Selling a pre-owned diamond as "NEW" with a new grade report

[flyingpig]

Is there any legal implication in the following cases?

Case 1. A diamond was bought in 2005. It was sent to GIA for a new lab report in 2017. The seller lists the stone as "NEW" (99.9% of buyers will not be able to track this)
Case 2. A diamond was bought in 2005. It was sent to GIA for a new lab report in 2017. The seller lists the stone as "Original Condition"
Case 3. A diamond was bought in 2005. It was recut and sent to GIA for a new lab report in 2017. The seller lists the stone as "NEW" (99.9% of buyers will not able to track this)

Does a seller have any legal obligation to disclose whether a stone is new, pre-owned, regraded, or recut? Obviously, any information on the grading report must match the stone's conditions; no chip, damage, repair that is not listed on the report is allowed.

 

[SimoneDi]

Interesting topic @flyingpig. I can't speak regarding any legal obligations, because I don't have the knowledge, but based on my observations, here is my feedback:
Case 1: I guess it depends on who the seller is. If I, as a private party, am selling a stone that sat in my safe for years unset, I am going a service to myself/perspective buyer a favor by re-certifying the stone, but I wouldn't call it "new". It is still pre-owned/pre-loved. However, if such stone sat in vendor's safe, I would assume that they would call it "new", because it has not exchanged hands. I have seen how some stones sit in vendors' inventories and suddenly their certificates get updated. Sometimes, even the color/clarity may be upgraded/downgraded. Even though these stones may be "old", they are still "new" per se in my view, at least.

Case 2: Again, I think that it matters who the "seller" is (aka private party vs. vendor) and who owns the stone. I would assume that a vendor that owns the stock would fall under Case 1, a private party may list is as "original condition", but the stone is still pre-owned. A diamond that is listed on co-signment is usually disclosed to be "pre-loved", but I have seen some discrepancies on that. Ultimately, I am not sure if listing it as "original condition" vs "new" matters much when we speak about loose stones and if such stones match their GIA/AGS reports.

Case 3: I know for a fact that, no, vendors don't have to disclose if a diamond has been recut and is now accompanied by a new report. Think of it in terms of "rough stock" now becoming a polished diamond. If I had a rough diamond that stayed in my safe for 12 years, then sold that diamond to a vendor, they cut it and listed it for sale, is the diamond one or new?

I think that an issue always exists if the diamond does not match the grading report and/or there is damage to the stone. Other scenarios are up for debate, I guess.

 

[Rockdiamond]

Interesting question flyingpig!
For sure, if a dealer knows it was previously sold, communicating that to potential buyers seems the right thing to do.
There's a big issue though- when a dealer buys a diamond from a cutter, or another dealer, they have no way of telling when the diamond was cut, or if it had been previously sold.
...

 

[denverappraiser]

Roughly speaking, every diamond ever mined is still out there, somewhere. If you want to guarantee that you're buying something that is freshly mined, there are jewelers who are prepared to do that, but for normal sorts of inventory, they have no way to even KNOW things like prior ownership history or how many times it may have been repolished or recut. It's a rock. There is no test for the age of a rock.

 

[flyingpig]

I fully understand that diamonds are extremely difficult to track. No PS vendor lists any information in regards to prior ownership.
Lets take at this listing for an example.

http://www.ebay.ca/itm/0-54-Ct-GIA-...323909?hash=item3d474e6085:g:uk4AAOSwuiNZrxwL

The stone is recently graded. It is sealed in the official GIA packaging. It is listed as "NEW with tags.. UNUSED and UNWORN".
Nobody knows any detailed information in regards to any prior ownership. Nobody can prove or dissaprove that the stone is unused and unworn.
Does the fact that it is recently graded and in the official GIA packaing make the stone "NEW"?

 

[HDer]

In my opinion 1, 2, and 3 happen all of the time.

When I go to James Allen, I don't see the word "new" anywhere.

On top of #1, 2, and 3, think about the following cases:
4. If a customer buys a loose diamond and returns it, is it no longer "new?"
5. If a customer buys and has a diamond set, and then returns it within the 30 day return period, is it no longer "new?"
6. If a customer takes advantage of High Performance Diamonds' 80% buy back policy, http://www.hpdiamonds.com/en-us/whyus/whyus-lifetime is that stone no longer "new?" If so, where's the "used" section on their website?

So it's kind of unfortunate that consumers have this squeamishness about used diamonds (I'm saying that even though my g/f didn't want a used diamond). In reality, probably the only way to ensure a diamond is truly new, or maybe a better term "never set" is to have it custom cut from the rough.

 

[flyingpig]

To be clear, I do not have any issue with any vendor not disclosing information in regards to previous ownership. They cannot track, they don't know, they don't list, they don't guarantee, they don't claim, they don't advertise whether a diamond is new or preowned. It is fair.
I am more concerned of listings from Ebay and other consignment websites, and the selling and listing process if I choose to sell privately.
Why take a 30% hit or pay a consignment fee or both, when you can regrade it and potentially sell it as "NEW" privately. That's at least in theory...

 

[HDer]

To be clear, I do not have any issue with any vendor not disclosing information in regards to previous ownership. They cannot track, they don't know, they don't list, they don't guarantee, they don't claim, they don't advertise whether a diamond is new or preowned. It is fair.
I am more concerned of listings from Ebay and other consignment websites, and the selling and listing process if I choose to sell privately.

I just listed three different scenarios where a vendor knows for sure that the diamond is "used" and yet still will not disclose that fact to the consumer.

Should eBay sellers be held to a higher standard? Maybe. I personally only buy from eBay sellers who list their products as GENUWINE NIB OEM.

But if you want to be on the safe side legally when you list a diamond just don't mention if it's new or used?

 

[HDer]

I fully understand that diamonds are extremely difficult to track. No PS vendor lists any information in regards to prior ownership.
Lets take at this listing for an example.

http://www.ebay.ca/itm/0-54-Ct-GIA-...323909?hash=item3d474e6085:g:uk4AAOSwuiNZrxwL

The stone is recently graded. It is sealed in the official GIA packaging. It is listed as "NEW with tags.. UNUSED and UNWORN".
Nobody knows any detailed information in regards to any prior ownership. Nobody can prove or dissaprove that the stone is unused and unworn.
Does the fact that it is recently graded and in the official GIA packaing make the stone "NEW"?

Unused and unworn is just eBay's description of new with tags. The doesn't make any other claims in the summary text.

I don't know if the diamond is actually new. Probably not if it's on eBay. But I'll tell you one thing: I definitely wouldn't go through the trouble of cleaning, recerting, and sealing a diamond, to just list it as used on eBay.

 

[SimoneDi]

To be clear, I do not have any issue with any vendor not disclosing information in regards to previous ownership. They cannot track, they don't know, they don't list, they don't guarantee, they don't claim, they don't advertise whether a diamond is new or preowned. It is fair.
I am more concerned of listings from Ebay and other consignment websites, and the selling and listing process if I choose to sell privately.
Why take a 30% hit or pay a consignment fee or both, when you can regrade it and potentially sell it as "NEW" privately. That's at least in theory...

A private party, in my view, will always struggle with marketing a diamond as "new". If I buy jewelry & diamonds form a private party I don't expect the same customer experience, return/exchange policies and even the same level of detail. Even just based on that, I am however already expecting a lower price point, because if the same, then I will go elsewhere where I can get all the extras that provide for a "safer" purchase. From an "old" vs "new" perspective, I don't think it matters much if a stone was graded years ago vs a few days ago, but anybody looking to purchase a diamond on the secondary market should look for a recent report, in my opinion. A lot of things may happen to diamonds over the years.
I guess people who are not fond of buying pre-owned will be better off sticking with known retailers and/or engaging in a custom cut project as diamonds can change hands over time as @denverappraiser and @Rockdiamond indicated..

 

[HDer]

An interesting article about "recycling" diamonds, from the GIA itself:

https://www.gia.edu/gia-news-research/recycled-diamonds-mining-worlds-largest-diamond-resource

 

[Rockdiamond]

eBay? Arghh- don;t get me started.
They have all kinds of boxes you can click when listing, some of which are pretty general...eBay should never offer an "unworn" button on a diamond, as there's simply no way to guarantee that. ( not that we are not possibly guilty of checking the box, I'll check with the person doing eBay..)
Rings are a totally different story than loose diamonds.
We do accept rings back on trade ups in some cases.
If the ring is in excellent, saleable condition and we offer it as is, we make sure the new buyer knows that it is a trade up.
If we remove the stones and make a brand new ring, I would generally mention the trade up in the description- but if the stone is completely undamaged, with a new GIA report, it is essentially a new diamond at that point, no?

 

[flyingpig]

but if the stone is completely undamaged, with a new GIA report, it is essentially a new diamond at that point, no?

Thank you very much. This answers my question. I wanted to know what is reasonably considered a "NEW" diamond among industry experts.

 

[Matata]

but if the stone is completely undamaged, with a new GIA report, it is essentially a new diamond at that point, no?

No. It's a preowned diamond with a new report.

 

[MissGotRocks]

It would be a great question for many vendors. To me, a new diamond would be one that was freshly mined, sent to a cutter and then off for certification. If you were having a stone cut for you, you might at least know if it was cut from rough or a recut from another stone. Not everyone is ethical enough to tell you the background and in all honesty, I'm not really sure it matters. A diamond is one of the only commodities that can be sold as 'used' or 'preowned' and still be in brand new condition. The difference - as with most commodities - is price charged.

 

[HDer]

No. It's a preowned diamond with a new report.

What about the scenarios I mentioned?

Is a diamond sent back for a refund preowned?
Is a diamond that's set and then sent back for a refund preowned?
Is a diamond that's bought back by a vendor from a customer as part of a buy back policy preowned?

If so, then in my estimation almost every single vendor on this forum is guilty of selling preowned diamonds as new.

And if you really want to enforce the pre-owned/new distinction then say goodbye to all of those return and buyback policies people like so much because they'll become prohibitively expensive for vendors to maintain.

 

[Rockdiamond]

No. It's a preowned diamond with a new report.

I totally get why you say that Matata.
People who trade in diamonds, are forced to live by the rules of the market.
A stone is worth exactly what it is based on its attributes as described by the GIA report- as well as the actual physical characteristics.
If a dealer bought a diamond for $10 and the replacement cost is $12, it's easy to make a case that the diamond is now worth $12
If replacement cost goes down to $8, it's definitely now an $8 diamond, if the goal is to sell it.
When the diamond was cut has no bearing on the market value- in almost all cases.
The exceptions I can think of are if it's an antique and there's provenance.
Or, if it's a branded stone, where the origin is part of the deal.
Both of those increase the value.

That's how "used or new" affects value, but the bottom line we agree that transparency is very important.
As I said, I would generally mention if a stone was traded in, and after this thread, I'll make it a rule

 

[Matata]

Is a diamond sent back for a refund preowned?
Is a diamond that's set and then sent back for a refund preowned?
Is a diamond that's bought back by a vendor from a customer as part of a buy back policy preowned?

If so, then in my estimation almost every single vendor on this forum is guilty of selling preowned diamonds as new.

Yes to all 3 of your questions. Money exchanged hands and so did the diamond. A diamond is preowned when it's purchased from a vendor. The vendor bought it and owned it before a consumer purchased it. And before that, someone owned the rough that became the diamond. The mine owner is the only original owner, imo. I fail to see why you believe a vendor is "guilty." I've never seen a sign touting "New Diamonds Sold Here" in any vendor's shop or e-store.

And in the long run, we're talking about a rock that took between 1-3 billion years to form, so "new" is relative

 

[totallyfree]

Rather than "new" or "old" for diamonds maybe the focus should be on the integrity and possible damage to the stone. I don't care if it's had 5 previous owners or 0, if there are chips or scratches it's a less attractive proposition. (As has been pointed out, if you want a freshly mined and cut stone there are vendors that will sell this to you.)

Settings are different and there is no grading or certification that can tell me how roughly it was manhandled on someone elses finger. I want to know if anyone has taken that setting home! There is more risk, I feel, in a 'used' setting than a 'used' diamond.

 

[flyingpig]

I started this thread to clarify any legal issue in selling and listing a diamond as "NEW" when there is no way to confirm this.

In general, I do not consider any diamond with an old report whether it is pre-owned or virtual inventory or vetted. For me, it is like buying a house or an used car with an inspection report from years ago.

 

[totallyfree]

Sorry @flyingpig, my response was a bit off topic!

I'd say the legal side will depend on the strength of your national/state laws. In Australia (where I think we have pretty good consumer protections!) the businesses must not deliberately mislead the buyer. The exact legal guidance is:
For example, businesses cannot make false claims about:

• the quality, style, model or history of a product or service
• whether the goods are new
• the sponsorship, performance characteristics, accessories, benefits or use of products and services
• the availability of repair facilities or spare parts
• the need for the goods or services
• any exclusions on the goods and services.

(Ref: https://www.accc.gov.au/consumers/misleading-claims-advertising/false-or-misleading-claims)

If a business does make a false claim and you discover this then you have the option of requesting a refund from the business directly or via legal route similar to a small claims court.

This does not appear to apply to individual sellers, although that would be difficult to manage as it's very much "he said, she said". Again, if a buyer is unhappy the most they could realistically expect to achieve is a refund - there is no compensation for time taken or inconvenience.

How does this apply to your cases? Businesses rarely, in my experience, list stones as 'new' (because you're right - they cannot track this outside of a few select brands), but perhaps as 'new stock'.

Case 1. A diamond was bought in 2005. It was sent to GIA for a new lab report in 2017. The seller lists the stone as "NEW" (99.9% of buyers will not be able to track this)
Perhaps strictly legal if the business is not aware of anything to the contrary and has no reason to believe it isn't 'new'. If the business knows this is a second hand stone then I'd be disappointed if they were marketing it as 'new'. But I don't know how you'd go about proving this in a legal sense as a buyer.

Case 2. A diamond was bought in 2005. It was sent to GIA for a new lab report in 2017. The seller lists the stone as "Original Condition"
Depends on your definition of 'original condition', but as long as there are no damage marks to the stone then I think this is legit.

Case 3. A diamond was bought in 2005. It was recut and sent to GIA for a new lab report in 2017. The seller lists the stone as "NEW" (99.9% of buyers will not able to track this)
I think this is OK as long as the claims aren't misleading. "New" as in 'freshly mined & cut' would be misleading.

 

[tkyasx78]

I may have been misinformed - so take it for what it is worth - I was told that a jeweler can absolutely take a diamond and have it recut and graded and laser inscribed and certified and sell it at the same price as they sell new ones. they dont come with proof of when or where it was mined and only VERY expensive stones are mapped well enough to locate inclusions to id a stone.
unless you are having diamond cut from rough and you see it in its original state, it is very difficult for anyone to prove a stone is "used" after it has been recut, certified and laser inscribed with a new number.
As far as I know they are not required to disclose if someone has worn a diamond before. Proving it is used when there are no old laser inscriptions and the new one shows the new inscription would be very difficult. I dont know of any jewelers who if they offer a 30 day exchange on a more expensive stone guarantees no one has " owned " any of the diamonds they sell before. It is my understanding that as long as the stone is in original condition ( no chips ect ) they dont have to discount a diamond or tell you it has been worn before.
ebay is a hot mess. buy from reputable dealers.

 

[denverappraiser]

New & used are not gemological properties and mostly they don’t apply to 200 million year old rocks. As mentioned above, condition can be a topic but not always. It’s not even usually.

What then makes a used diamond used?

History of ownership. In answer to the original question, no there is not a legal requirement to disclose this and, in general, sellers don’t even know it. As mentioned above, even in cases where it’s known and discussed, it’s not necessarily a defect. That seems to be the crux of the question. Should used diamond should cost less than new ones? No, I don't think they should. They don’t, and they never have. A recut diamond is ‘new’ in exactly the same way that a product made out of recycled materials can be new.

In any case, eBay and any other sellers can charge whatever they want for anything they're selling. They don't HAVE to discount anything for any reason. If customers don't like it, they don't have to buy. There's no law about this, nor should there be.

 

[HDer]

Should used diamond should cost less than new ones? No, I don't think they should. They don’t, and they never have.

But in the hands of a consumer they do. Whether the consumer gets 60-70% of retail from another consumer or 20-30% from a vendor.

And then they get see the vendor list it back on their site for full retail and they get start questioning why they needed to take such a steep discount when the vendor doesn't even disclose its provenance.

 

[ChristineRose]

Diamonds are millions of years old. Unworn, yes. New?...uh, no.

Personally I've never understood why someone would think a few hundred extra years in the dirt makes it a better diamond than one that was worn by someone's great-great-great-grandparent in the 18th century. I've heard some people say that the idea of wearing a dead person's diamond is not romantic. But lots of things about the diamond industry are not romantic, and some people prefer to get an antique so as not to do any further damage to the earth.

 

[Rockdiamond]

Two different considerations....one is if the stone is "used"- the other is where you buy it.
When a consumer buys an item from an established dealer, it's going to cost a lot more than the very same item on Craig's list ie

 

[Dizzie]

But in the hands of a consumer they do. Whether the consumer gets 60-70% of retail from another consumer or 20-30% from a vendor.

And then they get see the vendor list it back on their site for full retail and they get start questioning why they needed to take such a steep discount when the vendor doesn't even disclose its provenance.

Consumers take hits because they cannot offer the same level of customer service (think returns, payment via CCs, ability to sit on the inventory for month until the right customer comes) as businesses. In theory, as a consumer (presuming the diamond is in undamaged condition and fully certified) one can also try to ask the retail price, however as long as consumer will not be able to offer the same customer service as all other businesses in this competitive market, they will have to play their last trump- the price.

 

[bmfang]

I've always wondered about what happens to trade-ins. Do they get re-listed amongst regular inventory again at full retail price? I have a feeling they are.

I remember a thread on here where a person was looking at stones from BGD and I happened to stumble across two differently dated AGS reports for the same stone number (for some reason, on desktop, I was viewing the more current AGS report but on mobile, I was viewing the report from a few years prior). When I mentioned that I thought this could have been a trade-in stone because of the two reports on be exact same stone that were dated differently, the OP on that thread quickly dismissed that stone as his SO didn't want what could have been a pre-owned stone.

I would surmise that for stones from one of our PS forum recommended vendors, they should be able to track whether a stone has been previously sold by them. For vendors like JA, might be a more difficult exercise.

 

[flyingpig]

I've always wondered about what happens to trade-ins. Do they get re-listed amongst regular inventory again at full retail price? I have a feeling they are.

I remember a thread on here where a person was looking at stones from BGD and I happened to stumble across two differently dated AGS reports for the same stone number (for some reason, on desktop, I was viewing the more current AGS report but on mobile, I was viewing the report from a few years prior). When I mentioned that I thought this could have been a trade-in stone because of the two reports on be exact same stone that were dated differently, the OP on that thread quickly dismissed that stone as his SO didn't want what could have been a pre-owned stone.

I would surmise that for stones from one of our PS forum recommended vendors, they should be able to track whether a stone has been previously sold by them. For vendors like JA, might be a more difficult exercise.

If that's what happened, maybe BGD send trade ins back to AGS for inspection and brand new reports.
Whiteflash does the same thing.

"They are of course re-evaluated to make sure they are in original condition (they are sent back to the lab and re-certified for this purpose), and go back through our normal internal review to insure that they meet all current specifications and qualifications for A CUT ABOVE" by Texa Leaguer

JA, for what I have observed, simply re-lists trade-ins with old reports and old SKU#. They are not sent to GIA or AGS for re-grading or verification. That's why I never buy diamonds with old lab reports (especially with old SKU#), unless I can verify they have been sitting in someone's inventory unsold, which is rare for well cut stones in I~G, SI1~VS1 ranges.

 

[bmfang]

@flyingpig, in trade-in cases, shouldn't the consumer be informed that these stones are trade-in's?

I've heard anecdotally that a lot of people have issues with pre-owned stones (particularly stones used in engagement rings) unless they happen to be family heirlooms. Hence the story as to why Tiffany & Co don't use stones that have been traded-in for a larger one in their engagement rings but instead use them in more decorative jewellery pieces where there isn't that much of an "emotional" connection to the piece.