The Ten Biggest Mistakes Diamond Buyers Make
& Internet Diamond Scams and How to Avoid Them

1.  ASSUMING ALL DIAMONDS OF THE SAME COLOR,
CLARITY,  AND CUT GRADE ARE THE SAME

Although GIA has made great strides forward with their new cut grading system (for round diamonds only), the system is nevertheless one of laboratory measurements. As a result, there is a wide variation in how beautiful a diamond appears if ranked by the gemologist at the high end of any cut grade from one ranked low in the same cut grade.  (For round diamonds, there is about a 30% price differential from the top to the bottom of the same cut grade).  No two diamonds, even with the same numbers, handle light or "perform" the same.

2.  ASSUMING EVERYTHING YOU NEED TO KNOW ABOUT A DIAMOND IS ON THE CERTIFICATE,
AND THAT A DIAMOND CAN BE PURCHASED "BY THE NUMBERS" ALONE

In addition to color and clarity, many consumers like to analyze the depth and table percentages of a diamond.  While these numbers can be used to eliminate certain stones as not being properly cut, not even an expert can tell if a diamond is well cut by looking only at the numbers.  The reason for this is that cutters can employ an angle shifting technique that results in depth and table percentages that appear to be correct on the certificate.  In other words, they can make a diamond look "paper pretty."

Another much more serious omission from the certificate is an analysis of the diamond material.  For reasons that are too technical to go into here, diamond material can vary from stone to stone.  Some diamond material may be very "grainy," while it is the "crystal" material that is most desired and most valuable.  Many jewelers do not know how to distinguish this phenomenon, but an experienced gemologist who knows what to look for is able to detect this using specific gemological techniques.  For more techincal information on this subject, click this link.

3. ASSUMING EVERYONE SELLING DIAMONDS IS A GIA GRADUATE GEMOLOGIST

I find this to be the most important question consumers never ask: "Are you a GIA Graduate Gemologist?"   (This is a good question to ask before making your appointment.)  Unfortunately, there are no federal or state qualifications, training, or licensing required for someone to sell a diamond (hard to believe, but true).  Ask to see their credentials.  At M. Martin and Company our credentials are displayed in our showroom.  Anyone can sell a diamond, but would you trust buying a diamond from just "anyone?"

4.  ASSUMING  LABORATORY GRADING IS ALWAYS
ACCURATE AND UNIFORM TO INDUSTRY STANDARDS.

Unfortunately, each laboratory sets its own policy on how "strict" or how "loose" they will grade diamonds.  Many dealers and stores like to use certificates from laboratories that give diamonds inflated grades (3 to 5 grades higher is not unusual) because it increases their profit margins (at the customer's expense, of course).  For more information and to see which labs should be avoided, see our web page entitled "Critique of the Laboratories."   However, even graders at the best and strictest labs can make incorrect calls (they are human, after all).  We regrade every certified diamond to double check the accuracy of the certificate.

5.  ASSUMING COLOR AND CLARITY ARE THE MAJOR
DETERMINANTS IN PRICING A DIAMOND

In fact, the largest variant in diamond pricing is the cutting.  Each color and clarity grade sets a range of prices, and these ranges overlap.  Cutting alone may cause as much as a 50% variation in price for a specific color and clarity grade.  Inherent shortcomings in the diamond material may cause an additional 25% variation.  Therefore, there could be as much as a 75% variation in the price of two diamonds with the same weight, color, and clarity.  Gemologists also look at many other characteristics of a diamond before making a judgment as to its overall quality.

6.  ASSUMING THAT CHOOSING A SPECIFIC COLOR AND CLARITY
GRADE AND THEN SHOPPING FOR THE LOWEST
PRICE WILL YIELD THE BEST DIAMOND

While it is good to comparison shop in order to find the best value, the lowest price diamond of any specific color and clarity grade is usually the one with the worst cut or some inherent gemological shortcomings in the diamond material.  DeBeers sets the price on rough diamonds, and this often translates into a fixed price at the wholesale level.  Prices at the retail level may vary more depending on the jewelry store where the diamond is sold.   However, the diamond that is offered at the "bargain price" is usually the one of which you would want to be most wary.

7.  ASSUMING ALL DIAMONDS ARE WELL CUT

Again, this is unfortunately not true.  Statistics show that 95% of all diamonds cut are not properly proportioned.  The reason for this lies in the original shape of the rough diamond crystal.  The further a diamond cutter strays from the ideal proportioning of the diamond, the more weight he is able to retain on the stone.  For example, a cutter may have a rough diamond crystal which, if cut to ideal proportions, would produce a diamond weighing .85 carats.  He could instead cut this same rough diamond crystal with a high crown and a deep pavilion, making it now weigh one carat.  Not only would the one carat diamond still have the diameter of a .85 carat diamond, but it would also show reduced brilliance because all of the angles of the facets would be incorrect.  But the cutter, and subsequently the jeweler, can now make the consumer believe that he is getting a better bargain by offering a one carat off-make diamond for the same price as a .85 carat well-proportioned diamond.

8. ASSUMING EVERY STORE GRADES DIAMONDS TO PROPER STANDARDS

Larger, better quality diamonds should only be purchased with a certificate from a major, respected laboratory.  But what about smaller or lesser quality diamonds such as you might find in diamond stud earrings, tennis bracelets, or pendants?  In this case you would want to know that the store is grading the diamonds correctly to GIA standards.  Unfortunately, when there are no certificates on diamonds, there is a tendency for many stores to inflate the grades of the diamonds they are selling.  Check the seller's credentials, and know the reputation of the store before making a purchase.

9.  ASSUMING COLOR IS THE MOST IMPORTANT CHARACTERISTIC
    ASSUMING CLARITY IS THE MOST IMPORTANT CHARACTERISTIC

Cutting, more than any other factor, determines the beauty and brilliance of a diamond.  A "D" color diamond, though high on the color scale, may lack beauty and brilliance due to poor cutting.  A flawless diamond may also lack beauty and brilliance due to poor cutting.  In order to find a diamond that is both beautiful and brilliant, it is necessary to first search for a diamond that is well proportioned, and then to balance out the color, clarity, and size with budgetary considerations. 

10.  ASSUMING A DIAMOND CAN BE BOUGHT CHEAPER...
...when the jewelry show comes to town
...when the diamond goes on sale
...when traveling to another country
...from a company selling diamonds on the internet

None of the above are true.

Although jewelry shows tend to portray a "bazaar" type atmosphere, seldom, if ever, will the consumer find a real bargain.  Due to their extremely high travel and insurance expenses, the dealers at these events often have a greater overhead than local jewelers.  In addition, in an attempt to compete with each other on price, high quality merchandise is rarely sold at these shows.

Jewelry, with the exception of watches, has no list price.  Stores frequently mark jewelry up to unrealistically high prices and then give large, though fictitious, discounts.   This is why some stores are able to continually run 50% and 70% off "sales." 

Diamonds are traded in the major overseas exchanges in U.S. dollars.  Since De Beers sets the world price on rough diamonds, diamonds will not be less expensive in other countries.  Gold also has a set world price, and other gemstones have worldwide markets.  Therefore, in general, jewelry will not cost less in foreign countries.  There is nothing wrong with spending a small amount of money on a piece of jewelry that will serve as a remembrance of a trip, or on something unusual that may be indigenous to a specific area of the world.  However, it is not a good idea to spend thousands of dollars anticipating a "deal."  It is important to shop only in recommended stores, and to expect that the jewelry is being sold at its full retail price.  Due to the fact that the U.S. market is so competitive, the United States is probably the best place to buy jewelry. 

You do not have to look very far to find companies selling diamonds on the internet. While your first reaction is that these companies might be able to sell you a diamond for less money than a jewelry store, the reality is that this rarely happens. Every business has operating expenses (rent, salaries, insurance, etc.) which affect the prices at which they will sell their products. Internet companies not only have these same expenses, they also have the additional expenses associated with designing and maintaining an ever-changing web site. Since each web site tries to compete with each other solely on price, do not expect the finest stones to be offered. Internet companies do not even stock diamonds—they compile readily available diamond databases from other companies and post these offerings on their site. The diamond is shipped to you straight from the vendor (the vendor is supplied with return address labels to make it look as if the stone was sent to you by the internet company). In other words, they neither own nor have ever seen the diamonds that they are offering to you.  Many jewelers are now using the same databases with thousands of the same diamonds that internet companies use.  They do not stock diamonds, but just order them from their computer.  As with any internet company, they neither own nor have ever seen the diamonds they are offering to you.

As an example of the above, we consider the Blue Nile Company one of the most efficiently run internet companies, and yet their markup on jewelry is still considerable at 29% partly due to the fact they have nearly 300 employees (source: their annual report).  At M. Martin and Company our low overhead, upstairs location in the Jewelers Center allows us to use margins CONSIDERABLY LESS than that of even internet companies.   For this reason, we can offer you the quality that you find at only the finest stores at prices that even internet companies cannot match.

Interent Diamond Scams and How to Avoid Them

Steven Martin has had experience as an expert witness and has worked as a consultant on a number of jewelry fraud and criminal cases. Sources for the information below include our industry publicatons, legal and law enforcement sources, and our own industry experience.  Some of the scams are outright illegal, some are just unethical, and some are designed to just stay within the law.

Counterfeit certificates.  GIA certificates are not that difficult to counterfeit.  Specifications for the stone are taken from actual certificates so that a report check from GIA does not reveal the bogus certificate.

Switching stones and using a genuine GIA certificate.  A stone of the exact weight and near measurements but of a lower grade is substituted for the actual diamond.  In some cases, a new laser engraved number is put onto the diamond with easily obtainable laser engraving machines.

Creating a special item for the "photo shoot" for the web site.   If we use a ring as an example, companies will create a special ring for the photo for their web site with larger diamonds and a heavier mounting than the customer will receive.  To skirt the law, they will give the correct diamond weight in the written description.  The ring that is received barely looks like the picture.  We have even seen this with large, reputable web site companies because the photo is supplied to them by the vendor. (They may not know until they receive a lot of complaints).

The same trick can even be done with a simple wedding band.  The company will shoot a picture of a quality band with thick, substantial walls.  The customer receives a ring with paper thin walls or with hollowed out walls.

Inflating grades of diamonds that don't have certificates. Self-explanatory.   (Let's be fair here. Some stores do this also).

Selling diamonds from laboratories that purposely inflate diamond grades. (Again, some store sell these also.)  If you don't know which laboratories purposely  inflate grades see my section entitled "Laboratory Critique."

Sending you a certificate from a "contract laboratory."  Be wary of certificates from unknown laboratories.  Some of these labs are actually owned by the selling company and, of course, diamond grades are inflated.  In other cases, the seller and the lab may be independent but there is a "handshake" agreement that grades will be inflated in return for a certain amount of their business.

Labelling a diamond with a broad, generic grade. For example, a company may describe a diamond as an "SI clarity grade."  But is it SI1, SI2, or SI3? (Hint: Bet on SI3).

Digitally altering certificates that are posted on the internet.  A company may take a legitimate certificate and make a slight alteration to it. One example might be to remove some of the imperfections in the plot of the stone.  When it is received by the customer, the difference is rarely noticed.  As a legal variation on this scheme, some labs plot the imperfections with super-fine pens and make the plot so light that the lines cannot be seen by someone with normal vision without using a magnifier (these imperfections are so light, they will not be picked up by any scanner or duplicating machine).

Selling clarity enhaced diamonds with a "clarity enhanced" grade from a laboratory working for the selling company.  A clarity enhanced diamond is typically a diamond with an opening or crack in the surface into which a filler material is placed.  Because the filler has nearly the same refractive index as diamond, the filler makes the crack virtually impossible to detect. They are legal to sell as long as the jeweler or internet company discloses the enhancement and explains it properly to the customer.  Before the stone is filled it may be, for example an imperfect I2 diamond, being graded that way because of the visible cracks.  However, after the cracks are filled and hidden, the stone may have the appearance of a very clean diamond, say VS2.  A cooperating laboratory then issues a VS2 certificate for this stone (small print on the certificate may explain this is just an equivalent grade after the filling was put in, but few people would pick up on this).

We will publish more as we encounter them...     

I invite you to click this link to read my complete Diamond Buying Guide so that you don't make any of the above mistakes.

Written by Steven R. Martin, Graduate Gemologist (GIA), President, M. Martin & Company Jewelers,
5 S. Wabash Ave., Suite 611, Chicago, IL 60603; Phone: (312) 263 - 4957.  Copyright M. Martin & Co.