GIA Diamond Scandal
Has Silver Lining for Insurers
Last year's scandal over inflated grades on diamond reports led to deep changes within the GIA, changes that benefit both insurers and consumers.
The Gemological Institute of America was sued last year for accepting bribes in return for inflating color and clarity grades on some certificates. The scandal had the jewelry industry in turmoil, as the GIA is the most respected organization in diamond grading. GIA's reputation was on the line.
Ultimately the suit was settled. GIA fired four employees responsible, and it informed diamond dealers who violated its code of ethics that it would no longer do business with them. To avoid any appearance of impropriety, the GIA will no longer solicit or accept donations from dealers whose stones are graded in the lab.
More important to the public, GIA took a close look at its procedures and made some changes.
Cost of a Diamond Report
GIA used to offer memberships to help support its lab, and members would get discounted prices on their diamond reports. For example, a diamond dealer, who would want certificates for the hundreds of gems he trades trade each year, could donate to the non-profit in return for member status and then pay a discounted price for each report. A jewelry consumer, who needed just a single report on a diamond he'd purchased, would pay more for the report.
GIA has discontinued the membership price structure. Under the new system, reports are priced according to the weight of the diamond. The rates (shown below) are available on the GIA web site for all to see, and the rates are the same for everyone — supplier, dealer, retailer, consumer, insurer.
Weight (CT) |
Fee |
Weight (CT) |
Fee |
|
| 0.18 to 0.22 |
59 |
6.00 to 7.99 |
482 |
|
0.23 to 0.46 |
53 |
8.00 to 9.99 |
570 |
|
| 0.47 to 0.69 |
64 |
10.00 to 11.99 |
791 |
|
0.70 to 0.99 |
78 |
12.00 to 14.99 |
928 |
|
| 1.00 to 1.49 |
100 |
15.00 to 19.99 |
1,138 |
|
1.50 to 1.99 |
110 |
20.00 to 24.99 |
1,484 |
|
| 2.00 to 2.99 |
154 |
25.00 to 29.99 |
1,732 |
|
3.00 to 3.99 |
217 |
30.00 to 39.00 |
2,102 |
|
| 4.00 to 4.99 |
288 |
40.00 to 49.00 |
2,474 |
|
5.00 to 5.99 |
409 |
Report Verification Service
Since GIA certificates are the most highly regarded, there is always the risk of getting a counterfeit.
Earlier this year one buyer found himself with two counterfeit GIA reports, which he'd received with purchases. Subsequent appraisals revealed the diamonds to be of lower color and clarity than listed on the GIA reports and to have been treated. It turned out the GIA had done reports on the diamonds, and had included the correct information, but the reports the buyer received were not the original GIA certificates.
Sometimes the scams are quite broadly based. In 2003 the GIA notified law enforcement that counterfeits of its certificates were being sold on the Internet. Who bought those certificates? In what insurers' files do they now rest?
As a counter to such frauds, GIA's new report verification service is a boon to consumers and insurers. By supplying the report number and carat weight of a stone, you can quickly confirm that the information on your report matches what is archived in the GIA report database. You can even get a copy of the report.
Reports can be verified either online or by phone (760-603-4500 ext. 7590).
Any buyer who receives a GIA report other than directly from GIA can confirm its authenticity. Every adjuster can confirm the authenticity of a GIA report before paying a claim based on information found there.
Recertifying Diamonds
Because the negative publicity last year had some customers worried that their own certificates carried incorrect information, GIA offered to recertify any diamonds at no charge during the first six months of 2006. The diamond must be loose and the original certificate must be from GIA. This offer expires at the end of June.
FOR AGENTS & UNDERWRITERS
GIA diamond reports are considered the most reliable certificates available—as long as they are not counterfeit or altered. If a certificate comes from any source other than the GIA itself — say from a seller on the Web, from a pawnbroker, from a private sale, from the selling jeweler — it is wise to verify the authenticity of its information with the GIA either online or by phone (760-603-4500 ext. 7590).
FOR ADJUSTERS
Never base a claim on information from a GIA report without verifying the authenticity of the report. You can do this quickly either online or by phone (760-603-4500 ext. 7590).
In dealing with damaged jewelry for which there is a diamond report or appraisal, be sure to have the jewelry examined by a Graduate Gemologist, preferably a Certified Insurance Appraiser™. This should verify the identity of the damaged stone as the stone described in the report or appraisal.
©2006, JCRS Inland Marine Solutions, Inc. All Rights Reserved. www.jcrs.com
©2010, JCRS Inland Marine Solutions, Inc. All Rights Reserved. www.jcrs.com
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