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Remember the old Superman movie where the Man of Steel squeezed carbon in his hand to create a diamond? That’s not how it’s done, but these days not everything sparkly comes from a mine. In addition to mined diamonds, consumers can choose simulated diamonds or diamonds created in a laboratory. What matters to consumers – and the FTC – is that companies accurately describe what they’re selling.

In July 2018, the FTC issued updated its Guides for the Jewelry, Precious Metals, and Pewter Industries. The Jewelry Guides give marketers detailed information about how to make non-deceptive claims about their products – including jewelry made with mined, laboratory-created, and simulated diamonds. The FTC just sent warning letters to eight companies, citing examples from their ads that raise compliance concerns under the Jewelry Guides.

The Guides caution marketers not to use the name of any precious stone, including diamonds, to describe a simulated or laboratory-created stone, unless the name is immediately preceded by a clear disclosure of the nature of the product and that it’s not a mined stone. The Guides put it this way:

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,” “gem,” “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 name]-created,” or some other word or phrase of like meaning, or by the word “imitation” or “simulated,” so as to disclose clearly the nature of the product and the fact it is not a mined gemstone.

The warning letters also advise marketers not to describe simulated diamonds in a way that may falsely imply they have the same optical, physical, and chemical properties of mined diamonds. Here’s the relevant provision in the Guides:

It is unfair or deceptive to use the word “laboratory-grown,” “laboratory-created,” “[manufacturer name]-created,” “synthetic,” or other word or phrase of like meaning with the name of any natural stone to describe any industry product unless such product has essentially the same optical, physical, and chemical properties as the stone named.

The letters address multiple facets of the companies’ marketing, but here are some of the points raised by FTC staff.

The Jewelry Guides apply in social media advertising. Some of the letters expressly cite things the companies have said about their products on Instagram, Facebook, Twitter, etc. The Jewelry Guides and the truth-in-advertising provisions of the FTC Act apply regardless of how you choose to communicate claims to consumers.

Clarify your use of “diamond.” According to FTC staff, some ads showed pictures that appear to be diamond jewelry or use the word “diamond” without disclosing close to the product depiction or name, or in the product description, that it was a lab-created or simulated stone. Hashtags and URLs can convey claims, too. That’s why advertisers who sell lab-created or simulated products should exercise caution about using #diamonds or domain names that include the word “diamond.”

Don’t assume that consumers will understand your marketing terminology. Some of the warning letters went to companies that described their lab-created or simulated stones with proprietary phrases that FTC staff thought could be deceptive to consumers without more explanation. Advertisers should avoid lingo that could leave buyers with a misimpression about the nature of the product.

Keep your descriptions consistent. In one Instagram ad cited in the warning letters, the company described some of its diamonds as “cultured” and others as “lab grown.” FTC staff was concerned that the inconsistent descriptors could create a false impression in consumers’ minds that the “cultured diamonds” are mined, rather than laboratory-created.

Keep disclosures close to the terms they explain. Some advertisers reveal the true nature of their products behind vague hyperlinks, in an FAQ section, or on an “education” page. That won’t do. Consumers could easily overlook the information because it’s not close to the product description. As the FTC’s .com Disclosures establishes, “Required disclosures must be clear and conspicuous. In evaluating whether a disclosure is likely to be clear and conspicuous, advertisers should consider its placement in the ad and its proximity to the relevant claim. The closer the disclosure is to the claim to which it relates, the better.”

Be careful to substantiate environmental claims. Some companies described their products as “eco-friendly,” “eco-conscious,” “sustainable,” etc. Marketers must have a reasonable basis for any environmental claim they make. Furthermore, according to the FTC’s Green Guides, companies should steer clear of general environmental benefit claims because it’s unlikely advertisers can substantiate all reasonable interpretations of those claims.

The letters ask the companies to get back to the FTC staff within 10 days with the steps they plan to take to revise their marketing. The letters also include citations to law enforcement actions that explain how the FTC Act applies to claims about jewelry.



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