FTC PROPOSES REVISIONS TO GUIDES FOR THE JEWELRY, PRECIOUS METALS, AND PEWTER INDUSTRIES

In a Federal Register notice dated January 12, 2016, the Federal Trade Commission (“FTC”) is seeking comments on proposed amendments to its Guides for the Jewelry, Precious Metals, and Pewter Industries (“Jewelry Guides”).  Companies are encouraged to submit comments to the FTC before the changes are finalized as these proposed changes may have a significant impact on current marketing practices. Comments are due by April 4, 2016.

In July 2012, the FTC initiated a regulatory review of the Jewelry Guides which yielded information related to technological developments and changes in industry standards as well as consumer perceptions related to the jewelry industry.  Based on this review, the FTC has proposed revisions to the marketing and disclosure requirements in the Jewelry Guides that are intended to avoid consumer deception[1] in the following areas:

• Products with a Surface Application of Precious Metals
  • Surface application of platinum and silver: The sections addressing surface application of platinum and silver would be amended. Products featuring only a surface application of silver or platinum could not be described using “silver” or “platinum” unless the term was qualified to indicate that the product features only a surface layer of the precious metal.
  • Surface application of gold: The sections addressing surface application of gold would be amended. A definition of the term “reasonable durability” would be included. Higher thickness would be required for marking products as Gold Filled, Gold Overlay, Rolled Gold Plate, Gold Plate, and Gold Plated. Higher karat fineness would be required for marking products featuring gold applied using electrolytic processes.
  • Surface application of rhodium: A new section would be added related to surface applications of rhodium. Disclosure would be required where products featuring a surface application of rhodium are marked or described as precious metal such as “white gold” or “silver.”

• Products Containing More than One Precious Metal
  • A new section would be added related to misrepresentation where products contain two or more metals. Marketers would generally be required to list precious metals in order of their relative weight, from highest weight to lowest. Where the consumer would not be misled, precious metals would not need to be listed in order of their relative weight (e.g., “14k gold-accented silver”).

• Alloys with Precious Metals in Amounts Below Minimum Thresholds
  • The sections related to use of the terms “gold” or “silver” to describe or mark a product with precious metals below the minimum threshold would be amended. The proposed amendments would not apply to use of the term platinum to describe or mark a product with precious metals below the minimum threshold.
  • Where marketers have reliable scientific evidence that products containing gold or silver below the minimum threshold have materially similar properties to at- or above-threshold products, the marketers would be permitted to non-deceptively reference the precious metal without additional disclosures other than purity.
  • Where the product does not have materially similar properties, marketers would be permitted to non-deceptively reference the preciously metal as long as they disclose that the product may not have the same properties as jewelry made with the same precious metal in an amount at or above the minimum threshold.

• Lead-Glass-Filled Stones
  • A new note would be added addressing lead-glass-filled stones. Where stones are filled with a substantial quantity of lead glass, it would be unfair or deceptive for marketers to:
    • Use the unqualified name of any precious or semi-precious stone (e.g., “ruby” or “sapphire”);
    • Describe the stone as “treated,” “laboratory-grown,” “laboratory-created,” “[manufacturer-name]-created,” or “synthetic”; or
    • Describe the stone as “composite,” “hybrid,” or “manufactured” without qualification.

• Varietals
  • A new section would be added addressing varietals.  A varietal describes a division of gem type based on color, optical phenomenon, or other distinguishing characteristic such as crystal structure.   It would be unfair or deceptive for marketers to mark or describe a product with an incorrect varietal name. For example, it would be unfair or deceptive to use the term “yellow emerald” to describe a golden beryl or heliodor and it would be unfair or deceptive to use the term “green amethyst” to describe prasiolite.

• “Cultured” Diamonds
  • A new section would be added addressing cultured diamonds. It would not be unfair or deceptive to use the term “cultured” to describe laboratory-created diamonds if the term is accompanied by a qualifier such as “laboratory-created” or “synthetic.”

• Misuse of the Word “Gem”
  • The sections currently addressing misuse of the word “gem” in general and as applied to pearls would be removed. Instead, misuse of the word “gem” would be addressed under the same section addressing misuse of the words “ruby,” “sapphire,” “emerald,” “topaz,” “stone,” “birthstone,” and “gemstone.”

• Treatments to Pearl Products
  • A new section would be added addressing disclosures of treatments to pearls and cultured pearls. Where a pearl or cultured pearl is treated, marketers would be required to disclose the treatment if the treatment: (a) is not permanent; (b) creates special care requirements or (c) has a significant effect on the product’s value.

Please contact David J. Evan or Jamie L. Maguire should you have any questions regarding this notice or seek assistance in the preparation of comments.

 

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[1] Industry guides are intended to help companies comply with legal requirements and are not independently enforceable.  However, failure to follow the guides may still result in an enforcement action under the FTC Act, 15 U.S.C. §45, based on a finding of deception or unfair practice.  Section 5 of the FTC Act prohibits deceptive or unfair acts or practices.  An act or practice is deceptive if it involves a material statement or omission that would mislead a consumer acting reasonably under the circumstances.