UK Advertising Standards Ruling Targets Lab Diamond Marketing

 

Two online jewellery retailers have been ordered to amend their advertising after the United Kingdom’s Advertising Standards Authority (ASA) ruled that their use of the word “diamond” without clear qualification was misleading to consumers.

According to a report published by the Financial Times, the ASA found that online retailers Linjer and Novita Diamonds breached advertising standards by failing to adequately disclose that the products promoted in paid Google and Meta advertisements were laboratory grown rather than natural diamonds.

The advertisements, which ran in January, were challenged by the Natural Diamond Council and the London Diamond Bourse, both of which argued that consumers could reasonably interpret the term “diamond” to refer to natural diamonds unless otherwise specified.

The ASA ruled that future advertising must include clear and prominent qualifiers such as “synthetic”, “laboratory grown”, or “laboratory created” whenever describing non natural diamond products.

Amber Pepper, CEO of the Natural Diamond Council, described the decision as “a victory for consumers”, while London Diamond Bourse president David Troostwyk said the ruling delivered a strong message that misleading advertising practices would not be tolerated within the jewellery sector.

Linjer stated that it had not realised the advertisements breached the code and confirmed it would work with its marketing agency to ensure appropriate terminology is used in future campaigns. Novita Diamonds maintained that it did not consider its advertising misleading, although it has since amended its advertisements to place the word “lab” before “diamonds” for greater clarity.

Laboratory grown diamonds are manufactured using high pressure high temperature or chemical vapour deposition technology, replicating the crystal structure of natural diamonds through energy intensive industrial processes. Their significantly lower production costs have contributed to rapid market growth in recent years, particularly within the United States jewellery sector.

The Financial Times reported that laboratory grown diamonds now account for approximately 17 per cent of the US retail diamond jewellery market by volume, compared with only 3 per cent in 2020.

The ruling is likely to be viewed as an important development for the natural diamond industry, which has faced increasing price pressure and shifting consumer demand amid the rapid expansion of synthetic diamond sales. For many within the trade, the decision reinforces the importance of accurate terminology, transparency, and consumer confidence in diamond marketing and disclosure standards.

Source: DCLA

No Probe into Collapse of Diamond Brand with $220m Debts

The UK’s Serious Fraud Office (SFO) decided not to investigate the luxury diamond jewelry brand Vashi, which subsequently collapsed in 2023 with debts of $220m, according to the BBC.

The company gained attention for its innovative approach to selling high-quality diamonds directly to consumers, and for its flamboyant founder, chairman and CEO Vashi Dominguez. But it was declared bankrupt in April 2023 after a court ruling forced it into liquidation.

But the company’s former chief technology officer John Ames reportedly warned the SFO that Vashi was defrauding investors and falsifying accounts in May 2022, almost a year earlier.

The SFO decided not to investigate, according to a BBC report, despite documentation which allegedly showed the company had made sales worth £5.5m ($7.2m) in 2020, rather than the £53.6m ($70m) boasted of in marketing materials and filed in the company accounts.

Mr Ames contacted the SFO in May 2022. In an online form he said: “I discovered (Vashi) to be defrauding their investors, they are also likely to be misstating information on their statutory reporting, both through inflated stock holdings and failing to provide details on revenue sources.”

Dominguez reportedly left for Dubai on the day the company went into liquidation. His whereabouts are not known.

Dominguez (pictured) attracted investment from high-profile backers, including mobile phones billionaire John Cauldwell, and Nick Wheeler, founder of British shirtmaker Charles Tyrwhitt.

The Spanish-born entrepreneur also had a flair for self-publicity, positioned himself as a diamond expert in national newspapers and appeared with celebrities on TV.

Source: DCLA

US to Require Self-Certification for Russian Diamond Ban

The US and the UK will require importers of polished diamonds weighing 1 carat and above to apply a “self-certification” declaring the stones are not of Russian origin, while the UK will also expect documentary proof in some cases.

The new US guidelines are a follow-up to last month’s directive by the US Office of Foreign Assets Control (OFAC) implementing tighter restrictions on loose Russian diamonds and those set into jewelry that had been in part or fully manufactured or “substantially transformed” in another country. The rules address a loophole that had been in place since the US first imposed sanctions in March 2022.

The US Customs and Border Protection released an update to the bans beginning March 1, calling for importers to upload a PDF on official company letterhead, it said last week. For nonindustrial diamonds, the self-certification should state: “I certify that the nonindustrial diamonds in this shipment were not mined, extracted, produced, or manufactured wholly or in part in the Russian Federation, notwithstanding whether such diamonds have been substantially transformed into other products outside of the Russian Federation.”

Those bringing in diamond jewelry or unsorted diamonds should submit a document saying: “I certify that the diamond jewelry and unsorted diamonds in this shipment are not of Russian Federation origin or were not exported from the Russian Federation.”

The UK government’s Department for Business and Trade has followed suit, noting that supplier declaration of compliance with the sanctions “may be acceptable,” but that “traders should be prepared to provide documentation to demonstrate evidence of a stone’s supply chain.” That evidence can include the original Kimberley Process (KP) certificate issued when shipped from the diamond’s origin country, an invoice, a certificate of origin issued by a chamber of commerce, or a diamond origin report. The government also distributed rules for diamonds manufactured in another country that were outside of Russia before March 1.

Last week, the London Diamond Bourse (LDB) held an emergency meeting to discuss the ban due to the “absence of clarity and guidance…as to how we might conform with the restrictions…in terms of paperwork and provenance” before the March 1 launch, it said. The exchange noted it was in an “invidious” position and felt its members and the greater trade should avoid importing polished loose diamonds above 1 carat until there is “less ambiguous guidance.” The bourse may put out updated guidance following the release of the new rules.

While neither the US or the UK has given a timeline as to how long these guidelines will be in effect, it’s likely the less restrictive rules will only be valid during the “sunrise period,” which ends August 31 and allows importers time to become accustomed to the new measures. The European Union has stated that it would accept documentation proving non-Russian origin during the initial timeframe but will expect all stones passing through Antwerp to be placed on a traceability system beginning September 1. At that point, restrictions in all Group of Seven (G7) nations — Canada, France, Germany, Italy, Japan, the US and the UK, as well as the EU — will expand to include diamonds weighing more than 0.50 carats.

For its part, Canada also produced a statement noting it would comply with the March 1 curbs against indirect imports of Russian-origin diamonds.

“Canada has been at the forefront of imposing economic barriers on the Putin regime,” said Mélanie Joly, the country’s minister of foreign affairs. “Along with our allies and partners, we have imposed severe sanctions on the Russian regime, and we will continue to do so to hold [Russian President Vladimir] Putin and his enablers to account.”

The current self-certification rules are likely to provide a temporary solution to concerns industry groups voiced over a proposal that all diamonds would be funneled through Antwerp for screening and certification prior to arriving at their destination countries, a move the organizations feared would harm the rest of the industry.

On Saturday, India’s Gem and Jewellery Export Promotion Council (GJEPC) sent a message to members urging them to “review guidelines meticulously,” and “exercise utmost caution when dispatching shipments to G7 countries.” The council also advised exporters to “maintain meticulous records of all documents of import and purchase.” A large portion of the world’s rough is manufactured in the country before making its way to consumer nations.

“It is crucial to emphasize that while some of the G7 countries/EU have already issued guidelines to their importers, a few are still in the process of finalizing theirs,” the GJEPC said. “We believe even the issued ones are initial guidelines and are subject to changes [and] updates during the course of time.”

Source: DCLA