Labs Grade Differently and Consumers Get Conned

Do different gemological labs grade the same diamonds differently, and if they do, is it wrong? Ostensibly, why wouldn't they grade differently – there is no single standard, some of the grading is arguably subjective, and each lab is free to set its own internal standards. Who is to say that one lab is right, and the rest are wrong?

In fact, far from being just an academic discussion, this issue has wide implications for pricing and even ethics. Because a diamond's price is based on its 4Cs, then a lab's decision on a grade impacts the diamond's price. An unscrupulous seller may offer an uninformed buyer a diamond graded, for example, H/SI2 by most labs as a better color or clarity diamond with a gemological certificate from a lenient lab, or even an "internal lab." With a better grading comes a higher price.

This seller need not demand the full price of the higher grade – even with a nice discount he'll increase his margins, as well as possibly deceive the buyer. After all, how is the buyer to know that not all labs are the same?

The lenient lab is not to blame, of course. In fact, traders, diamond professionals with many years of experience, know well how labs tend to grade, and two diamonds with the same grading from two different labs will be priced differently by traders. The difference in prices is a discount the wholesale market puts on grading certificates from different labs, based on how strictly they are perceived.

Without the insight seasoned pros have, consumers can be easily fooled and this is a source of many problems, including legal, ethical and reputational issues.

About five years ago, IDEX submitted 22 diamonds to the five leading gem labs, and received some very inconsistent results. We found that some labs were clearly stricter than others, and several stones got a wide range of color and clarity gradings. Rob Bates, Senior Editor at JCK, told us that they just carried out a similar test with one diamond, and the differences were minute.

Twittersphere Weighs In
This week, an involved discussion about grading took place on Twitter. Fourth generation Oklahoma City jewelry retailer Daniel Gordon tweeted about consumers buying lower-cost diamonds they thought were of better quality. Instead of getting a great deal, they were actually overcharged, buying lower-cost diamonds graded as better diamonds.

The Twittersphere discussion was the longest thread I've ever seen or have taken part in, and many participated in it – including retailers and diamond traders, as well as journalists Bates and Cheryl Kremkow. Suggestions were made, concerns raised, but a solution is yet to be found.

A Uniform Standard
One option is setting a single standard for grading diamonds, just as a single standard for weight was made in the past. Think of the 134-year-old cylinder of platinum-iridium alloy stored at the International Bureau of Weights and Measures near Paris that serves as the standard kilo, but for diamonds – a master set that is the single reference for all labs.

It's not as simple as a standard weight, especially because color grades are a range (so what do you do with borderline colors) and clarity can be subjective, but where there are problems, there are solutions.

The ongoing discussion is an important one, and more traders and retailers as well as the labs themselves should participate in this discussion, primarily to ensure that consumers are informed. This is an important task.

Next week, CIBJO, the international body that sets many of the standards in the industry, is holding its annual meeting. This is the time to urge delegates to discuss the problem, consider solutions and advance the topic. Meanwhile, the discussion is continuing online. It will continue and lead to change.

Follow Edahn on Twitter
Get in touch on LinkedIn
Connect on Facebook
Or email Edahn at idexonline dot com