments opposed

the tolerances because they would

increase the cost of sorting diamonds,

raise the price of diamonds for highvolume manufacturers, and increase

prices for consumers. MJSA explained

that high-volume manufacturers sieve

rather than weigh individual stones, and

that the proposed tolerance would

require manufacturers to ‘‘weigh, tag,

and flute the stones to be incorporated

in a piece of jewelry.’’ 232 MJSA stated

that ‘‘the added costs of this procedure

would be reflected in the price of the

finished article and be passed on to the

consumer.’’ 233

Although Bruce supported the

proposed tolerance and opposed the use

of fractions to describe diamond

weights, it noted that ‘‘fractional

diamond sizes are a convenience for the

industry, in the trading of loose stones,’’

and that ‘‘keeping track of diamond

sizes for tagging purposes would require

a little more care and planning, but it

can be done.’’ 234

Many commenters stated that the

current industry practice is to use

fractions to designate weights of less

than a carat, and that there is a standard

tolerance for such fractional

representations. Service explained that

chain retailers use fractions to advertise

diamonds so that specific prices can be

given for specific weights. Service

explained that the proposed tolerance

would be costly because it ‘‘would

narrowly and unreasonably limit the

range of weights available for particular

fractions of a carat.’’ 235 For example, a

fifth represents 20 points and under the

JVC’s proposed tolerances, only

diamonds that weigh at least 19.5 points

could be described as a fifth. Several

commenters stated that they used the

standards contained in the GIA

publication, ‘‘Diamonds 3.’’ 236 This

1986 GIA booklet, states, at p.19, that

‘‘approximate weights are often stated in

fractions,’’ and it sets out a chart stating

the average weight range associated

with the various fractions (i.e., 1⁄5 carat

refers to .18 through .22 carat).237

Best noted that under the GIA

tolerances, a diamond can be sold as

half a carat if it weighs between .47 and

.56 carats, but that the proposed

tolerances would require it to weigh at

least .495 carats. Best stated that under

the JVC proposal it would be forced to

either select stones that fall within the

tolerances, so that prices for the size

could be advertised, or to treat each

stone individually, and not provide

price information regarding the stones

in advertising. It explained that because

there is a limited supply of stones that

fall within the JVC’s proposed

tolerances, demand will escalate for

these stones and the cost of the stones

will increase. Therefore, ‘‘[j]ewelers like

Best would no longer be able to offer a

consistently lower price alternative to

the traditional high margin jewelers.’’

Instead, Best would be forced to ‘‘price,

mark and sell each item individually,’’

which is the philosophy of a boutique
27200 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

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 a

piece of jewelry with multiple diamonds is too

restrictive . . . [because] we show a piece of

diamond jewelry in our catalog and order backup

items after the catalog is mailed.’’ Ross-Simons

further stated that for pieces containing several

carats of diamonds, with multiple stones, a .01 ct.

deviation is unrealistic, and would require it to

either ‘‘understate the weight to be safe or

overcharge the consumer.’’ Comment 67, p.1.

241 GIA booklet, p.19, attached as Exh. B to

NACSM (219).

242 Some mass retailers stated that they already

provide the weight ranges in their catalogs and/or

at 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 include

a better definition of the word ‘‘nacre’’ because it

would ‘‘eliminate misinterpretations of the term

therefore 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 the

JVC’s proposed definition of ‘‘pearl’’ and ‘‘imitation

pearl’’).

246 Comment 238, p.1; NACSM (219) p.27 (stating

that the definitions ‘‘seem unnecessary’’).

jeweler, and ‘‘contrary to the way a mass

merchandiser operates.’’ 238

Several comments suggested

alternatives to the JVC proposal. MJSA

suggested ‘‘a broader minus tolerance

which is expressed in proportional

terms rather than as an absolute

quantitative measurement.’’ 239 RossSimons suggested a tolerance of 5% or

.05 carat for a piece with multiple

diamonds, whichever is smaller.240

The Commission agrees with the

comments that state that the proposed

tolerance may be too restrictive and may

result in an increased cost to the

consumer. However, consumers may not

interpret a claim that a diamond is half

a carat as meaning that it falls within

the range set out in the GIA booklet. In

fact, the GIA booklet states: ‘‘Customers

also think in terms of fractions, but they

tend to expect a half-carat stone to

weigh exactly 0.50 carat.’’ 241

Furthermore, diamonds are so

expensive that receiving a diamond that

is even a few points less than what was

represented can be a significant loss to

the consumer. In this respect it appears

that at least for some industry members,

current practice may be contrary to

consumers’ expectations and may not

adequately apprise consumers of the

terms of the seller’s offer (i.e., that

jewelry advertised with 1⁄5 carat

diamonds is actually offered as jewelry

with 1⁄5 carat weight, plus or minus

some tolerance the seller is using).

However, the Commission believes

that a fractional representation of carat

weight may be qualified so that it is

neither unfair or deceptive. For

example, if a claim such as ‘‘1⁄2 carat’’

is accompanied by a disclosure of the

weight range that is used, it does not

imply precision to the level of 0.005

carat. A decimal representation of carat

weight, such as ‘‘0.47 carat,’’ does imply

accuracy to the level of the second

decimal place—i.e., .005 carat.

Therefore, the level of tolerance

applicable to a diamond weight claim

depends on the type of claim that has

been made.

Thus, the revised Guides clarify that

representations of diamond weight

should indicate the weight tolerance

that is being used. If diamond weight is

stated as decimal parts of a carat, the

stated figure should be accurate to the

last decimal place. If a fractional

representation is used to describe the

weight of a diamond, the fact that the

diamond weight is not exact should be

conspicuously disclosed in close

proximity to the fractional

representation, and the range of weight

for each fraction should also be

disclosed. A Note following this section

(23.17) explicitly states that, for claims

made in catalogs, the disclosure should

appear on every page where the claim

is made, but that the disclosure may

refer to a chart or other detailed

explanation of the actual ranges used.

(For example, ‘‘Diamond weights are not

exact; see chart on p.X for ranges.’’) 242

These provisions also provide guidance

for making weight representations for

items with multiple stones.

e. Misrepresentation of weight of

diamonds combined with other

gemstones. Finally, one comment

suggested that a provision be added to

the Guides stating that it is unfair to

represent the combined weight of two or

more gemstones of different gemological

varieties in any new single product as

‘‘total gemstone weight’’ or words of

similar import, without disclosing with

equal conspicuity the combined weight

of the gemstone of each gemological

variety in the products.243

However, the phrase ‘‘total gemstone

weight’’ does provide notice that the

weight given applies to all gemstones in

the item, not just the most expensive.

Thus, the Commission does not believe

that a representation of ‘‘total gemstone

weight’’ would inherently be unfair or

deceptive. Consumers interested in a

breakdown by gemstone category would

be put on notice by the statement ‘‘total

gemstone weight’’ that further inquiry is

needed.

E. Pearls (Category IV): §§ 23.15–23.17

The current Guides address pearls in

the definition section, § 23.0, and in

§§ 23.15–23.17. Section 23.15 describes

practices which are unfair uses of the

word ‘‘pearl.’’ Section 23.16 describes

unfair uses of other terms, such as

‘‘cultured pearl,’’ ‘‘Oriental pearl,’’ and

‘‘natura.’’ Section 23.17 describes unfair

practices involving false, misleading, or

deceptive statements about cultured

pearls, including the manner in which

they are produced and the thickness of

the nacre coating. In addition,

provisions in §§ 23.20 and 23.21,

pertaining to the misuse of certain

words (real, genuine, natural, gem,

reproduction, replica, and synthetic)

apply to pearls. The changes proposed

by the JVC and by certain commenters

are discussed below.

1. Definitions

a. Modifications of existing

definitions. The Commission has

moved the definitions relating to pearls

from § 23.0 to the beginning of the

substantive sections that deal with

pearls (§ 23.18). The JVC proposed

changes (in section 23.17 of its petition)

in the three definitions pertaining to

pearls (‘‘pearl,’’ ‘‘cultured pearl,’’ and

‘‘imitation pearl’’) that currently appear

in the Guides. No reasons were offered

for changing the current definitions, and

there was no allegation that they were

inaccurate or caused any problems.

Four comments addressed the

proposed changes in the definitions.

The National Retail Federation stated

that cogent definitions for the three

basic types of pearls ‘‘are lacking’’ in the

JVC petition.244 Three comments

suggested changes in the JVC’s proposed

definitions, but did not explain why it

is necessary to change the definitions in

the current Guides, nor state that any

misconceptions have occurred.245

Definitions are helpful to the extent

that they make clear what can

nondeceptively be represented to be a

pearl, a cultured pearl, or an imitation

pearl. There is no indication that the

definitions of the three types of pearls

in the current Guides have ever failed to

serve this purpose. Consequently, the

Commission has not changed these

definitions.

b. Additional proposed definitions.

The JVC proposed adding eleven new

definitions of types of pearls to the

Guides. The JVC offered no reason for

adding definitions of these terms to the

Guides, nor did it allege that these terms

had been used to deceive consumers.

The National Retail Federation noted

that there are three basic types of pearls

(natural, cultured, and simulated) and

that the definition section proposed by

the JVC ‘‘is unnecessarily detailed and

confusing.’’ 246 The Commission has
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27201

247 Finlay implied that retailers may be

describing fresh water cultured pearls as simply

‘‘fresh water pearls’’ and objected to requiring

advertisers to use ‘‘cultured’’ for fresh water pearls,

stating, ‘‘consumers have come to associate the term

‘cultured pearls’ with round pearls and that to use

the term ‘cultured’ in conjunction with irregularly

shapen [sic] fresh water pearls would create

confusion.’’ Comment 253, p.2.

248 Rapaport Diamond Report, July 17, 1992, p.24,

attached to Comment 233 (noting that the South Sea

pearls are the product of a different oyster than

Japanese 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 officially

called Myanmar, but there are other countries such

as Malaysia, Indonesia, and Thailand in that region

which 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 tissue

or the adductor muscle of cultured pearl-bearing

mollusks. These tiny non-nucleated pearls are byproducts of cultured pearls. The term ‘Keshi’ also

refers to the bigger pearls without nuclei that are

spontaneously formed in mollusks which bear

South Sea cultured pearls and freshwater cultured

pearls’’).

252 Comment 193, p.8 (defining ‘‘Keshi pearl’’ as:

‘‘A non-nucleated pearl, usually less than 2

millimeters in size, that may be formed by an oyster

in addition to the cultured product during the

process of cultivation’’).

253 Comment 29, p.2 (defining ‘‘Keshi pearl’’ as:

‘‘A formation of some nucleated baroque shape

pearls that grow ‘accidentally.’ The invasion of a

foreign body (such as a nucleus shell or mantle

tissue) stimulates the mollusk and induces

abnormal production of nacre that forms to create

‘keshi’ pearls’’).

254Comment 240, p.6 (‘‘A pearl produced by

means of manufacture characterized by a formation

of layers obtained from guanine crystals, an organic

substance from the scales of ocean fish around a

nucleus.’’).

determined to include additional

definitions in the Guides, as discussed

below, only where there are specific

reasons for doing so.

i. Definitions proposed by the JVC.

The only apparent purpose for five of

the proposed definitions appears to be

to emphasize the fact that a cultured

pearl (or whatever specific type of

cultured pearl) must be described as a

cultured pearl. The JVC proposed

definitions, with accompanying sections

regarding the use of the term

‘‘cultured,’’ for the following pearls:

Mabe cultured pearl, black pearl and

black cultured pearl, natural color, fresh

water pearl 247 and sweet water pearl.

However, § 23.15 of the current Guides

already states that it is unfair to use the

unqualified word ‘‘pearl’’ to describe

anything other than a natural pearl and

that it is unfair to use the word ‘‘pearl’’

to describe a cultured pearl ‘‘unless it is

immediately preceded, with equal

conspicuity, by the word ‘cultured’ or

‘cultivated,’ or by some other word or

phrase of like meaning and connotation,

so as to indicate definitely and clearly

that the product is not a pearl.’’ Because

there is no information indicating a

problem with these terms, or the

adequacy of the existing provision, the

Commission is not including these

definitions in the Guides.

South Sea pearls: The JVC suggested

the following definitions for South Sea

pearls: ‘‘A natural pearl found in the salt

water mollusks of the Pacific Ocean

South Sea Islands, Australia and

Burma.’’ It suggested that a South Sea

cultured pearl be defined as a cultured

pearl ‘‘found in the salt water mollusks

of the Pacific Ocean South Sea Islands,

Australia and Burma.’’ There was

comment suggesting that there is a

market for South Sea cultured pearls,

and that such pearls are quite valuable.

An article attached to the Rapaport

comment stated that South Sea cultured

pearls ‘‘have come to challenge the

supremacy of the Japanese akoya

[cultured pearls] in quality * * *. The

South Sea pearls have a strong market

because of one particular feature that

makes them attractive: size.’’ 248 The

CPAA stated that it frequently receives

complaints that imitation pearl

companies are using foreign names to

confuse consumers.249

The Commission therefore has revised

the Guides to state that it is unfair or

deceptive to represent a pearl or a

cultured pearl as being a South Sea

pearl when such is not the case. This

statement, which includes a definition

of the term, is included in section

23.20(g) of the revised Guides.250

Oriental pearl: The meaning of the

term ‘‘Oriental pearl’’ is clear in the

current Guides. There is no evidence

that the lack of a separate definition has

caused any confusion or resulted in any

misuse of the term. There was no

comment pertaining specifically to this

proposed definition. Thus, the

Commission has not included a separate

definition in the Guides.

Blister pearls: The JVC suggested

definitions for ‘‘blister pearl’’ and

‘‘cultured blister pearl’’ and proposed a

section stating that it is unfair to use the

term blister pearl unless it is a pearl

which meets the definition (i.e., a pearl

‘‘often hollow and irregular in form’’).

There is no evidence that blister

pearls are more valuable than other

pearls or that the term ‘‘blister pearl’’ is

being used to deceive consumers.

Moreover, misrepresentations of the

word ‘‘pearl’’ are adequately covered in

the Guides. The Commission therefore

is not including the definitions relating

to blister pearls in the Guides.

Seed pearl: Section 23.16(b) of the

Guides states that it is unfair to use the

term ‘‘seed pearl’’ or any similar term to

describe any cultured or imitation pearl.

The JVC proposed defining seed pearl

as: ‘‘A small, natural pearl which

measures approximately two

millimeters or less.’’ In a related portion

of its petition, the JVC proposed a

section that states that it is unfair to

describe a cultured or simulated pearl as

a seed pearl without using a qualifying

term such as ‘‘cultured,’’ ‘‘simulated,’’

‘‘artificial,’’ or ‘‘imitation.’’

The proposed definition and related

section would indicate it is not

deceptive to describe cultured and

artificial pearls as seed pearls, if

qualified appropriately, whereas the

current Guides appear to inhibit this.

The Commission has concluded that

this is a useful change because it allows

products that consumers might wish to

purchase (i.e., cultured or artificial seed

pearls) to be accurately described.

ii. Definitions suggested by other

commenters. Keshi pearls: A & Z Pearls,

CPAA, and AGTA proposed that a

definition of ‘‘Keshi’’ pearls be added to

the Guides.251 A & Z Pearls and CPAA

also proposed adding two more

definitions relating to ‘‘Keshi’’ pearls

(Keshi pearl, Sweet Water or Freshwater

Keshi pearl, and South Sea Keshi pearl.)

CPAA stated the word ‘‘Keshi’’ has been

used in recent years ‘‘as a product name

for seed pearls derived by accident as a

by-product of the pearl cultivation

process.’’ CPAA proposed adding the

term to the Guides ‘‘to further define

what is and what is not a cultured

pearl.’’ 252 A & Z Pearls stated, ‘‘There is

a lot of debate in the trade as to whether

‘‘Keshi’’ pearls should be considered

natural pearls. Like natural pearls, they

grow accidentally, but they form in

mollusks that are cultivated by man.’’ 253

The Commission believes that the JVC

proposal—i.e., allowing the term

‘‘cultured seed pearl’’ to be used to

describe very small pearls that grow in

mollusks cultivated by man—is an

appropriate solution to this issue.

However, there is no reason that the

term ‘‘Keshi’’ could not also be used to

refer to these pearls as long as it is not

used to deceive consumers. There is no

evidence that the term ‘‘Keshi’’ is being

used to deceive consumers, and thus,

the Commission has not included the

term in the Guides at this time.

Organic pearl: Majorica suggested

adding a definition for ‘‘organic

pearl.’’ 254 This definition would permit

Majorica pearls to be called ‘‘organic’’

rather than ‘‘imitation.’’ An article

attached to Majorica’s comment noted

that ‘‘to the untrained eye, Majorica

imitation pearls look very much like
27202 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

255 ‘‘Majorica Imitation Pearls,’’ Gems and

Gemology 185 (Fall 1990), attached to Comment

240.

256The article notes that ‘‘pearl essence’’ (i.e.,

guanine crystals) was discovered in the late 17th

century. Id. at 181. It states that ‘‘the process used

to produce most other imitation pearls involves

dipping or painting the beads with a resin; thus,

these imitations lack the iridescence of the Majorica

product and its cultured counterpart.’’ Id.

257Comment 240, p.5.

258Russell (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.

265The comments discussing the use of the word

‘‘faux’’ are discussed in more detail infra.

266The JVC did suggest that subsection (b), which

relates to the term ‘‘seed pearl,’’ be modified to

allow the use of the term ‘‘cultured seed pearl’’ or

the terms ‘‘simulated,’’ ‘‘artificial,’’ or ‘‘imitation

seed pearl.’’ As noted above, the Commission has

concluded that this change is useful and has

included it in the revised Guides.

267Comment 193, p.6.

268 Id.

saltwater cultured pearls.’’ 255 The

article, authored by employees of the

Gemological Institute of America, also

implies that some other brands of

imitation pearls, like Majorica pearls,

are made from guanine crystals,

although there may be other differences

in the manufacturing process that make

Majorica imitation pearls superior to

most other imitation pearls.256

Majorica states that the current system

of classification (i.e., pearl, cultured,

and imitation) ‘‘has narrowed the

market for MAJORICA pearls as a real

alternative to so-called cultured pearls’’

and ‘‘gives an unfair advantage to the

cultured pearl industry.’’ 257 One

commenter noted that most cultured

pearls today have only a small

percentage of nacre (the iridescent

coating), unlike pearls from 40–50 years

ago. Thus, cultured pearls today may

not look very different from imitation

pearls.258

Majorica’s suggestion, however,

involves renaming items that the public

has for many years known as imitation

pearls. This seems likely to provide

more rather than less opportunity for

deceiving consumers. NACAA noted,

for example, that ‘‘consumers may be

particularly confused by the many

varieties of natural, cultured, and

imitation pearls.’’ 259 Moreover, two

commenters noted that consumers

currently confuse Majorica pearls with

real or cultured pearls.260 Accordingly,

the Commission is not including a

definition of ‘‘organic pearls’’ in the

Guides.261

2. Misuse of the Word ‘‘Pearl’’

Section 23.15 of the current Guides

deals with misuse of the word pearl.

Section 23.15 (a) states that it is unfair

to use the unqualified word ‘‘pearl’’ to

describe anything other than a natural

pearl, and § 23.15(b) states that it is

unfair to use the word ‘‘pearl’’ to

describe a cultured pearl unless it is

qualified by the word ‘‘cultured’’ or

‘‘cultivated,’’ or a word of similar

import, to indicate that the product is

not a pearl. The JVC did not propose

any changes in these two sections.

Section 23.15(c) states that it is unfair

to use the word ‘‘pearl’’ to describe an

imitation pearl unless it is immediately

preceded, with equal conspicuity, by

the word ‘‘imitation’’ or ‘‘simulated,’’ or

by some other similar word or phrase.

The JVC proposed adding the word

‘‘artificial’’ to this section. NACAA

stated that the Guides should ‘‘require

artificial pearls to be clearly labeled

using one standard term.’’ It preferred

the terms ‘‘imitation’’ or ‘‘artificial,’’

instead of ‘‘simulated,’’ because

‘‘consumers are more likely to

understand what those words mean.’’ 262

The word ‘‘artificial’’ clearly indicates

that a product is not a natural pearl.

Thus, the Commission is including this

term in the Guides as another example

of a term (along with simulated) that can

be used to describe imitation pearls.

CPAA suggested that the Guides

include a section that states that it is

unfair ‘‘to use the terms ‘faux pearl,’

‘fashion pearl,’ ‘Mother of Pearl’ or any

other proper name or noun term alone

when describing or qualifying an

imitation pearl product without

including the words ‘imitation’,

‘simulated’ or any other term of similar

connotation within the same product

description and with equal

conspicuousness.’’ CPAA stated that the

use of these terms ‘‘has been the number

one marketing and advertising tool in

the sale of imitation pearl products

across the U.S.’’ CPAA explained that

‘‘many customers can not tell the

difference between the products by sight

alone,’’ and that ‘‘[w]ithout proper

product designations such as natural,

cultured and imitation, customers are

often misled as to the true nature of the

product that they are buying.’’ 263 With

respect to ‘‘faux’’ generally, NACAA

stated that ‘‘we do not believe that most

consumers know what it means’’ and

the Postal Service stated that ‘‘the term

‘faux’ has been used to confuse

unsophisticated consumers and enhance

the apparent value of their costume

jewelry.’’ 264

As noted, the Guides currently state

that it is unfair to describe an imitation

pearl as a pearl without a qualifier such

as ‘‘imitation.’’ Although the Guides

permit sellers to use terms other than

imitation as long as they ‘‘indicate

definitely and clearly that the product is

not a pearl,’’ based on information from

CPAA, the Postal Service, and NACAA,

it appears that the terms faux pearl,

fashion pearl, and Mother of Pearl are

inadequate to convey to a substantial

group of unsophisticated consumers

that the items are imitation pearls.

Accordingly, the Commission has

revised the Guides to state that it is

unfair or deceptive ‘‘to use the terms

‘faux pearl,’ ‘fashion pearl,’ ‘Mother of

Pearl,’ or any other such term to

describe or qualify an imitation pearl

product unless it is immediately

preceded, with equal conspicuousness,

by the word ‘artificial,’ ‘imitation,’ or

‘simulated,’ or by some other word or

phrase of like meaning, so as to indicate

definitely and clearly that the product is

not a pearl.’’ 265

The JVC also proposed adding a new

subsection (d) which states that it is

unfair to use the word ‘pearl’ with an

asterisk which references to a footnote

explaining that the product is an

imitation or cultured pearl. This

proposal is similar to a Note currently

in section 23.15 of the Guides. However,

section 23.15(c) states that the word

‘‘pearl’’ should be ‘‘immediately

preceded’’ by a qualifying word such as

‘‘imitation’’ or ‘‘cultured,’’ if the item is

not a natural pearl. The Commission

believes that this language advises

sellers about how to avoid a deceptive

use of the term ‘‘pearl.’’ The current

Note is superfluous and the Commission

has deleted it.

3. Misuse of Other Terms

a. Proposed changes to existing

subsections. Section 23.16 of the current

Guides consists of six subsections

describing several terms that can only

be used to describe specific types of

pearls. The JVC did not suggest any

changes in these sections.266

The only comment on these sections

referred to § 23.16(e), which states that

it is unfair to use the word ‘‘natura’’ or

any similar word to describe a cultured

or imitation pearl. CPAA suggested the

words ‘‘natural,’’ ‘‘nature’s,’’ and

‘‘organic’’ be ‘‘added to the list of words

that cannot be used to describe an

imitation pearl product.’’ 267 CPAA

explained that these words have been

used to describe imitation pearls, and

argued that they ‘‘only serve to confuse

the consumer and retail buyer as to the

proper origin and intrinsic value of an

imitation product.’’ 268
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27203

269Comment 240, pp.6 and 11. The section

requested by Majorica would limit the use of

‘‘organic’’ to any pearl other than an imitation pearl

made from guanine crystals. Id. at 7.

270Attachment to comment 49.

271Comment 193, p.6. 272Comment 193, p.7.

273Comment 193, p.7.

274Comment 193, p.8; comment 49, p.15.

275Comment 193, p.6.

On the other hand, Majorica requested

that the Guides be revised to add a

section stating that pearls made from

guanine crystals can be described as

‘‘organic’’ pearls. It stated that

elimination of the word ‘‘organic’’

would eliminate ‘‘the only real

competition which cultured pearls have

in this country.’’ 269 However, for the

reasons stated above, the Commission

has concluded that describing pearls

made from guanine crystals as ‘‘organic’’

pearls is likely to mislead consumers.

Nevertheless, there is a difference

between the words ‘‘natural’’ and

‘‘nature’s’’—neither of which can

inherently be used in a nondeceptive

manner with respect to imitation

pearls—and the word ‘‘organic.’’ The

Commission believes that the word

‘‘organic’’ could be used, with adequate

qualification, to describe Majorica

pearls in a truthful manner. For

example, in its ads, Majorica describes

its pearls as ‘‘organic man-made pearls’’

that consist of a translucent nucleus

‘‘coated with layers of pearlized

essence, an organic material extracted

from marine species.’’ 270 Thus, the

Commission has revised § 23.16(e) of

the current Guides to indicate that it is

unfair or deceptive to use the term

‘‘natural’’ and ‘‘nature’s’’ to refer to an

imitation pearl. The Commission also

has added a sentence to this section

stating that it is unfair or deceptive to

use the term ‘‘organic’’ to refer to an

imitation pearl unless the term is

qualified in such a way as to make clear

that the product is not a natural pearl.

The JVC suggested adding the word

‘‘cultura’’ to § 23.16(f) of the current

Guides, which states that it is unfair to

use the word ‘‘kultured’’ or any similar

word to describe an imitation pearl.

However, the section as currently

written prohibits the use of ‘‘any other

word, term, or phrase of like meaning

* * * .’’ The word ‘‘cultura’’ is very

similar to ‘‘kultured.’’ Thus, § 23.16(f)

already provides adequate guidance on

how to avoid deceptive representations.

However, CPAA stated that terms such

as ‘‘semi-cultured pearl,’’ ‘‘culturedlike,’’ ‘‘part-cultured,’’ and ‘‘pre-mature

cultured pearl,’’ have been used to

describe imitation pearls, and argued

that they ‘‘only serve to confuse the

consumer and retail buyer as to the

proper origin of an imitation

product.’’ 271 The Commission has

determined that these terms are

deceptive when applied to imitation

products and has included them in

§ 23.16(f) of the current Guides.

b. Additional proposed provisions

relating to cultured pearls. The JVC

proposed the addition of six new

subsections relating to the failure to

describe a cultured pearl as a cultured

pearl. These proposed subsections relate

to fresh water cultured pearls, Biwa

cultured pearls, South Sea cultured

pearls, black cultured pearls, and Mabe

cultured pearls.

All of these have been discussed

previously, in connection with the

section on definitions, except Biwa

pearls (which were not included in the

definition section proposed by the JVC.)

As noted, the Commission has

concluded that § 23.15(b) of the current

Guides, which states that it is unfair to

use the word ‘‘pearl’’ to describe a

cultured pearl unless the word ‘‘pearl’’

is ‘‘immediately preceded, with equal

conspicuity,’’ by the word ‘‘cultured’’ or

a word of similar import, is sufficient to

admonish sellers that they should

adequately disclose that a cultured

pearl—of whatever type—is cultured.

Thus, the Commission has not included

any of these proposed subsections

except the ones dealing with South Sea

pearls (discussed supra) and Biwa

pearls.

The subsection proposed by the JVC

for Biwa pearls states that it is unfair to

use the term ‘‘Biwa pearl’’ without the

qualifying term ‘‘cultured.’’ The

Commission has concluded that this

portion of the proposed subsection is

unnecessary. However, the proposed

subsection also provides that ‘‘the term

‘Biwa cultured pearl’ must only be used

when describing those formations

which have the distinctive appearance

of a fresh water cultured pearl taken

from the fresh water mollusks

inhabiting Lake Biwa within the island

of Honshu, Japan.’’

CPAA commented that the term

should be limited to ‘‘those formations

which are grown in fresh water

mollusks in the lakes and rivers of

Japan.’’ CPAA stated that the words

‘‘distinctive appearance’’ might allow

imitation pearls and pearls from other

countries to use the regional

description. CPAA explained that

‘‘Biwa’’ represents all Japanese

freshwater pearls because ‘‘first, many

people currently refer to all Japanese

origin freshwater cultured pearls as

‘Biwa’’ and second, because freshwater

pearl production in Japan is nearing

extinction ‘‘Biwa pearls’’ are

appreciating in value.272 CPAA stated

that many U.S. importers use the term

‘‘Biwa pearl’’ ‘‘to describe freshwater

pearls that have a similar appearance to

Biwa pearls but come from other

countries such as China’’ and artificially

inflate the prices of them, which ‘‘cost

as little as 30 times less than the

Biwas.’’ 273

Because of the evidence of deceptive

use of this term, the Commission has

included a provision in the Guides

stating that the term ‘‘Biwa’’ should

only be applied to pearls ‘‘which are

grown in fresh water mollusks in the

lakes and rivers of Japan.’’

c. Other proposed provisions. The JVC

proposed that eight other subsections be

added to the section dealing with

misuse of specific terms (in addition to

the proposed subsections described

above.) The first such proposed

subsection is general: ‘‘It is an unfair

trade practice to use the term ‘pearl,’

‘oriental pearl,’ ‘cultured pearl,’

‘cultivated pearl’ * * * to describe

* * * any such pearl product whose

outer surface does not consist wholly of

naturally occurring concentric layers of

nacre secreted by that mollusk.’’ This

section duplicates other subparts of

§ 23.16 of the current Guides, and

therefore, the Commission has not

included it in the Guides.

Another JVC proposal prohibits the

use of the term ‘‘non-nucleated pearl,’’

because ‘‘cultured pearls of this type are

formed by the introduction of mantle

tissue within the body of the mollusk’’

and thus are nucleated. However, both

the CPAA and AGTA used the

expression ‘‘non-nucleated pearl’’ in

their comments in referring to Keshi

pearls.274 Moreover, whether or not the

term ‘‘non-nucleated’’ is correct, no

evidence has been offered to show that

it is being used to deceive consumers as

to a material fact. Thus, the Commission

has not included this section.

Two of the additional proposed

sections relate solely to imitation pearls.

One states that it is unfair ‘‘to use the

term ‘man-made’ or ‘man-created’

without using the term ‘simulated’ or

similar term, to qualify the product as

in ‘man-made simulated pearls.’’’ CPAA

commented that this section should

state that it is unfair to use these terms

‘‘without also using the term

‘simulated,’ ‘imitation’ or any other term

that has the same connotation and

meaning when qualifying or describing

an imitation pearl product.’’ 275 The only

other comment relating to this provision

was from Majorica, which requested the

FTC ‘‘to withhold any further

restrictions on the words ‘organic,’
27204 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

276Comment 240, p.6 (emphasis added).

277Although there was no comment on the

inclusion of ‘‘precious’’ in this subsection, the

Commission has determined that it is deceptive as

applied to imitation pearls because ‘‘precious’’ in

the jewelry industry implies rarity. Although

imitation pearls can be of high quality, they are not

likely to be rare.

278Comment 49, p.16 (noting that there is not a

similar prohibition of the use of the term ‘gem’ in

the section on diamonds).

279The Commission has deleted § 23.21(c) of the

Guides, as discussed below, in the section

pertaining to gemstones.

280AGTA (49) p.16; CPAA (193) p.7 (suggesting

that the provision be modified to apply to

‘‘cultured, simulated, or imitation pearls’’ rather

than to ‘‘cultured or imitation pearls’’); Majorica

(240) p.6 (requesting no ‘‘further restrictions’’ be

placed on the use of ‘‘created’’ or ‘‘synthetic’’).

281Comment 193, p.8 (‘‘Orient is gemologically

defined as a subdued iridescence, occurring when

white light is divided into its separate and distinct

spectral colors as it passes through and is refracted

back from the nacre secreted by mollusks whether

surrounding a nucleus or not.’’).

‘man-made,’ ‘synthetic,’ and ‘created’

while considering the creation of a new

category of pearl to which the word

‘organic’ could properly and accurately

be applied.’’ 276 CPAA may be arguing

that the phrase ‘‘man-made’’ could be

understood to mean cultured pearls,

since such pearls are ‘‘started’’ by man.

However, there is no evidence that

consumers are interpreting the phrase

‘‘man-made’’ or similar phrases in this

manner, and without such evidence, the

Commission has decided not to include

the section, as proposed by CPAA, in

the revised Guides.

Four of the remaining five proposed

subsections relate to the misuse of

certain words, which are described in

§§ 23.20 and 23.21 of the current

Guides. Section 23.20 of the current

Guides provides that it is unfair to use

the words ‘‘real,’’ ‘‘genuine,’’ ‘‘natural,’’

or ‘‘similar terms as descriptive of any

article or articles which are

manufactured or produced synthetically

or artificially, or artificially cultured or

cultivated * * *.’’ Although this section

deals primarily with precious and semiprecious stones, it also applies to

cultured or imitation pearls.

The subsection proposed by the JVC

states that it is unfair to use these words

or the word ‘‘precious’’ or similar terms

to describe imitation or cultured pearls.

The Commission has reorganized the

Guides so that this statement appears in

the pearl section, making it more likely

that industry members searching for

guidance as to pearl advertising will see

it. As noted above, the Commission

already has included the term ‘‘natural’’

in the subsection dealing with the term

‘‘natura,’’ § 23.20(e) of the revised

Guides. Thus, the Commission has

added a new subsection, 23.20(i), that

states that it is unfair or deceptive to use

the terms ‘‘real,’’ ‘‘genuine,’’ or

‘‘precious’’ as descriptive of an

imitation pearl.277

This subsection does not state that the

terms ‘‘real’’ or ‘‘genuine’’ are unfair or

deceptive if used to describe cultured

pearls. The Commission has determined

that it is possible to truthfully describe

‘‘real’’ or ‘‘genuine’’ cultured pearls

without implying that they are not

cultured. In addition, there may be

instances when cultured pearls could be

truthfully described as ‘‘precious.’’

Therefore, § 23.20(i) is limited to

imitation pearls.

Section 23.21(a) in the current Guides

states that it is unfair to use the term

‘‘gem’’ or a similar term to describe ‘‘a

pearl, cultured pearl, diamond, ruby,

* * * which does not possess the

beauty, symmetry, rarity, and value

necessary for qualification as a gem.’’

The JVC proposed a section

recommending that the word ‘‘gem’’ not

be used as a quality designation or

description of natural pearls, ‘‘since

there is no existing criteria for these

terms, and their use to describe, imply,

or represent quality could be

misleading.’’

AGTA commented that this provision

should only apply to sales to a

consumer, stating, ‘‘The term ‘gem’ is

traditionally used within the trade to

describe particularly fine qualities of

any given gemstone species, including

pearls. To prohibit its use within the

trade is restrictive of traditional practice

and is unnecessary as it is clearly

understood.’’ 278 There is no evidence

that consumers would be deceived by

this term as applied to pearls that

‘‘possess the beauty, symmetry, rarity,

and value necessary for qualification as

a gem.’’ Therefore, the Commission has

retained current § 23.21(a) and has

moved the portion relating to pearls to

the pearls section of the Guides (revised

§ 23.20(j)). The Commission has

included a Note after this section

(which currently follows § 23.21(b) in

the current Guides) which states that the

use of ‘‘gem’’ with respect to cultured

pearls should be avoided since few

cultured pearls possess the necessary

qualities and that imitation pearls

should not be described as ‘gems.’

Section 23.21(c) of the current Guides

states that it is unfair to use the words

‘‘reproduction,’’ ‘‘replica,’’ or similar

terms to describe a cultured or imitation

pearl (or imitation precious or semiprecious stones.) The JVC proposed

including this statement, as it pertains

to pearls, in the pearls section.

However, if the nature of the material

used in a reproduction or replica is

adequately disclosed, as advised by

other sections of the Guides, it is not

clear that the use of these terms would

be deceptive or unfair. Thus, the

Commission has not added this section

to the Guides.279

Section 23.21(d) of the current Guides

states that the use of the term

‘‘synthetic’’ to describe cultured or

imitation pearls is unfair. The term may

be used for precious and semi-precious

synthetic stones if they have

‘‘essentially the same optical, physical,

and chemical properties as the stone

named.’’ The JVC proposed moving the

portion of § 23.21(d) that pertains to

pearls to the pearls section and adding

that it is unfair to use the word

‘‘created’’ to describe cultured or

imitation pearls. AGTA and CPAA both

supported the proposal, and Majorica

opposed it.280 No evidence was offered

to explain why the use of the term

‘‘created’’ is unfair or deceptive as

applied to cultured or imitation pearls.

The Commission therefore has not

included the proposed section regarding

the term ‘‘created’’ in the Guides.

However, the term ‘‘synthetic’’ has

been used with respect to gemstones to

refer to a man-made substance that has

all the physical, chemical and optical

properties of the natural stone. Since

cultured pearls do not have the same

physical and optical properties as

natural pearls, the use of this term may

be deceptive. Furthermore, the use of

the term ‘‘synthetic’’ to describe an

imitation pearl might convince some

consumers that the pearls were cultured

rather than imitation. Thus, the

Commission has included a new

subsection, 23.20(k), which states that it

is unfair or deceptive to use the word

‘‘synthetic’’ to describe cultured or

imitation pearls.

Finally, the JVC proposed a

subsection stating that it is unfair to use

the term ‘‘semi-precious’’ to describe

any pearl, cultured pearl, ‘‘or man-made

industry product.’’ No evidence was

offered to show that this use of ‘‘semiprecious’’ would be unfair or deceptive,

and there was no comment on this

proposal. In the absence of such

evidence, the Commission has decided

not to add this provision to the Guides

at this time.

d. Additional provisions proposed by

commenters. CPAA proposed that

several additional subsections be added

to the section pertaining to ‘‘Misuse of

terms.’’ First, CPAA suggested a

subsection stating that it is unfair to use

the term ‘‘orient’’ to describe the

properties of an imitation pearl.281

CPAA stated that ‘‘the term ‘orient’ was

first used in a gemological sense by the

Gemological Institute of America in
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27205

282Comment 193, p.9.

283 Id.

284CPAA (193) p.9 (explaining, for example, that

the ‘‘use of the term ‘Misaki Japanese Pearls’ in

several cases has led consumers to believe that they

were purchasing Japanese cultured pearls instead of

imitation pearl products’’).

285 Comment 240, pp.8–10. Unlike the CPAA

proposal, Majorica proposed to prohibit the use of

the term ‘‘Mallorca’’ or any similar expression

connoting the name of the Island of Mallorca, Spain

in combination with the word pearl. (The CPAA

proposal would allow an imitation pearl to be

described as a ‘‘Mallorca imitation pearl.’’) Majorica

stated that it has sued distributors of pearls and has

obtained relief which requires such distributors to

‘‘to reduce the emphasis on [Mallorca] in their

advertising and distribution.’’ Majorica asserts that

it is unfair to require it to go to the expense of

litigation every time such an abuse occurs. Id.

However, Majorica’s specific complaint regarding

the ‘‘passing off’’ of one manufacturer’s product for

another is already adequately addressed by caselaw

under Section 5.

286Comment 217, p.1 (suggesting that cultured

pearls with a 1⁄4 to 1⁄2 mm. coating of nacre should

be marked ‘‘Service Grade’’ and those with more

than 1⁄2 mm. marked ‘‘Heirloom Grade’’).

287 Id. at p.2.

288 ‘‘Majorica Imitation Pearls,’’ Gems and

Gemology 187 (Fall 1990), attached to Comment

240.

289 ‘‘Rapaport Diamond Report’’ 26 (July 17, 1992)

attached to Comment 233.

290 Id.

291Nassau (10) suggested, at p.1, three

modifications to the JVC proposal: the addition of

the 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’’).

292Although most of these techniques enhance

color, application of colorless oil could arguably be

used simply to cover inclusions. The current

Continued

order to explain and clarify quality

points of natural and cultured pearls

* * * many retailers and gemologists

alike hold their [GIA] definitions to be

the authoritative standard within the

industry.’’ 282 However, an article from

the GIA quarterly journal Gems &

Gemology was attached to Majorica’s

comment; the authors are all employees

of GIA. The article states, ‘‘An

iridescence resembling the orient seen

on some cultured pearls may also be

observed on Majoricas [an imitation

pearl].’’ Thus, it appears that at least

some imitation pearls can possess

‘‘orient.’’ Therefore, the Commission has

not included this provision in the

revised 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 regional

designation to describe cultured or

imitation pearls without including the

words ‘‘cultured, imitation or

simulated.’’ 283 CPAA explained that

imitation pearl companies recently have

used regional terms to describe their

products, and that this misleads

consumers about the true nature of the

product.284

Majorica made a similar suggestion,

stating that there is continued abuse of

terms such as ‘‘Mallorca Pearl,’’

‘‘Majorca Pearl,’’ and ‘‘Mayorca Pearl’’

and that they ‘‘have numerous examples

of customers and distributors who have

been deceived into purchasing pearls

under the label of ‘Majorca’ or

‘Mallorca’ pearls believing them to have

special qualities related to the Island of

Majorca or, for that matter, that they are

MAJORICA pearls.’’ 285

The Commission has concluded that

there is some evidence that regional

descriptions are being used to mislead

consumers. The Commission therefore

has included a provision in the revised

Guides that states that the regional

description of a pearl should be

accompanied by a description of

whether the item is a cultured or

imitation pearl.

4. Misrepresentation as to Cultured

Pearls

The JVC recommended no substantive

changes in § 23.17 of the current Guides.

As noted above, this section describes

unfair practices involving false,

misleading, or deceptive statements

about cultured pearls, including the

manner in which they are produced and

the thickness of the nacre coating.

One commenter, Kenneth Russell,

recommended that the Commission

establish grades for cultured pearls

based on the thickness of the nacre

deposited by the mollusk, following the

introduction by man of a mother-ofpearl bead. He noted that the thickness

of the nacre ‘‘mainly determines their

wearable value’’ and that this

‘‘indexing’’ information should

accompany this product ‘‘just as

karatage serves to rank gold jewelry.’’ 286

He stated that most cultured pearls

consist of 90 to 95% nucleus and very

little nacre.287

The article attached to the Majorica

comment stated that the thickness of the

nacre in a cultured pearl ‘‘will vary

depending on the amount of time the

nucleated mollusk was allowed to grow

before harvest.’’ 288 The article attached

to the Rapaport comment quoted a pearl

industry source as saying that some of

the lowest-quality Chinese pearls

should not be on the market because

‘‘the nacre peels off the nucleus within

a year.’’ 289 The article notes that pearl

grading is ‘‘a non-standardized process

that gives dealers a lot of room for

opinion.’’ It also notes that GIA has a

grading system which ‘‘uses numerical

grades to show differences in

appearance, durability and value of

pearl strands’’ and that some companies

use their own methods.290

The literature indicates that the nacre

on some cultured pearls might be so

thin that they do not meet the

expectations consumers have when an

item is described as a cultured pearl.

Section 23.17 in the current Guides

admonishes against misrepresentations

about the thickness of the nacre on

cultured pearls or the quality of pearls.

However, it is not unfair or deceptive to

fail to grade cultured pearls that contain

a coating of nacre that is thick enough

to meet minimal consumer expectations.

F. Precious and Semi-precious Stones

(Category V): §§ 23.18–23.21

Guides in this part apply primarily to

colored gemstones, precious (rubies,

sapphires, emeralds) and semi-precious

(amethyst, topaz, etc.) stones. The

Guides refer to three types of gemstones:

natural (i.e., mined from the ground);

synthetic stones, which are laboratorycreated and which § 23.21(d) describes

as having ‘‘essentially the same optical,

physical, and chemical properties’’ as

natural stones; and imitation stones,

which resemble natural stones but do

not have the same properties.

1. Deception Generally: § 23.18

Section 23.18 states that any material

misrepresentation with respect to

precious or semi-precious gemstones is

unfair. The JVC proposal omitted this

section. Section 23.18 merely repeats

the general admonition in § 23.1 against

material misrepresentations of any

industry product. Thus, the Commission

has deleted this provision from the

revised Guides.

a. Disclosure of Treatment

A Note following § 23.18 states that

any artificial coloring or tinting of a

diamond or precious or semi-precious

stone by ‘‘coating, irradiating, or

heating, or by use of nuclear

bombardment, or by any other means’’

should be disclosed and the fact that the

coloring is not permanent, if such is the

fact. The JVC proposed, in section

23.20(c) of its petition, a section in lieu

of the Note which requires the

disclosure of any enhancement ‘‘by

coating, application of colorless or

colored oil, irradiation, surface

diffusion, dyeing, heating or by use of

nuclear bombardment, or by any other

means.’’ 291 This proposal would expand

the recommended disclosure about

enhancements relating to color to all

enhancements (e.g., those related to

concealing cracks). In addition, it

explicitly covers enhancement by

applications of colored or colorless oil,

surface diffusion, or dyeing.292
27206 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

Guides recommend disclosure of techniques which

artificially color gemstones, and the fact that the

techniques are not explicitly mentioned may lead

readers to assume that it need not be disclosed.

Some comments gave this indication because they

assumed that the disclosure of treatment with

colorless oil was not currently advised.

293Lannyte (65) p.8 (also suggesting, at p.10, that

the guides state that it is unfair to state that a

gemstone has not been enhanced when it has been,

a suggestion that has been incorporated into § 23.1

of the revised Guides by including ‘‘treatment’’ in

the list of attributes that should not be

misrepresented); 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.

294Comment 18, p.2; AGTA (49) p.5 (noting

several technologies (e.g., diffusion-treated

sapphires, irradiated topaz) that ‘‘did not even exist

on 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.

295Comment 219, p.13 and letter to Secretary, p.1.

See also ‘‘Epoxy-Like Resins,’’ Jewelers’ CircularKeystone 176 (June 1994) (stating that ‘‘[t]he

majority of emeralds sold today are epoxy resin

impregnated’’ and noted that oil and epoxy resin

are both designed to ‘‘soften or hide the effect of

cracks and fissures’’).

296 Id.

297Comment 90, p.1.

298Lannyte (65) p.7; Impex (220) stated that the

JVC proposal would ‘‘defy standard industry

practices.’’

299See discussion infra of the 1990 Gemstone

Enhancement Manual (attached to comment 49).

300By letter dated February 7, 1989, the JVC

informed staff that it wished to revise its petition

to ‘‘include disclosure in the colored gemstone

provision the permanency and/or non-permanency

of enhancement.’’

301Bales (156) p. 10.

302Comment 49, p. 5 (stating that it sees examples

of overcharging too frequently and listing as ‘‘most

notable examples,’’ i.e., diffusion-treated sapphire,

Yehuda-treated and laser-drilled diamonds, and

irradiated topaz, sapphire, and diamond); Chatham

(231) p. 24 (stating that consumers are deceived by

treated natural stones that are passed off as more

valuable than they actually are).

303AGTA recommended that diffusion-treated

and irradiated gemstones always be described as

‘‘chemically colored by diffusion,’’ and, if the color

does not permeate the entire gem, that fact should

be revealed with a warning that re-cutting or repolishing is not recommended. Comment 49, p. 16.

However, River (254) stated, at pp. 2–3, that many

people find diffusion treated sapphire a better

value, and that the problem of re-cutting is ‘‘blown

out of proportion’’ since very few stones are re-cut

or re-polished at a customer’s request, and in the

rare instance when a stone is broken, it is replaced.

For these latter reasons, the Commission has not

included the language suggested by AGTA (i.e., a

warning about re-cutting or re-polishing) in the

Guides. Further, it is not practical for the Guides

to address every conceivable issue that may arise

in a jewelry transaction.

304Comment 222, p.5.

305Numerous comments noted that disclosure of

treatment of all gemstones would be expensive for

retailers. Service (222) p.5 (stating this is difficult

because the stone probably changed hands a few

times before being purchased by the retailer); Best

(225) p.9 (stating that the retailer may not know of

the enhancement); Finlay (253) p.2 (stating that it

would be an ‘‘overwhelming task’’ for the retailer

to obtain information about enhancement from the

manufacturers). Others commented (without further

explanation) 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.

306The Commission does not believe that it

would be unfair to fail to disclose the treatments

because, even assuming there might be some

consumer injury associated with such failure, the

injury would be outweighed by the benefits to

competition, see supra note 305, associated with

not requiring the disclosure. See International

Harvester, 104 F.T.C. at 949.

Numerous commenters noted that

almost every natural gemstone is subject

to some form of enhancement.293 AGS

stated that many new enhancement

techniques have been developed since

the Guides were issued and that

‘‘[c]oating processes are developed

daily.’’ 294 NACSM stated that up to 95%

of colored gemstones are dipped in oil

and that this treatment is ‘‘taken for

granted by retailers and consumers

alike.’’ 295 It questioned the value of

disclosures under these circumstances

and contended they would clutter

written advertisements and increase

prices.296 However, NACAA commented

that its members receive complaints

about failure to disclose stone

enhancement.297 Although the Guides

currently recommend disclosure of

color enhancement, some comments

indicated that there is little such

disclosure in the marketplace.298

However, some industry associations

strongly encourage their members to

disclose treatments.299

The Commission is persuaded by the

comments that many consumers do not

have detailed knowledge about the

nature and types of treatments used to

enhance gemstones. However,

consumers would expect their gemstone

purchases to retain their appearance

over time regardless of any treatments

and to not require special care to retain

their appearance. On the basis of the

comments and for the reasons discussed

below, the Commission has concluded

that non-permanent treatments of

various types (not just those that affect

color), or any treatments that create

special care requirements should be

disclosed. There is no logical reason to

limit disclosure to treatments that affect

color. Further, consumers should be

informed when the treatment is not

permanent.300

Some comments argued that any

treatment, even if it is permanent, may

reduce the value of a stone and a failure

to reveal treatment amounts to a

representation that a stone is more

valuable than it is. One commenter

noted that treatments should be

disclosed ‘‘since the stone gives the

appearance to the consumer that it is a

higher grade than what it actually

is.’’ 301 AGTA also stated that ‘‘the

difficulty in detecting treatments

presents opportunities for

misrepresentation of the value’’ and that

‘‘the potential for overcharging

consumers if the enhancements are not

disclosed at every level of the trade is

very real.’’ 302 AGTA attached a May

1993 notice it issued to its members in

which it referred to the fact that a

number of knowledgeable wholesalers

purchased diffusion-treated sapphires

without knowing that they were

treated.303

On the other hand, Service argued

that failure to reveal treatment is not

deceptive if the treatment is permanent,

stating, ‘‘[i]t is unreasonable to require

a retailer to disclose what has happened

to a stone in the manufacturing process

if the change is permanent.’’ Service

agreed that if the change is not

permanent, the customer ‘‘wants to

know if the color or quality may degrade

over time and what the customer must

do, if anything, to maintain the stone’s

quality and color. Requiring this

information to be provided is

acceptable.’’304

The Commission has concluded that

it is not unfair or deceptive to fail to

disclose a treatment that is permanent

or that does not create special care

requirements. As the Commission stated

in International Harvester, 104 F.T.C. at

948, it may be deceptive for a seller ‘‘to

simply remain silent, if he does so

under circumstances that constitute an

implied but false representation.’’ These

implied representations ‘‘may arise from

the physical appearance of the product,

or from the circumstances of a specific

transaction, or they may be based on

ordinary consumer expectations as to

the irreducible minimum performance

standards of a particular class of goods.’’

Id. The Commission explained,

however, that ‘‘[i]ndividual consumers

may have erroneous preconceptions

about issues as diverse as the entire

range of human error, and it would be

both impractical and very costly to

require corrective information on all

such points.’’ Id. at 949.305 Thus, if an

express or implied representation is

made (in advertising or at the point of

sale) that might imply rarity and

therefore lack of treatment—e.g., that

the gemstones are of an exceptionally

high quality—then the failure to reveal

any treatment may be deceptive.

However, if no such representation is

made, consumers simply might not give

any thought to whether the gemstones

were treated, beyond assuming that all

gemstones undergo some processing to

achieve their finished state. Therefore, it

is neither unfair nor deceptive to fail to

reveal treatments that are permanent,

and that do not create special care

requirements.306
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27207

307For example, the Manual states that emeralds

are usually oiled with colorless oil to improve

appearance; the stability of this treatment is

described as ‘‘fair to good.’’ According to the

Manual, oiled emeralds should not be subjected to

temperature changes, steaming, chemicals, or

ultrasonic cleaning machines. Moreover, numerous

other stones that are commonly treated to improve

appearance (e.g., Amazonite—usually waxed;

Jadite—impregnated with colorless wax; Lapis

Lazuli—impregnated with colorless wax or oil;

Malachite—coated with wax) should not be cleaned

in ultrasonic machines, according to the Manual.

Ultrasonic cleaning machines are now sold to the

general public by mass retailers.

308An article entitled ‘‘Emeralds’’ in National

Geographic, Vol. 178, July 1990, stated that oiling

of emeralds probably lasts from a few months to a

year or two ‘‘if the emerald is kept away from heat

and out of the sun.’’ Id. at 68. The oiling process

involves submerging vials of emeralds in boiling

water and then placing the vials in a pressure

chamber to drive the oil even deeper into the cracks

in the emeralds. This is not a process that the

average 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 puzzle

and dismay emerald owners.’’ Id. at p.49.

309 ‘‘Epoxy-Like Resins,’’ supra, at 177. The article

quotes experts who suggest that the filler may be

harder to take out if it deteriorates and changes

color, that it may turn cloudy over time, or that it

may cause stress and increase the chances of gem

breakage. Id. at 178.

310NACSM (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 disclosure

should be recommended, rather than required.

312Honora (15); Argo (17); AGS (18) p.3 (stating

that ‘‘professional jewelers routinely disclose

special care requirements’’); Estate (23); Jabel (47)

p.2 (suggesting that the ‘‘stone manufacturer might

supply a ‘care and feeding’ card for every type of

stone he handles’’); Skalet (61); NACAA (90);

ArtCarved (155); Bales (156); Shire (221); and Leach

(257).

313Comment 81, p.3; Schwartz (52) p.3 (stating

that there should be disclosure since ‘‘many, if not

most, of gemstone enhancements are

unstable . . . .’’); Bruce (218) p.12 (stating that ‘‘it

is only when a stone is not permanently changed

and may revert back to another color or shade that

a ticket should be attached letting the consumer

know 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 to

insure its continued quality in appearance’’).

314AGTA (49) and CPAA (193).

315Comment 49, p.10 (stating that the Manual,

unlike the Guides, is revised frequently and ‘‘if the

guides attempt to address specific enhancements,

the information may be obsolete before changes

could be incorporated at the federal level’’). But see

River (254) p.2 (stating that the Manual uses letter

codes to describe treatment, which it described as

‘‘an arcane method of communicating’’).

Nevertheless, most treatments of

gemstones are not permanent, and most

treatments create special care

requirements. AGTA attached to its

comment a copy of the 1990 Gemstone

Enhancement Manual, which states, at

p.3, that it was ‘‘developed by a

coalition of jewelry industry leaders

representing the various trade

organizations, gemological scientists,

and the trade press.’’ This Manual gives

examples of treatments that are not

permanent, or that create special care

requirements.307 What appears to be the

most common treatment—oiling—is

definitely not permanent.308 Although a

new treatment with epoxy resin ‘‘leads

to a longer lasting improvement in

appearance which is not possible with

volatile compounds like oils and

paraffin used traditionally,’’ experts

have suggested that a number of

problems may occur even with this

treatment and that disclosure is

necessary because otherwise a seller

‘‘could easily ask a price commensurate

with a stone’s appearance.’’ 309

Further, as noted above, most

consumers probably do not have

detailed knowledge about the nature

and type of treatments that are used to

enhance gemstones. Therefore, if

consumers are unaware of the nonpermanency of a treatment or the

special care requirements associated

with a treatment, the gemstone may not

meet their expectations if the color fades

or inclusions appear, etc. Accordingly,

the Commission has included a section

in the revised Guides that states that

non-permanent treatments and

treatments that create special care

requirements should be disclosed. This

section explicitly states that certain

treatments, such as application of

colored or colorless oil or epoxy-like

resins, surface diffusion, or dyeing,

should be disclosed because they

usually are either not permanent or

create special care requirements. This

recognizes that whether a treatment is

permanent or invokes special care

requirements may be dependent on

factors such as the type of gemstone that

is treated.

Several commenters noted that the

current Guides do not specify whether

disclosure of treatment should appear in

advertising (as opposed to at the point

of sale). Several retailers commented

that disclosure of enhancement in

advertising would be burdensome and

would have a disparate impact on large

chains, which do advertise, as opposed

to small jewelry stores, which generally

do not advertise. NRF suggested that

whatever enhancement disclosures are

required should be limited to the point

of sale.310 Because the potential

deception arises due to the appearance

of the product, the Commission has

determined that disclosure at the point

of sale is adequate to prevent the

deception, except in the case of any

solicitations where the product can be

purchased without first viewing it (e.g.,

mail, on-line, or telephone orders). In

those cases there should be disclosure

that stones have been treated in the

solicitation or, in the case of televised

shopping programs, on the air.

b. Disclosure of special care

requirements. The current Guides do

not recommend the disclosure of special

care requirements for treated stones, and

the JVC petition did not propose that

special care requirements be disclosed.

However, the permanency of some

treatments is dependent on the care

exercised by the consumer. The FRN

solicited comment on whether the

Guides should advise sellers to disclose

to consumers in writing any special care

requirements and whether the method

of disclosure should be specified.

Thirty-four comments addressed this

issue. Seventeen comments stated that

the Guides should not require such

disclosure, with several stating that it

would be a costly burden for the

retailer.311 Eleven commenters favored

the disclosure of special care

requirements.312 GIA and three other

commenters stated that the Guides

should require such disclosures if the

stability of the enhancement may be

affected by the care provided.313 AGTA

and CPAA both stated that they

advocated responsible communication

between retailers and their clients as to

special care, but they deferred to the

opinion of retail jewelers as to whether

this should be required by the

Guides.314 AGTA suggested appending

the current edition of the industry’s

Gemstone Enhancement Manual to the

FTC guides to advise the industry about

the current methods being used.315

However, none of the comments

explained why failure to disclose

special care requirements would be

unfair or deceptive. Although failure to

reveal a fact material to consumers can

constitute deception by omission, the

Commission has determined that it is

not inherently deceptive to fail to reveal

special care requirements. First, as

discussed supra, the Commission has

revised the Guides to state that sellers

should disclose enhancements that

result in special care requirements.

Therefore, having been informed that

the stone was ‘‘enhanced,’’ a consumer

acting reasonably in the circumstances

could be expected to inquire about the

process and its permanence, and that

inquiry should result in disclosure of

special care requirements. For example,

Capital commented that ‘‘as long as

enhancement is faithfully disclosed,

special care requirements will also be

disclosed,’’ since consumers will ask for
27208 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

316Comment 19, p.2 (noting that trade

associations provide the industry with material on

disclosing care information, and that it is not

necessary to include this in the Guides).

317A Note following this section states that

qualifying these terms by means of an asterisk,

which reference a footnote explanation, ‘‘is not to

be regarded as compliance with the requirements of

this section.’’ The Commission believes that this

section, which states that a qualifying term should

immediately precede the name of the stone,

adequately advises sellers of the proper disclosure.

The Note is superfluous and the Commission has

deleted it.

318Comment 231, p.5.

319Comment 49, p.17.

320Comment 230, p.3. AGL also noted that the

colored stone industry opposed this change, citing

‘‘the historical, ‘universally understood’ application

of the term ‘synthetic.’’’ However, AGL stated that

there is a ‘‘conscious desire to leave the consumer

in a quandary regarding the difference between

‘synthetic’ and ‘imitation’ products. . . . to reduce

the capacity of the synthetic material manufacturer

to penetrate the U.S. marketplace with their

products.’’ Id.

321Chatham (231) pp.2, 31; Crystal (24) pp.1, 4;

Kimberley (227) p.7 (stating that the hydrothermal

process is the same process that creates ‘‘natural’’

emeralds); Matlins (205) pp.2–3, favored the use of

terms such as ‘‘created’’ or ‘‘laboratory-grown’’ for

flux-grown synthetic gems only, which she

described as being very different from melt or

‘‘flame-fusion’’ synthetic products, in that the fluxgrown products look more like natural stones and

are more expensive to produce. Manning (159) p.2,

which uses the melt method to produce rubies,

argued that solution growers [by which it appears

to be referring to flux-growers] should be allowed

to describe their products as ‘‘cultured’’ and melt

growers to describe their products as ‘‘created’’ or

‘‘lab-grown’’ because ‘‘without the ability of

solution growers to somehow separate their process

from ours in fair descriptive language, they will be

forced from the marketplace as too costly for the

market to bear.’’ Diamonique (224) p.3, stated

without elaboration, that it favored ‘‘cultured’’ for

gemstones that were produced by a method ‘‘which

replicates that growth process of natural

gemstones.’’

322 ICT (189), which makes gemstones by the melt

method, stated at p.3, that it objected to ‘‘reserving

the word ‘lab-created,’ ‘lab-grown,’ or ‘created,’ to

describe flux or hydrothermal methods of growth

only.’’ Service (222) stated, at p.2, that it is ‘‘unfair

to allow sellers of low quality created stones to use

the same term for their product as is used for the

highest quality of created stones’’ but suggested this

issue should be addressed in a ‘‘separate

rulemaking.’’ Friedman (234) stated, at p.3, that

‘‘cultured’’ would communicate to consumers ‘‘that

they were purchasing a true, high-value gemstone,

identical to a natural gemstone and made by a

process which included human intervention.’’ It

apparently favored the use of ‘‘cultured’’ for both

types of lab-created stones.

323Crystal (24) p.3 (stating that it uses the term

‘‘cultured’’ to describe its ‘‘Ramura Cultured

Ruby’’); Chatham (231) p.31 (stating that Crystal

and Emsprit Cultured Emeralds have been using the

term ‘‘cultured’’ for flux-grown gems).

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

(254) p.3.

instructions and retailers will offer them

to avoid future problems.316

Furthermore, according to the

Gemstone Enhancement Manual,

attached to the AGTA comment, special

care requirements are quite common for

many types of unenhanced stones. The

Guides have not recommended the

disclosure of special care requirements

for these unenhanced stones. Because

unenhanced stones have been sold for

many years, the Commission presumes

that over time consumers have become

familiar with their characteristics and

their care requirements. Similarly,

consumers may expect that enhanced

stones would require certain care

requirements too. Therefore, the

Commission believes that if the

enhancement is revealed, it is not

inherently unfair or deceptive to fail to

reveal special care requirements.

(Consumers who request, but do not

receive special care requirements,

presumably will choose to take their

business elsewhere. Thus, sellers should

have an incentive to provide such

information.) However, since enhanced

stones that have special care

requirements are newer products in the

marketplace, and consumers may not be

as familiar with the requirements of

these stones, the Commission has

recommended that the seller disclose

special care instructions to the

consumer.

2. Deceptive Use of Names of Specific

Stones: § 23.19

Section 23.19(a) in the current Guides

states that it is unfair to use the

unqualified name of a precious or semiprecious stone to describe a product

which is not a natural stone. This

section is not changed in the revised

Guides (§ 23.23(a)).

Section 23.19(b) states that it is unfair

to use the name of a precious or semiprecious stone (or the words ‘‘stone’’ or

‘‘birthstone’’) to describe a synthetic,

imitation or simulated stone unless the

name is immediately preceded by the

word ‘‘synthetic,’’ ‘‘imitation,’’ or

‘‘simulated,’’ whichever is applicable, or

by some other word or phrase of like

meaning, so as to disclose the fact that

it is not a natural stone.317

Both the current Guides and the JVC

petition allow the use of ‘‘synthetic’’ or

words or phrases of like meaning to

describe created stones that have the

same properties as a natural stone. The

purpose of this section is to prevent the

deceptive impression that an item is a

natural stone, and any word or words

that accomplish that goal are acceptable.

In Chatham Research Laboratories, 64

F.T.C. 1064, 1075 (1964), the

Commission found that the phrase

‘‘Chatham-Created Emeralds’’ was not

deceptive because the reasonable

inference from the phrase was that

‘‘such emeralds are Chatham created

and must therefore be synthetic since

they are not created by nature.’’

Chatham’s comment stated that after

almost 30 years of use, there is no

evidence that ‘‘Chatham-created’’ is

deceptive to consumers.318

AGTA commented, however, that

there should be no acceptable synonyms

for the word ‘‘synthetic.’’ 319 Other

comments argued that the Guides

should specifically identify terms other

than ‘‘synthetic’’ that can be used, such

as ‘‘laboratory created,’’ ‘‘created,’’ or

‘‘cultured.’’ AGL noted that it

introduced the term ‘‘Laboratory Grown

(Synthetic)’’ some time ago because it

seemed obvious that this would

‘‘increase the ability of a retailer to

explain and the capacity of consumer to

understand the basic differences

between glass/plastic, i.e., imitations,

and those products that are laboratory

grown to emulate the characteristics and

properties of a natural material.’’ 320

Chatham and numerous other

commenters also suggested that

synthetic stones appropriately could be

described as ‘‘cultured.’’ Chatham,

Kimberley, and Crystal argued that this

term should only be used for synthetics

that were created by the ‘‘hydrothermal’’

or ‘‘flux’’ method (which they use).321

Others argued that synthetics made by

the ‘‘melt’’ or ‘‘flame-fusion’’ process

also should be allowed to describe the

stones as ‘‘cultured.’’ 322

Although some companies have used

the term ‘‘cultured’’ to describe their

products for some time,323 no actual

evidence about consumer perceptions

arising from the use of a term such as

‘‘cultured ruby’’ was submitted.

However, in Chatham Research

Laboratories, 64 F.T.C. at 1074, the

Commission found that the phrase

‘‘Chatham Cultured Emeralds’’ was

deceptive. Further, several commenters

indicated that they regarded the term

‘‘cultured emerald’’ as deceptive.324

Because there currently is insufficient

evidence as to consumer perceptions

regarding the use of the term

‘‘cultured,’’ the Commission has not

included the term in the Guides as a

‘‘safe harbor’’ (e.g., an example of an

adequate disclosure). Furthermore, the

Commission has concluded that there is

not enough evidence in the record to

establish ‘‘safe harbor’’ terms by which

makers of flux-grown gems could

distinguish their products from other

created gems. However, such

manufacturers can distinguish their

products from others by means of

truthful advertising.

Similarly, the Commission has

determined that there is not sufficient

evidence with respect to the consumer

interpretation of a phrase such as

‘‘created emerald’’ (as opposed to
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27209

325Comment 254, p.3.

326Comment 231, pp.2, 5, 22; Manning (159) p.4

(stating that there is no way to change the public

misunderstanding of ‘‘synthetic’’); River (254) p.3

(stating that consumers misunderstand ‘‘synthetic,’’

and noting that ‘‘their greatest experience is with

synthetic fabrics’’ so that ‘‘it is difficult for a clerk

in a retail store to explain that gemologists have a

special meaning for the word synthetic’’).

327Although the revised Guides no longer list the

word ‘‘synthetic,’’ some consumers may know the

technical meaning that has been attributed to the

word in the context of gemstones for many years,

and they might be deceived into thinking that

imitation stones described as ‘‘synthetic’’ have the

same physical and optical properties as natural

stones. Thus, the Commission has determined that

the provision which limits the use of the word

‘‘synthetic’’ to certain circumstances continues to

be useful.

328AGTA (49) argued, at p.17, that a phrase such

as ‘‘A ‘Chatham-created emerald ring’ implies not

that the emerald was created, but that the ring was

manufactured by Chatham.’’ (Emphasis added.)

However, it provided no evidence that consumers

interpret the phrase in that manner. If

manufacturers or sellers of these items have reason

to believe that consumers are misinterpreting this

phrase, it would be unfair or deceptive not to

correct the misunderstanding.

329Only one of the comments focused on the

issue of whether foreign words or phrases should

be added to the list of terms that are not to be used

to describe industry products. Sheaffer (249) stated,

at p.5, that it is not necessary ‘‘to identify and

specify . . . the many foreign terms which might

be misleading if used in connection with an

industry product’’ but instead believed it more

desirable to add a general admonition that it would

be unfair or deceptive ‘‘to use any foreign term

which may be accurate and appropriate in its native

language’’ but which is not otherwise generally

used or understood.

330Comment 244, p.3.

331Schwartz (52); Bridge (163); and CPAA (193).

332Honora (15); Skalet (61); NACAA (90); Bedford

(210); MJSA (226); and Preston (229). Bedford stated

that a consumer might think that ‘‘faux’’ refers to

the color of a ‘‘faux emerald.’’

333AGTA (49); Bruce (218); and Shire (221).

AGTA gave an example, at p.11, of a consumer who

thought that ‘‘faux’’ referred to the place of origin

of 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).

335Lannyte (65); Ross-Simons (67); ArtCarved

(155); Bales (156); NACSM (219); ICT (189); Service

(222); Best (225) and Franklin Mint (250). Two of

these [NACSM (219) and ICT (189)] stated that

‘‘faux’’ has become part of the English language.

Ross-Simons (67) stated that ‘‘faux’’ should be

permitted because it romances the merchandise

without deception.

336There was little comment on this suggestion.

Lannyte (65) stated, at p.11, that ‘‘it is totally

inappropriate for a school to be THE authority on

descriptive names as names will develop from

within the trade usage in the same way as language

usage changes. This smacks of censorship!’’

‘‘laboratory created’’ or ‘‘Chathamcreated’’) to justify including it in the

Guides as a safe harbor. As River stated,

the description ‘‘laboratory grown’’ is

clear immediately, without further

explanation. However, terms such as

cultured, created and synthetic ‘‘are not

as clear to the general public and are

more often misunderstood because they

are not part of the common vocabulary

in the special sense in which we use

them.’’ 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 accurately

educate consumers that the only

difference between its gemstones and

natural is the environment in which the

crystals grow.’’ 326 The Commission is

persuaded that the term ‘‘synthetic,’’ as

applied to gemstones, is misunderstood

by some consumers to mean something

fake or artificial. Therefore, the

Commission has included the phrases

‘‘laboratory grown,’’ ‘‘laboratorycreated,’’ or ‘‘[manufacturer name]-

created’’ in the revised Guides (now

§ 23.23).327 Although the Commission

has determined that these terms more

clearly communicate the nature of the

stone, sellers can still use the term

‘‘synthetic.’’ The Commission has also

included an admonition against

misusing the terms ‘‘laboratory-grown,’’

‘‘laboratory-created,’’ or ‘‘[manufacturer

name]-created.’’

The JVC also proposed adding a Note

stating that if the term ‘‘created’’ is used

to describe a synthetic stone, ‘‘the name

of the firm or company using this

product-term must be disclosed in equal

prominence and size type as the term

‘created’ . . . [and] must be separated

from the term ‘created by a dash (-) so

as clearly to disclose the stone is manmade, i.e., Chatham-Created Emerald.’’

AGTA proposed prohibiting any

synonym for ‘‘synthetic,’’ but urged that,

if the Commission decided to allow the

continued use of the term ‘‘created,’’

then ‘‘the precise language’’ from the

Chatham action should be incorporated

into the Guides.328 The effect of the

Note proposed by the JVC (and ‘‘urged’’

by AGTA) would be to prohibit the use

of ‘‘created’’ except in precisely the

form mandated by the Note. However,

there is no evidence as to how most

consumers interpret a phrase such as

‘‘created emerald.’’ The Commission has

thus determined that there is no basis

for advising against all but one specific

use of the term ‘‘created.’’ However,

although the terms ‘‘laboratory created’’

and ‘‘[manufacturer name]-created’’ will

be included in the list of ‘‘safe harbor’’

terms, the term ‘‘created’’ alone will not

be included in this list.

In the FRN, the Commission also

sought comment on whether foreign

words or phrases like ‘‘faux’’ should be

added ‘‘to the list of terms in Section

23.24(b) [of the JVC petition] that are not

to be used to describe industry

products.’’ Thirty-five comments

addressed this question.329 The Postal

Service stated that ‘‘faux’’ has been used

‘‘by disreputable promoters to confuse

unsophisticated consumers and enhance

the apparent value of their costume

jewelry.’’ 330 Three other commenters

stated that ‘‘faux’’ is only used to

deceive and should be prohibited.331

Six commenters, including NACAA,

stated that ‘‘faux’’ should be prohibited

because some consumers do not know

what 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 comments

believe the use of ‘‘faux’’ to describe

industry products should be

acceptable.335

The evidence shows that many

unsophisticated consumers do not know

what the word ‘‘faux’’ means and that it

has been used to deceive them. Thus,

the Commission has added a Note to the

Guides that states that the use of the

word ‘‘faux’’ to describe a laboratorycreated stone is not regarded as an

adequate disclosure of the fact that it is

not a natural stone.

Finally, the JVC proposed the

addition of a Note [following petition

section 23.22] that states that

descriptive words relating to species

and varieties of gemstones must be in

conformance with approved

gemological terminology. No evidence

was offered to show that there is a need

for guidance in this area.336 Thus, the

Commission has not added this Note to

the revised Guides.

3. Misuse of the Words ‘‘Real,’’

‘‘Genuine,’’ ‘‘Natural’’: § 23.20

Section 23.20 states that it is unfair to

use the words ‘‘real,’’ ‘‘genuine,’’

‘‘natural,’’ or similar terms, to describe

any ‘‘articles which are manufactured or

produced synthetically or artificially, or

artificially cultured or cultivated,’’ if

such use is likely to deceive consumers.

The JVC has proposed [in section

23.23(a) of its petition] expanding this

section to include the words ‘‘precious’’

or ‘‘cultured’’ and to state that ‘‘it must

clearly be disclosed that a man-made

industry product is not a gemstone.’’ For

the reasons discussed above, the

Commission has not included the word

‘‘cultured’’ as a ‘‘safe harbor’’ term to

describe man-made gemstones.

However, there is not sufficient

evidence to advise against the use of

‘‘cultured’’ as applied to synthetic

gemstones. Further, there is no evidence

that it is being applied to imitation

gemstones, where its use is more likely

to be misleading. Thus, the Commission
27210 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

337 ‘‘Precious’’ stones are diamonds, emeralds,

rubies, and sapphires. All other gemstones are

‘‘semi-precious.’’

338Several comments that opposed banning

‘‘semi-precious’’ stated that its use with respect to

synthetic or imitation gems would be confusing.

AGTA (49) p.11; Schwartz (52) p.3; GIA (81) p.4;

MJSA (226) p.10.

339A synthetic stone is not likely to meet the

rarity criterion necessary to be described as a gem,

although it is conceivable that a particularly

beautiful and difficult to create stone could meet

the rarity criterion. In a separate section of its

petition [23.24(a)], the JVC also proposed the

addition of a section that states that it is unfair to

use the word ‘‘gem’’ to describe a synthetic or

imitation stone. Diamonique (224) noted, at p.4,

that ‘‘there are differing quality levels with natural

gemstones, as there are with man-made gemstones.

If the term ‘gem’ is appropriate for natural material,

it should also be appropriate for man-made

material.’’ The Commission has determined that the

word ‘‘gem’’ may be appropriately used to describe

a synthetic stone and has not added the proposed

section to the Guides.

340Comment 162, p.2 (adding, at p.3, that most

gemstones are not durable ‘‘in the true sense of the

word,’’ citing as examples amber, ivory, malachite,

lapis lazuli, coral pearls, cameos, sodalite, and

turquoise).

341One comment suggested that the words ‘‘rarity

and value’’ be deleted from the current definition

of gem in § 23.21, arguing that beauty and durability

are the two basic properties of all gemstones.

Lannyte (65) pp.6, 11. However, this comment

appears to have confused the definition of

‘‘gemstone’’ with ‘‘gem.’’ As noted, the current

Guides suggest only a very limited use of the word

‘‘gem’’ is appropriate.

342Comment 18, p.3.

343Comment 222, p.4 (noting that this proposal

creates problems for ‘‘fair and competitive

advertising’’); Franklin (250) p.6 (stating that there

is no reason the term should not be used for

laboratory-created stones as long as it is properly

qualified); Lannyte (65) p.9, 10 (asking ‘‘How does

one refer to gemstones made by man when

discussing them generically?’’ and suggesting that

the Guides provide that it is unfair to use the word

‘‘gemstone’’ to refer to a synthetic stone without

disclosing that it is ‘‘not the unassisted product of

nature’’).

has not added the word ‘‘cultured’’ to

this section of the Guides.

The Commission, however, has

determined that the term ‘‘precious’’ 337

is deceptive when applied to synthetic

or imitation gemstones because it

implies rarity. Because synthetic or

imitation gemstones can be produced in

virtually unlimited quantities, they are

not ‘‘rare’’ or ‘‘precious’’ like natural

gemstones. Therefore, the Commission

has included the word ‘‘precious’’ in

this section (§ 23.24 of the revised

Guides).

The JVC also proposed (in section

23.23(b) of its petition) a section which

would in effect prohibit the use of the

term ‘‘semi-precious’’ to describe any

gemstones. The Commission has

determined that ‘‘semi-precious’’ is

deceptive when applied to synthetic or

imitation gemstones (because it implies

they occur naturally) and has included

it in § 23.24 of the revised Guides.338

The proposal to ban its use as to natural

gemstones is discussed below, as is the

proposal that the Guides state that ‘‘it

must clearly be disclosed that a manmade industry product is not a

gemstone.’’

4. Deceptive Use of ‘‘Gem’’ and

‘‘Synthetic’’: § 23.21

Section 23.21(a) in the current Guides

states 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 necessary

for qualification as a gem.’’ Section

23.21(b) states that the word ‘‘gem’’ may

not be used to describe a synthetic

product unless that product meets the

requirements of 23.21(a) and ‘‘unless

such word is immediately accompanied,

with equal conspicuity, by the word

‘synthetic,’ or by some other word or

phrase of like meaning.* * *’’ A Note

to section 23.21 states that ‘‘few

cultured pearls or synthetic stones

possess the necessary qualifications to

properly be termed ‘gems’ ’’ and that the

use of the word ‘‘gem’’ therefore should

be avoided. The Note also states that

imitation pearls, diamonds, and other

stones should not be described as

‘‘gems.’’ Finally, the Note states that

‘‘Not all diamonds or natural stones,

including those classified as precious

stones, possess the necessary

qualifications to properly be termed

‘gems.’ ’’

The current Guides do not contain

any admonitions as to the use of the

words ‘‘gem stone’’ other than the

general admonition, in § 23.18, against

misleading representations used in

connection with the sale of precious or

semi-precious gemstones. Under the

current Guides, few if any synthetic

stones are likely to qualify as ‘‘gems,’’

but synthetic stones may be described as

‘‘gemstones’’ (for example, in an

advertisement for various varieties of

stones), as long as the term is so

qualified as to disclose that the product

is not a natural stone.339 In addition, the

Guides allow lower quality natural

stones, which do not possess ‘‘the

beauty, symmetry, rarity, and value

necessary for qualification as a gem’’ to

be referred to as gemstones as long as

they are not of such low quality (e.g.,

industrial quality stones) that it would

be deceptive to so describe them.

The JVC proposed changing this

scheme. It proposed that the Guides

state that the word ‘gem’ should not be

used as a quality designation of

gemstones. It also proposed that a

definition of ‘‘gemstone’’ be added to

the Guides, along with a provision

stating that it is unfair to use the word

‘‘gemstone’’ to describe any object that

does not meet the definition. The JVC

defined gemstone as ‘‘a naturally

occurring substance which has been

carefully fashioned into a jewel suitable

for use in jewelry, for personal

adornment, display, etc. A gemstone

possesses beauty, rarity, durability and

value.’’

This definition is similar to the

definition of ‘‘gem’’ in the current

Guides but it limits the use of

‘‘gemstone’’ to natural cut and polished

stones, suitable for use in jewelry, that

are also durable. The JVC has provided

no evidence indicating that industry

members or consumers have

misunderstood the definition of ‘‘gem’’

in § 23.21 in the current Guides, nor has

it provided any evidence as to why the

definition it suggests for ‘‘gemstone’’

(which omits symmetry and adds

durability to the qualities a gem must

possess and excludes any synthetic

stone) is more accurate or useful than

the definition of ‘‘gem’’ in the current

Guides.

The part of the proposal that would

prevent natural stones from being

described as gemstones unless they

possessed beauty, rarity, durability and

value was not discussed by most

comments. However, the House of Onyx

stated, ‘‘This is a broad statement that,

if taken literally, would eliminate the

vast majority of the Gemstones currently

in the market.’’ 340 For example, under

the scheme proposed by the JVC, a

natural emerald that did not possess,

e.g., rarity, would not be a gemstone.

The Commission has determined to

retain the current Guides, which allow

lower quality natural stones, which do

not possess ‘‘the beauty, symmetry,

rarity, and value necessary for

qualification as a gem’’ to be referred to

as gemstones.341

The proposed definition of

‘‘gemstone’’ also would prevent

synthetic stones from being described as

‘‘gemstones.’’ The FRN solicited

comment on this proposal. AGS

commented simply that it is essential

‘‘that a like size declaration of the words

‘synthetic, imitation, etc.’ accompany

the description of the stone.’’ 342 Service

commented that the proposed definition

of gemstone ‘‘is not needed to avoid

deception of the consumer. As long as

the consumer is ultimately advised

whether or not the stone was naturally

occurring * * * the interest in full

disclosure has been satisfied.’’ 343 Best

noted that ‘‘gemstone’’ is ‘‘loosely used

in the industry today to refer to both

naturally occurring and laboratory
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27211

344Comment 225, attachment at p.8.

345Comment 234, p.2. Freidman did suggest that

imitation gems should not be defined as gemstones.

Id. at 3.

346Comment 231, p.5. Chatham also attached a

declaration from Robert Miller, a merchant who has

sold both Chatham-created gemstones and natural

gemstones for ten years. He stated that a prohibition

on the use of the words ‘‘gem’’ or ‘‘gemstone’’

‘‘would be inconsistent with current trade practice,

in which the words ‘gemstone’ and ‘gem’ are an

integral part of the marketing of Chatham products,

as well as most other jewelry’’ and that ‘‘prohibiting

sellers from using these common-place terms would

hurt our ability to communicate with our customers

about the very nature of Chatham products’’ and

that the end result ‘‘would be confusion on the part

of consumers who would wrongly perceive that the

prohibition is a negative reflection on the quality

of Chatham gemstones.’’ Miller declaration ¶ 8 and

9. Chatham also attached a declaration from Dr.

Frederick Pough, who received a Ph.D. in

Mineralogy from Harvard in 1935 and who has

authored hundreds of articles on mineralogy. He

states that the definitions proposed by the JVC

‘‘would represent a dramatic departure from the

way in which the terms ‘gemstone’ and ‘gem’ have

been understood and used in the trade and in

gemological circles for several decades’’ and ‘‘as it

is currently and loosely used, and as it has been

used for years, the term ‘gemstone’ does not identify

the source of the stone, or whether or not it is a

‘naturally occurring substance.’’’ Similarly, he

stated ‘‘under no current definition of ‘gem’ of

which I am aware, is the term limited to ‘naturally

occurring substances.’’’ Pough declaration ¶ 8, 9,

and 13.

347Comment 231, pp.5, 9. The eight other

commenters who sell significant quantities of

synthetic gemstones also believe it is not deceptive

to use the term for synthetic stones as long as it is

qualified to indicate that the stones are not natural

stones: 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 this

to be of minor importance, but believe neither stone

nor gemstone should be used to describe an

artificial product.’’).

349Comment 49, p.9.

350One of these, LaPrad (181) stated, at p.3, that

‘‘gemstone’’ should also be prohibited as

descriptive of any artificially colored natural stone.

351 Comment 162, p.3; NACSM (219) stated, at

p.12, that this would ‘‘limit the use of the English

language;’’ AGTA (49) stated, at p.16, that the Note

should be stricken or, if retained, ‘‘like language

should be added to the diamond section.’’

352 Onyx (162) p.3 (stating that the proposed

prohibition ‘‘flies in the face of fact’’); NACSM (219)

p.13 (opposing the provision and describing it as a

restrictive limitation for which no justification has

been given); Service (222) p.5 (stating that there is

no reason to prohibit a phrase such as ‘‘gemstone

jewelry box’’).

353 Thorpe (7) p.2; Capital (19) p.2.

354 Comment 49, p.10

355 Comment 61, p.5.

manufactured stones.’’ 344 Friedman

stated, ‘‘[t]o our customers, the

laboratory grown gems have gained

acceptance as, and are, gemstones.’’ 345

Chatham noted that it has used the

terms ‘‘gemstone’’ and ‘‘gem’’ virtually

from its inception in 1946 and that the

terms ‘‘have been adopted and widely

used by tradespeople in the jewelry

industry * * * To date there has not

been any suggestion (other than by the

JVC) that consumers have been misled

thereby.’’ 346 Chatham also noted that

the proposal would place Chatham

gemstones ‘‘at a competitive

disadvantage vis-a-vis their natural

counterparts and would do so for no

justifiable reason.’’ 347

Although many commenters

supported the JVC proposal, few gave

any reason beyond stating that

‘‘synthetics are not natural.’’ GIA agreed

that ‘‘gemstone’’ should be limited to

natural stones because it implies that

the material occurred in nature.348

AGTA stated that synthetics ‘‘emulate

and often approximate the appearance

of 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 the

distinction in the consumer’s mind as to

the important differences between the

two. In all probability, this will result in

higher consumer prices for synthetic

and simulated materials.’’ 349 Other

commenters agreed that synthetics

should not be described as

gemstones.350

The current Guides permit the use of,

e.g., ‘‘synthetic ruby’’ or ‘‘imitation

ruby.’’ The Commission is persuaded

that consumers would understand that

gemstones described as ‘‘laboratorycreated gemstones’’ or ‘‘imitation

gemstones’’ are not natural gemstones.

Thus, the word ‘‘gemstone’’ is not

deceptive when applied to synthetic or

imitation stones, if its use is properly

qualified by a word or phrase that

discloses that the stone is not natural.

The Commission therefore has added

the word ‘‘gemstone’’ to § 23.19(b) of the

current Guides, which states that the

name of a precious or semi-precious

gemstone as descriptive of a synthetic or

imitation stone should be adequately

qualified to disclose that it is not a

natural stone. However, for the reasons

described above, the Commission has

not adopted the definition of

‘‘gemstone’’ suggested by the JVC nor

changed the definition of ‘‘gem’’ in

§ 23.21 of the current Guides.

As noted, the JVC also proposed

adding a Note recommending that the

word ‘‘gem’’ or ‘‘similar term’’ not be

used as a quality designation or as

descriptive of gemstones because no

criteria for these terms exist and ‘‘their

use to describe, imply or represent

quality could be misleading.’’ However,

the JVC cited no evidence that such

terms have actually been misleading to

consumers. Moreover, as Onyx noted,

‘‘there are ‘Gem’ quality Gemstones as

well as ‘trash’ quality in the same

Gemstone.’’ 351 Truthful, and indeed

informative, use of the word ‘‘gem’’ is

possible and thus, the Commission has

not adopted this proposal.

The JVC also proposed adding a

section to the Guides stating that

‘‘gemstone’’ may not be used to describe

any object ‘‘not fashioned for use as

jewelry or personal adornment, e.g.,

statues, ashtrays, boxes, etc.’’ unless

qualified by a term such as ‘‘carving’’ or

‘‘engraving’’ [Petition 23.20(b)]. No

explanation was offered as to how such

a use could deceive consumers.352

The Commission has not included

this section in the Guides because items

other than jewelry are sometimes made

of gemstones and it would not be

deceptive to so describe them.

The JVC proposed that a section be

added to the Guides stating that it is

unfair to use the term ‘‘semi-precious’’

when referring to gemstones or any

synthetic, imitation, or simulated stone.

[Petition 23.23(b)] The FRN solicited

comment on this proposal.

No explanation was offered as to why

the term ‘‘semi-precious’’ was unfair or

deceptive when applied to natural

gemstones. Some commenters who

favored the proposal stated that it is a

‘‘misnomer’’ or that it ‘‘gives a false

impression of a gem having little

intrinsic value; an impression which

may not be correct.’’ 353 However, sellers

are not required to describe their wares

as semi-precious; the import of the JVC’s

proposal would be to prohibit those

who wish to so describe their wares

from doing so. AGTA commented that,

while it believes ‘‘semi-precious’’ is

denigrating to ‘‘natural gemstones other

than Ruby, Emerald, Sapphire and

Diamond which are traditionally

referred to in the trade as the ‘precious

gemstones,’’’ it did not believe it should

be illegal to so describe natural

stones.354 Skalet explained that the term

‘‘semi-precious’’ has been used in the

jewelry and gemstone industry for

generations ‘‘as a reference to natural

gemstones of moderate value and wide

availability.’’ 355 Based on the

comments, the Commission has

concluded that there is no basis for

advising against the use of this term to

describe natural gemstones.

Finally, the JVC also proposed

redrafting all sections pertaining to

precious and semi-precious stones,

removing the terms ‘‘precious’’ and

‘‘semi-precious’’ and substituting

‘‘gemstone.’’ However, there is no valid

purpose for this change, and the

Commission has determined that

substituting the term ‘‘gemstone’’ for

‘‘precious and semi-precious stones’’

would make the Guides less clear.
27212 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

356 The JVC proposed that the Guides state that

it is unfair ‘‘to use the word ‘‘flawless’’ as a quality

description of any gemstone which discloses

blemishes, inclusions, or clarity faults of any sort

when examined under a corrected magnifier at 10-

power, with adequate illumination, by a person

skilled in gemstone grading.’’ However, no

reference was made, in the petition or the

comments, to removal of blemishes by internal

lasering of gemstones.

357 There was little comment about this

provision. Diamonique (224) stated, at p.4, that the

change ‘‘regarding the examination of gemstones

under 10-power magnification is radical and would

have far-reaching consequences. This proposed

change replaces practices and guidelines currently

in use worldwide, requiring examination of

gemstones with the unaided eye.’’ However, no

other commenter stated that the proposal was a

change from existing practices. Lannyte (65)

suggested, at p.10, modifying the section to state

that it is unfair ‘‘to use the words ‘‘flawless’’ or

‘‘perfect’’ or any other description which would

lead a buyer to presume that such gemstone is

totally without blemishes, inclusion or other faults

when viewed by a skilled person under ten times

magnification 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 both

diamonds and colored gems,’’ but if the use of the

term ‘‘perfect’’ is acceptable for diamonds, it should

also be acceptable for colored gemstones.

Otherwise, there ‘‘would be a passive inference that

colored gemstones are less desirable than

diamonds. There are certainly as many ‘perfect,’ i.e.

flawless (under 10X magnification), top color, wellcut gemstones as there are diamonds.’’

359 Diamonique (224) p.3 (stating that ‘‘the

Guides should contain more specific guidelines in

this 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 recognized

difference in the marketplace between a ‘synthetic’

. . . and an ‘imitation’ stone’’); Diamonique (224) p.3

(stating that ‘‘cultured, synthetic and simulated

gemstones would be described according to the

same standards used for natural gemstones. To do

otherwise would create confusion within the

industry itself as well as among consumers’’).

361 NACSM (219) p.27 (stating that the attempt

to ‘‘ban’’ the word ‘‘reproduction’’ is dubious); ISA

(237A) p.15 (stating that this would prohibit the use

of ‘‘reproduction’’ and ‘‘replica’’ to describe ‘‘items

which are in fact reproductions and replicas. We

recommend more emphasis on section 23.1(a), the

general paragraph which makes clear that the intent

of the Guides is to prohibit deception and deceptive

use of such terms’’).

1The Guides for the Watch Industry, 16 C.F.R.

Part 245, address watchcases and permanently

attached watchbands.

5. Misuse of the Words ‘‘Flawless,’’

‘‘Perfect,’’ Etc.

The JVC proposed the addition of a

new section [petition 23.21] that

prohibits the use of the word ‘‘perfect’’

when applied to gemstones and limits

‘‘flawless’’ to gemstones that do not

have blemishes. The JVC’s definition of

‘‘flawless’’ is similar to the provision in

§ 23.10 of the current Guides, which

applies only to diamonds.356 A claim

that a colored stone is flawless when it

is not is deceptive. The Commission has

determined that the addition of this

section clarifies the meaning of

‘‘flawless.’’ 357

Part (b) of the section proposed by the

JVC prohibits the use of ‘‘perfect’’ as a

quality description ‘‘of any gemstone

other than a diamond.’’ No reasons were

offered as to why the use of ‘‘perfect’’

as applied to colored stones would

always be deceptive, and numerous

comments objected to this provision.358

On the basis of the comments, the

Commission has not included this

provision. However, the Commission

has determined that the industry may

need guidance as to the use of ‘‘perfect’’

with respect to gemstones,359 and has

included a provision (like the provision

for diamonds) that ‘‘perfect’’ should be

used only for a gemstone that is flawless

and not of inferior color or cut.

The JVC proposed that the Guides

state it is unfair to use ‘‘flawless’’ or

‘‘perfect’’ to describe synthetics or

imitations. No reasons were offered as to

why the use of ‘‘flawless’’ or ‘‘perfect’’

as applied to synthetic stones would

always be deceptive. Thus, the

Commission has concluded that there is

not enough evidence to include this

provision as to synthetic stones.

However, because the terms imply that

a stone is a finer quality and,

accordingly, a greater value, when used

to describe imitation stones, which are

almost always flawless, they could be

misleading.360 Thus, the terms

‘‘flawless’’ and ‘‘perfect’’ should not be

used to describe imitation stones.

6. Misuse of the Words ‘‘Reproduction,’’

or ‘‘Replica’’: § 23.21(c)

Section 23.21(c) of the current Guides

states that it is unfair to use the words

‘‘reproduction,’’ ‘‘replica,’’ or similar

terms to describe cultured or imitation

pearls or any imitation of precious or

semi-precious stones. The JVC proposed

changing this section so that it only

prohibits the use of ‘‘reproduction’’ or

‘‘replica’’ when applied to synthetic or

imitation stones [petition 23.24(b)]. If

the nature of the material used in a

reproduction or replica is adequately

disclosed, as is advised by other

sections of the Guides, it is not clear

that the use of these terms would be

deceptive or unfair.361 Accordingly, the

Commission has deleted this entire

section from the Guides.

List of Subjects in 16 CFR Parts 19 and

23

Advertising, Labeling, Trade

practices, Watch bands and jewelry.

Accordingly, Part 23 is revised to read

as follows:

PART 23—GUIDES FOR THE

JEWELRY, PRECIOUS METALS, AND

PEWTER 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 of

pewter.

23.9 Additional guidance for the use of

quality 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 artificial

coloring, 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 cultured

pearls.

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, gold

filled, gold overlay, rolled gold plate,

silver, and platinum industry products.

Authority: Sec. 6, 5, 38 Stat. 721, 719; 15

U.S.C. 46, 45.

§ 23.0 Scope and application.

(a) These guides apply to jewelry

industry products, which include, but

are not limited to, the following:

gemstones and their laboratory-created

and imitation substitutes; natural and

cultured pearls and their imitations; and

metallic watch bands not permanently

attached to watches.1 These guides also

apply to articles, including optical

frames, pens and pencils, flatware, and
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27213

2 See § 23.4(c) for examples of acceptable

markings and descriptions.

hollowware, fabricated from precious

metals (gold, silver and platinum group

metals), precious metal alloys, and their

imitations. These guides also apply to

all articles made from pewter. For the

purposes of these guides, all articles

covered by these guides are defined as

‘‘industry products.’’

(b) These guides apply to persons,

partnerships, or corporations, at every

level of the trade (including but not

limited to manufacturers, suppliers, and

retailers) engaged in the business of

offering for sale, selling, or distributing

industry products.

Note to paragraph (b): To prevent

consumer deception, persons, partnerships,

or corporations in the business of appraising,

identifying, or grading industry products

should utilize the terminology and standards

set forth in the guides.

(c) These guides apply to claims and

representations about industry products

included in labeling, advertising,

promotional materials, and all other

forms of marketing, whether asserted

directly or by implication, through

words, symbols, emblems, logos,

illustrations, depictions, product brand

names, 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 an

industry product.

Note 1 to § 23.1: If, in the sale or offering

for sale of an industry product, any

representation is made as to the grade

assigned the product, the identity of the

grading system used should be disclosed.

Note 2 to § 23.1: To prevent deception, any

qualifications or disclosures, such as those

described in the guides, should be

sufficiently clear and prominent. Clarity of

language, relative type size and proximity to

the claim being qualified, and an absence of

contrary claims that could undercut

effectiveness, will maximize the likelihood

that the qualifications and disclosures are

appropriately clear and prominent.

§ 23.2 Misleading illustrations.

It is unfair or deceptive to use, as part

of any advertisement, packaging

material, label, or other sales promotion

matter, any visual representation,

picture, televised or computer image,

illustration, diagram, or other depiction

which, either alone or in conjunction

with any accompanying words or

phrases, misrepresents the type, kind,

grade, quality, quantity, metallic

content, size, weight, cut, color,

character, treatment, substance,

durability, serviceability, origin,

preparation, production, manufacture,

distribution, or any other material

aspect of an industry product.

Note to § 23.2: An illustration or depiction

of a diamond or other gemstone that portrays

it in greater than its actual size may mislead

consumers, unless a disclosure is made about

the item’s true size.

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

‘‘hand-polished,’’ etc.

(a) It is unfair or deceptive to

represent, directly or by implication,

that any industry product is hand-made

or hand-wrought unless the entire

shaping and forming of such product

from raw materials and its finishing and

decoration were accomplished by hand

labor and manually-controlled methods

which permit the maker to control and

vary the construction, shape, design,

and finish of each part of each

individual product.

Note to paragraph (a): As used herein,

‘‘raw materials’’ include bulk sheet, strip,

wire, and similar items that have not been

cut, shaped, or formed into jewelry parts,

semi-finished parts, or blanks.

(b) It is unfair or deceptive to

represent, directly or by implication,

that any industry product is handforged, hand-engraved, hand-finished,

or hand-polished, or has been otherwise

hand-processed, unless the operation

described was accomplished by hand

labor and manually-controlled methods

which permit the maker to control and

vary the type, amount, and effect of

such operation on each part of each

individual product.

§ 23.4 Misrepresentation as to gold

content.

(a) It is unfair or deceptive to

misrepresent the presence of gold or

gold alloy in an industry product, or the

quantity or karat fineness of gold or gold

alloy contained in the product, or the

karat fineness, thickness, weight ratio,

or manner of application of any gold or

gold alloy plating, covering, or coating

on any surface of an industry product or

part thereof.

(b) The following are examples of

markings or descriptions that may be

misleading: 2

(1) Use of the word ‘‘Gold’’ or any

abbreviation, without qualification, to

describe all or part of an industry

product, which is not composed

throughout of fine (24 karat) gold.

(2) Use of the word ‘‘Gold’’ or any

abbreviation to describe all or part of an

industry product composed throughout

of an alloy of gold, unless a correct

designation of the karat fineness of the

alloy immediately precedes the word

‘‘Gold’’ or its abbreviation, and such

fineness designation is of at least equal

conspicuousness.

(3) Use of the word ‘‘Gold’’ or any

abbreviation to describe all or part of an

industry product that is not composed

throughout of gold or a gold alloy, but

is surface-plated or coated with gold

alloy, unless the word ‘‘Gold’’ or its

abbreviation is adequately qualified to

indicate that the product or part is only

surface-plated.

(4) Use of the term ‘‘Gold Plate,’’

‘‘Gold Plated,’’ or any abbreviation to

describe all or part of an industry

product unless such product or part

contains a surface-plating of gold alloy,

applied by any process, which is of such

thickness and extent of surface coverage

that reasonable durability is assured.

(5) Use of the terms ‘‘Gold Filled,’’

‘‘Rolled Gold Plate,’’ ‘‘Rolled Gold

Plated,’’ ‘‘Gold Overlay,’’ or any

abbreviation to describe all or part of an

industry product unless such product or

part contains a surface-plating of gold

alloy applied by a mechanical process

and of such thickness and extent of

surface coverage that reasonable

durability is assured, and unless the

term is immediately preceded by a

correct designation of the karat fineness

of the alloy that is of at least equal

conspicuousness as the term used.

(6) Use of the terms ‘‘Gold Plate,’’

‘‘Gold Plated,’’ ‘‘Gold Filled,’’ ‘‘Rolled

Gold Plate,’’ ‘‘Rolled Gold Plated,’’

‘‘Gold Overlay,’’ or any abbreviation to

describe a product in which the layer of

gold plating has been covered with a

base metal (such as nickel), which is

covered with a thin wash of gold, unless

there is a disclosure that the primary

gold coating is covered with a base

metal, which is gold washed.

(7) Use of the term ‘‘Gold

Electroplate,’’ ‘‘Gold Electroplated,’’ or

any abbreviation to describe all or part

of an industry product unless such

product or part is electroplated with

gold or a gold alloy and such

electroplating is of such karat fineness,

thickness, and extent of surface

coverage that reasonable durability is

assured.

(8) Use of any name, terminology, or

other term to misrepresent that an

industry product is equal or superior to,

or different than, a known and

established type of industry product

with reference to its gold content or

method of manufacture.

(9) Use of the word ‘‘Gold’’ or any

abbreviation, or of a quality mark

implying gold content (e.g., 9 karat), to

describe all or part of an industry

product that is composed throughout of
27214 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

3The term ‘‘substantial thickness’’ means that all

areas of the plating are of such thickness as to

assure a durable coverage of the base metal to

which it has been affixed. Since industry products

include items having surfaces and parts of surfaces

that are subject to different degrees of wear, the

thickness of plating for all items or for different

areas of the surface of individual items does not

necessarily have to be uniform.

4A product containing 1 micron (otherwise

known as 1μ) of 12 karat gold is equivalent to onehalf micron of 24 karat gold. 5See footnote 3.

6Under the National Stamping Act, articles or

parts made of gold or of gold alloy that contain no

solder have a permissible tolerance of three parts

per thousand. If the part tested contains solder, the

permissible tolerance is seven parts per thousand.

For full text, see 15 U.S.C. 295, et seq.

7See footnote 3.

an alloy of gold of less than 10 karat

fineness.

Note to paragraph (b) § 23.4: The

provisions regarding the use of the word

‘‘Gold,’’ or any abbreviation, as described

above, are applicable to ‘‘Duragold,’’

‘‘Diragold,’’ ‘‘Noblegold,’’ ‘‘Goldine,’’

‘‘Layered Gold,’’ or any words or terms of

similar meaning.

(c) The following are examples of

markings and descriptions that are

consistent with the principles described

above:

(1) An industry product or part

thereof, composed throughout of an

alloy of gold of not less than 10 karat

fineness, may be marked and described

as ‘‘Gold’’ when such word ‘‘Gold,’’

wherever appearing, is immediately

preceded by a correct designation of the

karat fineness of the alloy, and such

karat designation is of equal

conspicuousness as the word ‘‘Gold’’

(for example, ‘‘14 Karat Gold,’’ ‘‘14 K.

Gold,’’ or ‘‘14 Kt. Gold’’). Such product

may also be marked and described by a

designation of the karat fineness of the

gold alloy unaccompanied by the word

‘‘Gold’’ (for example, ‘‘14 Karat,’’ ‘‘14

Kt.,’’ or ‘‘14 K.’’).

Note to paragraph (c)(1): Use of the term

‘‘Gold’’ or any abbreviation to describe all or

part of a product that is composed

throughout of gold alloy, but contains a

hollow center or interior, may mislead

consumers, unless the fact that the product

contains a hollow center is disclosed in

immediate proximity to the term ‘‘Gold’’ or

its abbreviation (for example, ‘‘14 Karat GoldHollow Center,’’ or ‘‘14 K. Gold Tubing,’’

when of a gold alloy tubing of such karat

fineness). Such products should not be

marked or described as ‘‘solid’’ or as being

solidly of gold or of a gold alloy. For

example, when the composition of such a

product is 14 karat gold alloy, it should not

be described or marked as either ‘‘14 Kt.

Solid Gold’’ or as ‘‘Solid 14 Kt. Gold.’’

(2) An industry product or part

thereof, on which there has been affixed

on all significant surfaces, by any

process, a coating, electroplating, or

deposition by any means, of gold or gold

alloy of not less than 10 karat fineness

that is of substantial thickness,3 and the

minimum thickness throughout of

which is equivalent to one-half micron

(or approximately 20 millionths of an

inch) of fine gold,4 may be marked or

described as ‘‘Gold Plate’’ or ‘‘Gold

Plated,’’ or abbreviated, as, for example,

G.P. The exact thickness of the plate

may be marked on the item, if it is

immediately followed by a designation

of the karat fineness of the plating

which is of equal conspicuousness as

the term used (as, for example, ‘‘2

microns 12 K. gold plate’’ or ‘‘2μ 12 K.

G.P.’’ for an item plated with 2 microns

of 12 karat gold.)

Note paragraph (c)(2) to paragraph (b): If

an industry product has a thicker coating or

electroplating of gold or gold alloy on some

areas than others, the minimum thickness of

the plate should be marked.

(3) An industry product or part

thereof on which there has been affixed

on all significant surfaces by soldering,

brazing, welding, or other mechanical

means, a plating of gold alloy of not less

than 10 karat fineness and of substantial

thickness 5 may be marked or described

as ‘‘Gold Filled,’’ ‘‘Gold Overlay,’’

‘‘Rolled Gold Plate,’’ or an adequate

abbreviation, when such plating

constitutes at least 1⁄20th of the weight

of the metal in the entire article and

when the term is immediately preceded

by a designation of the karat fineness of

the plating which is of equal

conspicuousness as the term used (for

example, ‘‘14 Karat Gold Filled,’’ ‘‘14

Kt. Gold Filled,’’ ‘‘14 Kt. G.F.,’’ ‘‘14 Kt.

Gold Overlay,’’ or ‘‘14K. R.G.P.’’). When

conforming to all such requirements

except the specified minimum of 1⁄20th

of the weight of the metal in the entire

article, the terms ‘‘Gold Overlay’’ and

‘‘Rolled Gold Plate’’ may be used when

the karat fineness designation is

immediately preceded by a fraction

accurately disclosing the portion of the

weight of the metal in the entire article

accounted for by the plating, and when

such fraction is of equal

conspicuousness as the term used (for

example, ‘‘1⁄40th 12 Kt. Rolled Gold

Plate’’ or ‘‘1⁄40 12 Kt. R.G.P.’’).

(4) An industry product or part

thereof, on which there has been affixed

on all significant surfaces by an

electrolytic process, an electroplating of

gold, or of a gold alloy of not less than

10 karat fineness, which has a minimum

thickness throughout equivalent to .175

microns (approximately 7/1,000,000ths of

an inch) of fine gold, may be marked or

described as ‘‘Gold Electroplate’’ or

‘‘Gold Electroplated,’’ or abbreviated, as,

for example, ‘‘G.E.P.’’ When the

electroplating meets the minimum

fineness but not the minimum thickness

specified above, the marking or

description may be ‘‘Gold Flashed’’ or

‘‘Gold Washed.’’ When the

electroplating is of the minimum

fineness specified above and of a

minimum thickness throughout

equivalent to two and one half (21⁄2)

microns (or approximately 100/1,000,000ths

of an inch) of fine gold, the marking or

description may be ‘‘Heavy Gold

Electroplate’’ or ‘‘Heavy Gold

Electroplated.’’ When electroplatings

qualify for the term ‘‘Gold Electroplate’’

(or ‘‘Gold Electroplated’’), or the term

‘‘Heavy Gold Electroplate’’ (or ‘‘Heavy

Gold Electroplated’’), and have been

applied by use of a particular kind of

electrolytic process, the marking may be

accompanied by identification of the

process used, as for example, ‘‘Gold

Electroplated (X Process)’’ or ‘‘Heavy

Gold Electroplated (Y Process).’’

(d) The provisions of this section

relating to markings and descriptions of

industry products and parts thereof are

subject to the applicable tolerances of

the National Stamping Act or any

amendment thereof.6

Note 4 to paragraph (d) : Exemptions

recognized in the assay of karat gold industry

products and in the assay of gold filled, gold

overlay, and rolled gold plate industry

products, and not to be considered in any

assay 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’’ if

such mark or description misrepresents

the product’s true composition.

(b) An industry product may be

described or marked as ‘‘vermeil’’ if it

consists of a base of sterling silver

coated or plated on all significant

surfaces with gold, or gold alloy of not

less than 10 karat fineness, that is of

substantial thickness 7 and a minimum

thickness throughout equivalent to two

and one half (21⁄2) microns (or

approximately 100/1,000,000ths of an inch)

of fine gold.

Note 1 to § 23.5: It is unfair or deceptive

to use the term ‘‘vermeil’’ to describe a

product in which the sterling silver has been

covered with a base metal (such as nickel)

plated with gold unless there is a disclosure

that the sterling silver is covered with a base

metal that is plated with gold.

Note 2 to § 23.5: Exemptions recognized in

the assay of gold filled, gold overlay, and

rolled gold plate industry products are listed

in the Appendix.

§ 23.6 Misrepresentation as to silver

content.

(a) It is unfair or deceptive to

misrepresent that an industry product
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27215

8See footnote 3.

9Under the National Stamping Act, sterling silver

articles or parts that contain no solder have a

permissible tolerance of four parts per thousand. If

the part tested contains solder, the permissible

tolerance is ten parts per thousand. For full text, see

15 U.S.C. 294, et seq.

contains silver, or to misrepresent an

industry product as having a silver

content, plating, electroplating, or

coating.

(b) It is unfair or deceptive to mark,

describe, or otherwise represent all or

part of an industry product as ‘‘silver,’’

‘‘solid silver,’’ ‘‘Sterling Silver,’’

‘‘Sterling,’’ or the abbreviation ‘‘Ster.’’

unless it is at least 925/1,000ths pure

silver.

(c) It is unfair or deceptive to mark,

describe, or otherwise represent all or

part 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 or

part of an industry product as being

plated or coated with silver unless all

significant surfaces of the product or

part contain a plating or coating of silver

that is of substantial thickness.8

(e) The provisions of this section

relating to markings and descriptions of

industry products and parts thereof are

subject to the applicable tolerances of

the National Stamping Act or any

amendment thereof.9

Note 1 to § 23.6: The National Stamping

Act provides that silverplated articles shall

not ‘‘be stamped, branded, engraved or

imprinted with the word ‘sterling’ or the

word ‘coin,’ either alone or in conjunction

with other words or marks.’’ 15 U.S.C. 297(a).

Note 2 to § 23.6: Exemptions recognized in

the assay of silver industry products are

listed in the Appendix.

§ 23.7 Misuse of words ‘‘platinum,’’

‘‘iridium,’’ ‘‘palladium,’’ ‘‘ruthenium,’’

‘‘rhodium,’’ and ‘‘osmium.’’

It is an unfair trade practice to use the

words ‘‘platinum,’’ ‘‘iridium,’’

‘‘palladium,’’ ‘‘ruthenium,’’ ‘‘rhodium,’’

or ‘‘osmium,’’ or any abbreviations

thereof, as a marking on, or as

descriptive of, any industry product or

part thereof, under any circumstance or

condition having the capacity and

tendency or effect of deceiving

purchasers or prospective purchasers as

to the true composition of such product

or part.

Note 1 to § 23.7: Commercial Standard

CS66–38, issued by the National Bureau of

Standards of the U.S. Department of

Commerce, covers the marking of articles

made wholly or in part of platinum.

Markings on industry products which are in

compliance with the requirements of CS66–

38 will be regarded as among those fulfilling

the requirements relating thereto which are

contained in this section.

Note 2 to § 23.7: See also § 23.9 entitled

‘‘Additional guidance for the use of quality

marks.’’

§ 23.8 Misrepresentation as to content of

pewter.

(a) It is unfair or deceptive to mark,

describe, or otherwise represent all or

part of an industry product as ‘‘Pewter’’

or any abbreviation if such mark or

description misrepresents the product’s

true composition.

(b) An industry product or part

thereof may be described or marked as

‘‘Pewter’’ or any abbreviation if it

consists of at least 900 parts per 1000

Grade A Tin, with the remainder

composed of metals appropriate for use

in pewter.

§ 23.9 Additional guidance for the use of

quality marks.

As used in these guides, the term

‘‘quality mark’’ means any letter, figure,

numeral, symbol, sign, word, or term, or

any combination thereof, that has been

stamped, embossed, inscribed, or

otherwise placed on any industry

product and which indicates or suggests

that any such product is composed

throughout of any precious metal or any

precious metal alloy or has a surface or

surfaces on which there has been plated

or deposited any precious metal or

precious metal alloy. Included are the

words ‘‘gold,’’ ‘‘karat,’’ ‘‘carat,’’ ‘‘silver,’’

‘‘sterling,’’ ‘‘vermeil,’’ ‘‘platinum,’’

‘‘iridium,’’ ‘‘palladium,’’ ‘‘ruthenium,’’

‘‘rhodium,’’ or ‘‘osmium,’’ or any

abbreviations thereof, whether used

alone or in conjunction with the words

‘‘filled,’’ ‘‘plated,’’ ‘‘overlay,’’ or

‘‘electroplated,’’ or any abbreviations

thereof. Quality markings include those

in which the words or terms ‘‘gold,’’

‘‘karat,’’ ‘‘silver,’’ ‘‘vermeil,’’ ‘‘platinum’’

(or platinum group metals), or their

abbreviations are included, either

separately or as suffixes, prefixes, or

syllables.

(a) Deception as to applicability of

marks. (1) If a quality mark on an

industry product is applicable to only

part of the product, the part of the

product to which it is applicable (or

inapplicable) should be disclosed when,

absent such disclosure, the location of

the mark misrepresents the product or

part’s true composition.

(2) If a quality mark is applicable to

only part of an industry product, but not

another part which is of similar surface

appearance, each quality mark should

be closely accompanied by an

identification of the part or parts to

which the mark is applicable.

(b) Deception by reason of difference

in the size of letters or words in a

marking or markings. It is unfair or

deceptive to place a quality mark on a

product in which the words or letters

appear in greater size than other words

or letters of the mark, or when different

markings placed on the product have

different applications and are in

different sizes, when the net impression

of any such marking would be

misleading as to the metallic

composition of all or part of the

product. (An example of improper

marking would be the marking of a gold

electroplated product with the word

‘‘electroplate’’ in small type and the

word ‘‘gold’’ in larger type, with the

result that purchasers and prospective

purchasers of the product might only

observe the word ‘‘gold.’’)

Note 1 to § 23.9: Legibility of markings. If

a quality mark is engraved or stamped on an

industry product, or is printed on a tag or

label attached to the product, the quality

mark should be of sufficient size type as to

be legible to persons of normal vision, should

be so placed as likely to be observed by

purchasers, and should be so attached as to

remain thereon until consumer purchase.

Note 2 to § 23.9: Disclosure of identity of

manufacturers, processors, or distributors.

The National Stamping Act provides that any

person, firm, corporation, or association,

being a manufacturer or dealer subject to

section 294 of the Act, who applies or causes

to be applied a quality mark, or imports any

article bearing a quality mark ‘‘which

indicates or purports to indicate that such

article is made in whole or in part of gold

or silver or of an alloy of either metal’’ shall

apply to the article the trademark or name of

such 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 any

other term of similar meaning to

describe an industry product unless all

parts of the product will be immune

from rust and other forms of corrosion

during the life expectancy of the

product; or

(2) Use the terms ‘‘corrosion

resistant,’’ ‘‘rust resistant,’’ or any other

term of similar meaning to describe an

industry product unless all parts of the

product are of such composition as to

not be subject to material damage by

corrosion or rust during the major

portion of the life expectancy of the

product under normal conditions of use.

(b) Among the metals that may be

considered as corrosion (and rust)

resistant are: Pure nickel; Gold alloys of

not less than 10 Kt. fineness; and

Austenitic stainless steels.

§ 23.11 Definition and misuse of the word

‘‘diamond.’’

(a) A diamond is a natural mineral

consisting essentially of pure carbon
27216 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

crystallized in the isometric system. It is

found in many colors. Its hardness is 10;

its specific gravity is approximately

3.52; and it has a refractive index of

2.42.

(b) It is unfair or deceptive to use the

unqualified word ‘‘diamond’’ to

describe or identify any object or

product not meeting the requirements

specified in the definition of diamond

provided above, or which, though

meeting such requirements, has not

been symmetrically fashioned with at

least seventeen (17) polished facets.

Note 1 to paragraph (b): It is unfair or

deceptive to represent, directly or by

implication, that industrial grade diamonds

or other non-jewelry quality diamonds are of

jewelry quality.

(c) The following are examples of

descriptions that are not considered

unfair or deceptive:

(1) The use of the words ‘‘rough

diamond’’ to describe or designate

uncut or unfaceted objects or products

satisfying the definition of diamond

provided above; or

(2) The use of the word ‘‘diamond’’ to

describe or designate objects or products

satisfying the definition of diamond but

which have not been symmetrically

fashioned with at least seventeen (17)

polished facets when in immediate

conjunction with the word ‘‘diamond’’

there is either a disclosure of the

number of facets and shape of the

diamond or the name of a type of

diamond that denotes shape and that

usually has less than seventeen (17)

facets (e.g., ‘‘rose diamond’’).

Note 2 to paragraph (c): Additional

guidance about imitation and laboratorycreated diamond representations and misuse

of 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 the

word ‘‘flawless’’ to describe any

diamond that discloses flaws, cracks,

inclusions, carbon spots, clouds,

internal lasering, or other blemishes or

imperfections of any sort when

examined under a corrected magnifier at

10-power, with adequate illumination,

by a person skilled in diamond grading.

(b) It is unfair or deceptive to use the

word ‘‘perfect,’’ or any representation of

similar meaning, to describe any

diamond unless the diamond meets the

definition of ‘‘flawless’’ and is not of

inferior color or make.

(c) It is unfair or deceptive to use the

words ‘‘flawless’’ or ‘‘perfect’’ to

describe a ring or other article of jewelry

having a ‘‘flawless’’ or ‘‘perfect’’

principal diamond or diamonds, and

supplementary stones that are not of

such quality, unless there is a disclosure

that the description applies only to the

principal diamond or diamonds.

§ 23.13 Disclosing existence of artificial

coloring, infusing, etc.

If a diamond has been treated by

artificial coloring, tinting, coating,

irradiating, heating, by the use of

nuclear bombardment, or by the

introduction or the infusion of any

foreign substance, it is unfair or

deceptive not to disclose that the

diamond has been treated and that the

treatment is not or may not be

permanent.

§ 23.14 Misuse of the term ‘‘blue white.’’

It is unfair or deceptive to use the

term ‘‘blue white’’ or any representation

of similar meaning to describe any

diamond that under normal, north

daylight or its equivalent shows any

color or any trace of any color other

than blue or bluish.

§ 23.15 Misuse of the term ‘‘properly cut,’’

etc.

It is unfair or deceptive to use the

terms ‘‘properly cut,’’ ‘‘proper cut,’’

‘‘modern cut,’’ or any representation of

similar meaning to describe any

diamond that is lopsided, or is so thick

or so thin in depth as to detract

materially from the brilliance of the

stone.

Note to § 23.15: Stones that are commonly

called ‘‘fisheye’’ or ‘‘old mine’’ should not be

described as ‘‘properly cut,’’ ‘‘modern cut,’’

etc.

§ 23.16 Misuse of the words ‘‘brilliant’’ and

‘‘full cut.’’

It is unfair or deceptive to use the

unqualified expressions ‘‘brilliant,’’

‘‘brilliant cut,’’ or ‘‘full cut’’ to describe,

identify, or refer to any diamond except

a round diamond that has at least thirtytwo (32) facets plus the table above the

girdle and at least twenty-four (24)

facets below.

Note to § 23.16: Such terms should not be

applied to single or rose-cut diamonds. They

may be applied to emerald-(rectangular) cut,

pear-shaped, heart-shaped, oval-shaped, and

marquise-(pointed oval) cut diamonds

meeting the above-stated facet requirements

when, in immediate conjunction with the

term used, the form of the diamond is

disclosed.

§ 23.17 Misrepresentation of weight and

‘‘total weight.’’

(a) It is unfair or deceptive to

misrepresent the weight of a diamond.

(b) It is unfair or deceptive to use the

word ‘‘point’’ or any abbreviation in any

representation, advertising, marking, or

labeling to describe the weight of a

diamond, 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 a

standard unit of weight for a diamond and is

equivalent to 200 milligrams (1⁄5 gram). A

point is one one hundredth (1⁄100) of a carat.

(c) If diamond weight is stated as

decimal parts of a carat (e.g., .47 carat),

the stated figure should be accurate to

the last decimal place. If diamond

weight is stated to only one decimal

place (e.g., .5 carat), the stated figure

should be accurate to the second

decimal place (e.g., ‘‘.5 carat’’ could

represent a diamond weight between

.495–.504).

(d) If diamond weight is stated as

fractional parts of a carat, a conspicuous

disclosure of the fact that the diamond

weight is not exact should be made in

close proximity to the fractional

representation and a disclosure of a

reasonable range of weight for each

fraction (or the weight tolerance being

used) should also be made.

Note to paragraph (d): When fractional

representations of diamond weight are made,

as described in paragraph d of this section,

in catalogs or other printed materials, the

disclosure of the fact that the actual diamond

weight is within a specified range should be

made conspicuously on every page where a

fractional representation is made. Such

disclosure may refer to a chart or other

detailed explanation of the actual ranges

used. For example, ‘‘Diamond weights are

not exact; see chart on p.X for ranges.’’

§ 23.18 Definitions of various pearls.

As used in these guides, the terms set

forth below have the following

meanings:

(a) Pearl: A calcareous concretion

consisting essentially of alternating

concentric layers of carbonate of lime

and organic material formed within the

body of certain mollusks, the result of

an abnormal secretory process caused

by an irritation of the mantle of the

mollusk following the intrusion of some

foreign body inside the shell of the

mollusk, or due to some abnormal

physiological condition in the mollusk,

neither of which has in any way been

caused or induced by humans.

(b) Cultured Pearl: The composite

product created when a nucleus

(usually a sphere of calcareous mollusk

shell) planted by humans inside the

shell or in the mantle of a mollusk is

coated with nacre by the mollusk.

(c) Imitation Pearl: A manufactured

product composed of any material or

materials that simulate in appearance a

pearl or cultured pearl.

(d) Seed Pearl: A small pearl, as

defined in (a), that measures

approximately two millimeters or less.
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27217

§ 23.19 Misuse of the word ‘‘pearl.’’

(a) It is unfair or deceptive to use the

unqualified word ‘‘pearl’’ or any other

word or phrase of like meaning to

describe, identify, or refer to any object

or product that is not in fact a pearl, as

defined in § 23.18(a).

(b) It is unfair or deceptive to use the

word ‘‘pearl’’ to describe, identify, or

refer to a cultured pearl unless it is

immediately preceded, with equal

conspicuousness, by the word

‘‘cultured’’ or ‘‘cultivated,’’ or by some

other word or phrase of like meaning, so

as to indicate definitely and clearly that

the product is not a pearl.

(c) It is unfair or deceptive to use the

word ‘‘pearl’’ to describe, identify, or

refer to an imitation pearl unless it is

immediately preceded, with equal

conspicuousness, by the word

‘‘artificial,’’ ‘‘imitation,’’ or ‘‘simulated,’’

or by some other word or phrase of like

meaning, so as to indicate definitely and

clearly that the product is not a pearl.

(d) It is unfair or deceptive to use the

terms ‘‘faux pearl,’’ ‘‘fashion pearl,’’

‘‘Mother of Pearl,’’ or any other such

term to describe or qualify an imitation

pearl product unless it is immediately

preceded, with equal conspicuousness,

by the word ‘‘artificial,’’ ‘‘imitation,’’ or

‘‘simulated,’’ or by some other word or

phrase of like meaning, so as to indicate

definitely and clearly that the product is

not a pearl.

§ 23.20 Misuse of terms such as ‘‘cultured

pearl,’’ ‘‘seed pearl,’’ ‘‘Oriental pearl,’’

‘‘natura,’’ ‘‘kultured,’’ ‘‘real,’’ ‘‘gem,’’

‘‘synthetic,’’ and regional designations.

(a) It is unfair or deceptive to use the

term ‘‘cultured pearl,’’ ‘‘cultivated

pearl,’’ or any other word, term, or

phrase of like meaning to describe,

identify, or refer to any imitation pearl.

(b) It is unfair or deceptive to use the

term ‘‘seed pearl’’ or any word, term, or

phrase of like meaning to describe,

identify, or refer to a cultured or an

imitation pearl, without using the

appropriate 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 the

term ‘‘Oriental pearl’’ or any word, term,

or phrase of like meaning to describe,

identify, or refer to any industry product

other than a pearl taken from a salt

water mollusk and of the distinctive

appearance and type of pearls obtained

from mollusks inhabiting the Persian

Gulf and recognized in the jewelry trade

as Oriental pearls.

(d) It is unfair or deceptive to use the

word ‘‘Oriental’’ to describe, identify, or

refer to any cultured or imitation pearl.

(e) It is unfair or deceptive to use the

word ‘‘natura,’’ ‘‘natural,’’ ‘‘nature’s,’’ or

any word, term, or phrase of like

meaning to describe, identify, or refer to

a cultured or imitation pearl. It is unfair

or deceptive to use the term ‘‘organic’’

to describe, identify, or refer to an

imitation pearl, unless the term is

qualified in such a way as to make clear

that the product is not a natural or

cultured pearl.

(f) It is unfair or deceptive to use the

term ‘‘kultured,’’ ‘‘semi-cultured pearl,’’

‘‘cultured-like,’’ ‘‘part-cultured,’’ ‘‘premature cultured pearl,’’ or any word,

term, or phrase of like meaning to

describe, identify, or refer to an

imitation pearl.

(g) It is unfair or deceptive to use the

term ‘‘South Sea pearl’’ unless it

describes, identifies, or refers to a pearl

that is taken from a salt water mollusk

of the Pacific Ocean South Sea Islands,

Australia, or Southeast Asia. It is unfair

or deceptive to use the term ‘‘South Sea

cultured pearl’’ unless it describes,

identifies, or refers to a cultured pearl

formed in a salt water mollusk of the

Pacific Ocean South Sea Islands,

Australia, or Southeast Asia.

(h) It is unfair or deceptive to use the

term ‘‘Biwa cultured pearl’’ unless it

describes, identifies, or refers to

cultured pearls grown in fresh water

mollusks in the lakes and rivers of

Japan.

(i) It is unfair or deceptive to use the

word ‘‘real,’’ ‘‘genuine,’’ ‘‘precious,’’ or

any word, term, or phrase of like

meaning to describe, identify, or refer to

any imitation pearl.

(j) It is unfair or deceptive to use the

word ‘‘gem’’ to describe, identify, or

refer to a pearl or cultured pearl that

does not possess the beauty, symmetry,

rarity, and value necessary for

qualification as a gem.

Note to paragraph (j): Use of the word

‘‘gem’’ with respect to cultured pearls should

be avoided since few cultured pearls possess

the necessary qualifications to properly be

termed ‘‘gems.’’ Imitation pearls should not

be described as ‘‘gems.’’

(k) It is unfair or deceptive to use the

word ‘‘synthetic’’ or similar terms to

describe cultured or imitation pearls.

(l) It is unfair or deceptive to use the

terms ‘‘Japanese Pearls,’’ ‘‘Chinese

Pearls,’’ ‘‘Mallorca Pearls,’’ or any

regional designation to describe,

identify, or refer to any cultured or

imitation pearl, unless the term is

immediately preceded, with equal

conspicuousness, by the word

‘‘cultured,’’ ‘‘artificial,’’ ‘‘imitation,’’ or

‘‘simulated,’’ or by some other word or

phrase of like meaning, so as to indicate

definitely and clearly that the product is

a cultured or imitation pearl.

§ 23.21 Misrepresentation as to cultured

pearls.

It is unfair or deceptive to

misrepresent the manner in which

cultured pearls are produced, the size of

the nucleus artificially inserted in the

mollusk and included in cultured

pearls, the length of time that such

products remained in the mollusk, the

thickness of the nacre coating, the value

and quality of cultured pearls as

compared with the value and quality of

pearls and imitation pearls, or any other

material matter relating to the

formation, structure, properties,

characteristics, and qualities of cultured

pearls.

§ 23.22 Deception as to gemstones.

It is unfair or deceptive to fail to

disclose that a gemstone has been

treated in any manner that is not

permanent or that creates special care

requirements, and to fail to disclose that

the treatment is not permanent, if such

is the case. The following are examples

of treatments that should be disclosed

because they usually are not permanent

or create special care requirements:

coating, impregnation, irradiating,

heating, use of nuclear bombardment,

application of colored or colorless oil or

epoxy-like resins, wax, plastic, or glass,

surface diffusion, or dyeing. This

disclosure may be made at the point of

sale, except that disclosure should be

made in any solicitation where the

product can be purchased without

viewing (e.g., direct mail catalogs, online services), and in the case of

televised shopping programs, on the air.

If special care requirements for a

gemstone arise because the gemstone

has been treated, it is recommended that

the seller disclose the special care

requirements 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 the

unqualified words ‘‘ruby,’’ ‘‘sapphire,’’

‘‘emerald,’’ ‘‘topaz,’’ or the name of any

other precious or semi-precious stone to

describe any product that is not in fact

a natural stone of the type described.

(b) It is unfair or deceptive to use the

word ‘‘ruby,’’ ‘‘sapphire,’’ ‘‘emerald,’’

‘‘topaz,’’ or the name of any other

precious or semi-precious stone, or the

word ‘‘stone,’’ ‘‘birthstone,’’

‘‘gemstone,’’ or similar term to describe

a laboratory-grown, laboratory-created,

[manufacturer name]-created, synthetic,

imitation, or simulated stone, unless

such word or name is immediately

preceded with equal conspicuousness

by the word ‘‘laboratory-grown,’’

‘‘laboratory-created,’’ ‘‘[manufacturer
27218 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

1Field pieces of lockets are those inner portions

used as frames between the inside edges of the

locket and the spaces for holding pictures. Bezels

are the separable inner metal rings to hold the

pictures in place.

2Oxfords are a form of eyeglasses where a flat

spring 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 the

word ‘‘imitation’’ or ‘‘simulated,’’ so as

to disclose clearly the nature of the

product and the fact it is not a natural

gemstone.

Note to paragraph (h): The use of the word

‘‘faux’’ to describe a laboratory-created or

imitation stone is not an adequate disclosure

that the stone is not natural.

(c) It is unfair or deceptive to use the

word ‘‘laboratory-grown,’’ ‘‘laboratorycreated,’’ ‘‘[manufacturer name]-

created,’’ or ‘‘synthetic’’ with the name

of any natural stone to describe any

industry product unless such industry

product has essentially the same optical,

physical, and chemical properties as the

stone named.

§ 23.24 Misuse of the words ‘‘real,’’

‘‘genuine,’’ ‘‘natural,’’ ‘‘precious,’’ etc.

It is unfair or deceptive to use the

word ‘‘real,’’ ‘‘genuine,’’ ‘‘natural,’’

‘‘precious,’’ ‘‘semi-precious,’’ or similar

terms to describe any industry product

that is manufactured or produced

artificially.

§ 23.25 Misuse of the word ‘‘gem.’’

(a) It is unfair or deceptive to use the

word ‘‘gem’’ to describe, identify, or

refer to a ruby, sapphire, emerald, topaz,

or other industry product that does not

possess the beauty, symmetry, rarity,

and value necessary for qualification as

a gem.

(b) It is unfair or deceptive to use the

word ‘‘gem’’ to describe any laboratorycreated industry product unless the

product meets the requirements of

paragraph (a) of this section and unless

such word is immediately accompanied,

with equal conspicuousness, by the

word ‘‘laboratory-grown,’’ ‘‘laboratorycreated,’’ or ‘‘[manufacturer-name]-

created,’’ ‘‘synthetic,’’ or by some other

word or phrase of like meaning, so as to

clearly disclose that it is not a natural

gem.

Note to § 23.25: In general, use of the word

‘‘gem’’ with respect to laboratory-created

stones should be avoided since few

laboratory-created stones possess the

necessary qualifications to properly be

termed ‘‘gems.’’ Imitation diamonds and

other imitation stones should not be

described as ‘‘gems.’’ Not all diamonds or

natural stones, including those classified as

precious stones, possess the necessary

qualifications to be properly termed ‘‘gems.’’

§ 23.26 Misuse of the words ‘‘flawless,’’

‘‘perfect,’’ etc.

(a) It is unfair or deceptive to use the

word ‘‘flawless’’ as a quality description

of any gemstone that discloses

blemishes, inclusions, or clarity faults of

any sort when examined under a

corrected magnifier at 10-power, with

adequate illumination, by a person

skilled in gemstone grading.

(b) It is unfair or deceptive to use the

word ‘‘perfect’’ or any representation of

similar meaning to describe any

gemstone unless the gemstone meets the

definition of ‘‘flawless’’ and is not of

inferior color or make.

(c) It is unfair or deceptive to use the

word ‘‘flawless,’’ ‘‘perfect,’’ or any

representation of similar meaning to

describe any imitation gemstone.

Appendix to Part 23—Exemptions

Recognized in the Assay for Quality of

Gold Alloy, Gold Filled, Gold Overlay,

Rolled Gold Plate, Silver, and Platinum

Industry Products

(a) Exemptions recognized in the industry

and not to be considered in any assay for

quality of a karat gold industry product

include springs, posts, and separable backs of

lapel buttons, posts and nuts for attaching

interchangeable ornaments, metallic parts

completely and permanently encased in a

nonmetallic covering, field pieces and bezels

for lockets,1 and wire pegs or rivets used for

applying mountings and other ornaments,

which mountings or ornaments shall be of

the quality marked.

Note: Exemptions recognized in the

industry and not to be considered in any

assay for quality of a karat gold optical

product include: the hinge assembly (barrel

or other special types such as are customarily

used in plastic frames); washers, bushings,

and nuts of screw assemblies; dowels;

springs for spring shoe straps; metal parts

permanently encased in a non-metallic

covering; and for oxfords,2 coil and joint

springs.

(b) Exemptions recognized in the industry

and not to be considered in any assay for

quality of a gold filled, gold overlay and

rolled gold plate industry product, other than

watchcases, include joints, catches, screws,

pin stems, pins of scarf pins, hat pins, etc.,

field pieces and bezels for lockets, posts and

separate backs of lapel buttons, bracelet and

necklace snap tongues, springs, and metallic

parts completely and permanently encased in

a nonmetallic covering.

Note: Exemptions recognized in the

industry and not to be considered in any

assay for quality of a gold filled, gold overlay

and rolled gold plate optical product include:

screws; the hinge assembly (barrel or other

special types such as are customarily used in

plastic frames); washers, bushings, tubes and

nuts of screw assemblies; dowels; pad

inserts; springs for spring shoe straps, cores

and/or inner windings of comfort cable

temples; metal parts permanently encased in

a non-metallic covering; and for oxfords, the

handle and catch.

(c) Exemptions recognized in the industry

and not to be considered in any assay for

quality of a silver industry product include

screws, rivets, springs, spring pins for wrist

watch straps; posts and separable backs of

lapel buttons; wire pegs, posts, and nuts used

for applying mountings or other ornaments,

which mountings or ornaments shall be of

the quality marked; pin stems (e.g., of badges,

brooches, emblem pins, hat pins, and scarf

pins, etc.); levers for belt buckles; blades and

skeletons of pocket knives; field pieces and

bezels for lockets; bracelet and necklace snap

tongues; any other joints, catches, or screws;

and metallic parts completely and

permanently encased in a nonmetallic

covering.

(d) Exemptions recognized in the industry

and not to be considered in any assay for

quality of an industry product of silver in

combination with gold include joints,

catches, screws, pin stems, pins of scarf pins,

hat pins, etc., posts and separable backs of

lapel buttons, springs, and metallic parts

completely and permanently encased in a

nonmetallic covering.

(e) Exemptions recognized in the industry

and not to be considered in any assay for

quality of a platinum industry product

include springs, winding bars, sleeves, crown

cores, mechanical joint pins, screws, rivets,

dust bands, detachable movement rims, hatpin stems, and bracelet and necklace snap

tongues. In addition, the following

exemptions are recognized for products

marked in accordance with section 23.8(b)(5)

of these Guides (i.e., products that are less

than 500 parts per thousand platinum): pin

tongues, joints, catches, lapel button backs

and the posts to which they are attached,

scarf-pin stems, hat pin sockets, shirt-stud

backs, vest-button backs, and ear-screw

backs, provided such parts are made of the

same quality platinum as is used in the

balance of the article.

By direction of the Commission.

Donald S. Clark,

Secretary.

Note: The following appendix will not

appear in the Code of Federal Regulations.

APPENDIX—LIST OF COMMENTERS AND ABBREVIATIONS

Abbreviation No. Commenter

A&D Gem ................................................... 187 A & D Gem Corp.
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27219

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.
27220 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

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.
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations 27221

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.
27222 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Rules and Regulations

1 57 FR 24996 (June 12, 1992). The Commission

published this Federal Register Notice soliciting

comment, in response to a petition from the

Jewelers Vigilance Committee (‘‘JVC’’). Among

other revisions, the JVC proposed consolidating all

three 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 Band

Industry

AGENCY: Federal Trade Commission.

ACTION: Final rule.

SUMMARY: The Federal Trade

Commission (the ‘‘Commission’’)

announces that it has concluded its

review of its Guides for the Metallic

Watch Band Industry (‘‘Watch Band

Guides’’). In a separate document

published elsewhere in this issue of the

Federal Register, the Commission is

consolidating certain provisions of the

Watch Band Guides with the Guides for

the Jewelry Industry, renamed Guides

for the Jewelry, Precious Metals and

Pewter Industries. The Commission has

decided to rescind the Watch Band

Guides. The Commission is taking this

action 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 of

Enforcement, Bureau of Consumer

Protection, Federal Trade Commission,

Washington, DC 20580.

SUPPLEMENTARY INFORMATION: The

Guides for the Metallic Watch Band

Industry (‘‘Watch Band Guides’’), 16

CFR Part 19, address claims made about

watch bands that are not permanently

attached to watchcases. The

Commission requested public comment

on the Watch Band Guides, the Guides

for the Jewelry Industry (‘‘Jewelry

Guides’’), 16 CFR Part 23, and the

Guides for the Watch Industry, 16 CFR

Part 245.1 Much of the material in the

Watch Band Guides duplicates

information in the Jewelry Guides. For

the reasons discussed in greater detail in

the Federal Register Notice announcing

revisions to the Jewelry Guides, the

Commission is consolidating some of

the provisions of the Watch Band

Guides into the Jewelry Guides.

Therefore, the Commission is rescinding

the Watch Band Guides. On the basis of

the discussion in the Commission’s

announcement of revisions to the

Jewelry Guides, which is located

elsewhere in this issue of the Federal

Register, and which is incorporated

herein, 16 CFR Part 19 is hereby

rescinded.

List of Subjects in 16 CFR Part 19

Advertising, Watch bands, Trade

practices.

PART 19—[REMOVED]

The Commission under the authority

of Section 5(a)(1) of the Federal Trade

Commission Act, 15 U.S.C. 45(a)(1),

amends chapter I of Title 16 of the Code