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Rough_Rock
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a publication of the International School of Gemology 30 April 2014
Gem Lab Report Fantasy
What consumers and jewelers need to know about the use of gem lab reports....
This is an update to our original report in 2012. I was recently asked to serve as expert witness in yet another fiasco caused by errors in a Diamond Grading Report from a major gem lab that touts itself as the "industry authority". In yet another case this lab made a grievous error in their report, which they admit, but they walked away from the whole mess claiming 'we are not responsible for errors in our reports"....and leaving a $100K+ litigation between buyer and seller. The buyer and seller made the deal based on this major gem lab diamond report, but when the report was determined to be in error caused by the lab....it is the buyer and seller who are in litigation....not the lab.
This is yet another example of a fact that the industry and consumers need to be aware of: gem lab reports do not make any guarantees of accuracy, and in the event they make an error the gem labs reports are not admissible in court due to the "hearsay" evidence rule. Plus, the labs will not show up in court to defend their reports or be responsible for their errors. You will pay the litigation costs and any losses. The gem labs go off whistling in the dark rather than be responsible for the problem they caused.
With that, here is a review of our report from 2012. With the upcoming J/CK Las Vegas show, we thought this might be an important review for everyone to know. And yes....I have been in court against the big name lab reports, and yes.....the reports were thrown out as "hearsay evidence". So this review is not coming to you based on opinion or conjecture, but on actual case history in court with the lab reports. If you buy or sell gemstones and use lab reports to do your grading for you.....you need to read the following....RJ
Gem Lab Reports. This industry has developed an insatiable demand for gem lab reports. We cannot operate without them. Dealers claim they cannot sell a diamond without them. Colored gemstone dealers tout their inventory to be “certified” by one lab or another. But what is the real story behind the big gemological labs turning out these “reports”? As it turns out, the story is not pretty. In fact, it’s gem lab report fantasy.
In the 23 March 2012 issue of National Jeweler it was disclosed that the HRD Antwerp, perhaps the world’s most trusted authority in diamond grading, had to fire four of its diamond graders for an “unprofessional act” that many are speculating has to do with bribery; selling higher diamond grades to big money dealers. The GIA New York trade lab was caught doing the same thing a few years ago.
Of course, the problem is that the GIA shielded those responsible for the act. It has been reported that the graders responsible for the GIA bribery scandal are still grading diamonds for other labs since the GIA refused to disclose the perpetrator’s names. But the bottom line is that we now have the two biggest names in diamond grading reports having the common problem of graders selling higher grades to high paying dealers.
This brings us to important questions: What proof do the labs offer that this is not a wide spread problem with their certificates? What guarantee do the major labs provide that the information contained in their reports is accurate? What oversight is there to insure gem lab compliance with any kind of standards?
The answer to all of these questions: None.
There are two main issues that point to the problem with major lab reports:
#1. No lab report offers any legal protection for buyers or sellers. This was demonstrated by the case of the AGTA GTC reports on Tibet andesine. In Art Garabedian’s legal declaration he points to the AGTA GTC reports of Tibet andesine being natural and untreated as the basis of the claims by DSN that the gemstones they sold were natural and untreated. However, in the California District and Appeals courts, the AGTA GTC reports were summarily dismissed as “hearsay” evidence and not allowed. This goes to the issue that lab reports do not stand up in court. Further to this issue, since the lab owners will not show up in court to defend their documents, the lab reports are considered to be without merit or substance. In short, the AGTA GTC reports were not worth the paper they were written on, in spite of being used to justify what has become a multi-million dollar fraud.
#2. The lab reports offer no guarantee of accuracy, and claim no responsibility even in the case of errors, omissions and verified negligence. We quote from the back of the GIA reports, and please read this carefully:
“GIA and its employees and agents shall not be liable for any loss, damage or expense resulting from any error in or omission from this report or from the issuance of or use of this report or any inscription, even if the loss, damage or expense was caused by or resulted from the negligence or other fault of GIA or any of its employees…”
In other words.......
If we make an error that causes damage….we are not responsible.
If we omit a fact that causes damage….we are not responsible.
If our employees are found to be negligent in doing their work…..we are not responsible.
This type of disclaimer is not limited to the GIA but also to every major lab world-wide. And this is the state of our industry. On this basis are virtually all of the diamonds and colored gemstones of the world markets being sold to consumers.
Ten Things Consumers and Dealers Need to Know About Gem Lab Reports
If a gem lab makes an error or is negligent, the dealer or jeweler using it has to pay for it.
Lab reports do not cover you in the event of a lawsuit. Even if the report was in error, you will bear the cost and liability for damages caused by the lab’s error.
In the event of a lawsuit regarding a claim you made based on a lab report, the labs will not show up in court to stand behind you. You are on your own.
The labs do not guarantee the accuracy of the information in their documents. In fact, they specifically state just the opposite. No lab guarantees the accuracy of their lab reports.
The labs cannot accurately identify the origin of colored gemstones to a legal standard.
Diamond graders in major labs have been caught selling higher grades on certificates.
It is common that diamonds graded by one lab will grade totally different in a different lab.
It is known that a diamond graded by one lab can be submitted to the same lab at a later date and get a different grade.
All diamond grades are subjective opinions.
The AGTA GTC, GIA GTL, and others who issued erroneous certificates regarding Tibet andesine will never be held liable for the errors in their reports.
It is unfortunate that this industry has abdicated our responsibility we have to consumers and allowed these big gem labs to do our thinking and learning for us, and then look the other way when these labs fail in their claimed responsibility. How many of you could do your job and then issue your customer a disclaimer that you are not responsible for any errors in your work? The idea is absurd to the point of pure stupidity. And yet, this is exactly what we are allowing from the world wide gem lab organizations.
“We are not responsible if we make a mistake, even if it’s our own negligence.”
What a concept? What an industry these labs have built up? They created a situation where we have convinced consumers that they must have a lab report in order to be protected, and then these same labs slough off any responsibility to consumers for the accuracy of their reports!
Would you do business with someone who said they are not responsible for any errors or damages caused by their errors, even if they are negligent? Seriously? Would you do business with someone who put that disclaimer on all of their work? Your doctor? Your insurance agent? Your car dealer? Then why your jeweler or gem dealer?
Real professionals know their products.
Real professionals stand behind their work.
Real professionals take responsibility for the quality and accuracy of their work.
Gem lab reports make wonderful sales tools. But other than a sales tool, they are not worth much else.
Know your jeweler. Know your dealer.
Shop with someone who knows their products and, most importantly, will stand behind their product and their work.
Robert James
President, ISG
Gem Lab Report Fantasy
What consumers and jewelers need to know about the use of gem lab reports....
This is an update to our original report in 2012. I was recently asked to serve as expert witness in yet another fiasco caused by errors in a Diamond Grading Report from a major gem lab that touts itself as the "industry authority". In yet another case this lab made a grievous error in their report, which they admit, but they walked away from the whole mess claiming 'we are not responsible for errors in our reports"....and leaving a $100K+ litigation between buyer and seller. The buyer and seller made the deal based on this major gem lab diamond report, but when the report was determined to be in error caused by the lab....it is the buyer and seller who are in litigation....not the lab.
This is yet another example of a fact that the industry and consumers need to be aware of: gem lab reports do not make any guarantees of accuracy, and in the event they make an error the gem labs reports are not admissible in court due to the "hearsay" evidence rule. Plus, the labs will not show up in court to defend their reports or be responsible for their errors. You will pay the litigation costs and any losses. The gem labs go off whistling in the dark rather than be responsible for the problem they caused.
With that, here is a review of our report from 2012. With the upcoming J/CK Las Vegas show, we thought this might be an important review for everyone to know. And yes....I have been in court against the big name lab reports, and yes.....the reports were thrown out as "hearsay evidence". So this review is not coming to you based on opinion or conjecture, but on actual case history in court with the lab reports. If you buy or sell gemstones and use lab reports to do your grading for you.....you need to read the following....RJ
Gem Lab Reports. This industry has developed an insatiable demand for gem lab reports. We cannot operate without them. Dealers claim they cannot sell a diamond without them. Colored gemstone dealers tout their inventory to be “certified” by one lab or another. But what is the real story behind the big gemological labs turning out these “reports”? As it turns out, the story is not pretty. In fact, it’s gem lab report fantasy.
In the 23 March 2012 issue of National Jeweler it was disclosed that the HRD Antwerp, perhaps the world’s most trusted authority in diamond grading, had to fire four of its diamond graders for an “unprofessional act” that many are speculating has to do with bribery; selling higher diamond grades to big money dealers. The GIA New York trade lab was caught doing the same thing a few years ago.
Of course, the problem is that the GIA shielded those responsible for the act. It has been reported that the graders responsible for the GIA bribery scandal are still grading diamonds for other labs since the GIA refused to disclose the perpetrator’s names. But the bottom line is that we now have the two biggest names in diamond grading reports having the common problem of graders selling higher grades to high paying dealers.
This brings us to important questions: What proof do the labs offer that this is not a wide spread problem with their certificates? What guarantee do the major labs provide that the information contained in their reports is accurate? What oversight is there to insure gem lab compliance with any kind of standards?
The answer to all of these questions: None.
There are two main issues that point to the problem with major lab reports:
#1. No lab report offers any legal protection for buyers or sellers. This was demonstrated by the case of the AGTA GTC reports on Tibet andesine. In Art Garabedian’s legal declaration he points to the AGTA GTC reports of Tibet andesine being natural and untreated as the basis of the claims by DSN that the gemstones they sold were natural and untreated. However, in the California District and Appeals courts, the AGTA GTC reports were summarily dismissed as “hearsay” evidence and not allowed. This goes to the issue that lab reports do not stand up in court. Further to this issue, since the lab owners will not show up in court to defend their documents, the lab reports are considered to be without merit or substance. In short, the AGTA GTC reports were not worth the paper they were written on, in spite of being used to justify what has become a multi-million dollar fraud.
#2. The lab reports offer no guarantee of accuracy, and claim no responsibility even in the case of errors, omissions and verified negligence. We quote from the back of the GIA reports, and please read this carefully:
“GIA and its employees and agents shall not be liable for any loss, damage or expense resulting from any error in or omission from this report or from the issuance of or use of this report or any inscription, even if the loss, damage or expense was caused by or resulted from the negligence or other fault of GIA or any of its employees…”
In other words.......
If we make an error that causes damage….we are not responsible.
If we omit a fact that causes damage….we are not responsible.
If our employees are found to be negligent in doing their work…..we are not responsible.
This type of disclaimer is not limited to the GIA but also to every major lab world-wide. And this is the state of our industry. On this basis are virtually all of the diamonds and colored gemstones of the world markets being sold to consumers.
Ten Things Consumers and Dealers Need to Know About Gem Lab Reports
If a gem lab makes an error or is negligent, the dealer or jeweler using it has to pay for it.
Lab reports do not cover you in the event of a lawsuit. Even if the report was in error, you will bear the cost and liability for damages caused by the lab’s error.
In the event of a lawsuit regarding a claim you made based on a lab report, the labs will not show up in court to stand behind you. You are on your own.
The labs do not guarantee the accuracy of the information in their documents. In fact, they specifically state just the opposite. No lab guarantees the accuracy of their lab reports.
The labs cannot accurately identify the origin of colored gemstones to a legal standard.
Diamond graders in major labs have been caught selling higher grades on certificates.
It is common that diamonds graded by one lab will grade totally different in a different lab.
It is known that a diamond graded by one lab can be submitted to the same lab at a later date and get a different grade.
All diamond grades are subjective opinions.
The AGTA GTC, GIA GTL, and others who issued erroneous certificates regarding Tibet andesine will never be held liable for the errors in their reports.
It is unfortunate that this industry has abdicated our responsibility we have to consumers and allowed these big gem labs to do our thinking and learning for us, and then look the other way when these labs fail in their claimed responsibility. How many of you could do your job and then issue your customer a disclaimer that you are not responsible for any errors in your work? The idea is absurd to the point of pure stupidity. And yet, this is exactly what we are allowing from the world wide gem lab organizations.
“We are not responsible if we make a mistake, even if it’s our own negligence.”
What a concept? What an industry these labs have built up? They created a situation where we have convinced consumers that they must have a lab report in order to be protected, and then these same labs slough off any responsibility to consumers for the accuracy of their reports!
Would you do business with someone who said they are not responsible for any errors or damages caused by their errors, even if they are negligent? Seriously? Would you do business with someone who put that disclaimer on all of their work? Your doctor? Your insurance agent? Your car dealer? Then why your jeweler or gem dealer?
Real professionals know their products.
Real professionals stand behind their work.
Real professionals take responsibility for the quality and accuracy of their work.
Gem lab reports make wonderful sales tools. But other than a sales tool, they are not worth much else.
Know your jeweler. Know your dealer.
Shop with someone who knows their products and, most importantly, will stand behind their product and their work.
Robert James
President, ISG
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