One Year Ago: FTC Demanding Tighter Online Jewelry Regulations


Originally published on January 10, 2000 and brought to you today as a time capsule.


The U.S. Federal Trade Commission (FTC) is insisting that while online jewelry merchants are getting better at telling the truth about their wares, there is still room for improvement.

Online sales of items that require close scrutiny, such as gems and finely crafted jewelry, can be difficult to regulate. Over a two-year period of analysis, the FTC has raised questions about advertisements and other claims made by some online jewelers about the size and quality of such offerings.

The review focused on advertisements for three areas: pearls, diamond weight claims, and gemstone treatments. Commission staffers went back to 90 Web sites that they had examined in a similar inquiry in 1998 and found 71 still active.

Steps Forward

According to the FTC, the sites have made some progress toward complying with the commission’s “Guide for the Jewelry, Precious Metals and Pewter Industries,” which describes advertising claims that the Commission considers misleading and explains how sellers can describe jewelry in a way that is “truthful and non-deceptive.”

“These results show that jewelry retailers still need to review their online ads more carefully to ensure that consumers receive complete and accurate information about the jewelry products they offer,” Associate Director of the FTC’s Division of Enforcement Elaine D. Kolish said.

Half-Truths

Rather than publish blatant lies, many online jewelry sellers simply leave out important distinctions and details, the FTC’s study found, and that practice did not disappear in 1999. Pearl jewelry sellers, for example, rarely note when pearls are imitation, cultured or natural.

Natural pearls are extremely rare and expensive, but many consumers do not understand the distinctions, the FTC said. Only 44 percent of online jewelry merchants studied by the FTC clearly stated this distinction, but that number is a 15 percent increase from 1998.

“Commission staff found that although many sites provided the appropriate qualifying information in some parts of their site, they often neglected to inform consumers about whether particular types of pearls, such as black pearls or freshwater pearls, were imitation or cultured,” the FTC said.

Carat weights of diamonds are even more difficult to monitor on the Internet. Jewelers who use fractions instead of decimals to indicate weights are instructed to warn consumers that fractions are less precise measurements of the gems. In this area, Web sites have improved dramatically from 1998, with 75 percent now complying with the guidelines — as compared to 58 percent in the earlier study.

Compliance with guidelines for disclosures about other gemstones, however, remains abysmal. Ads for certain gemstones must include information on any permanent or non-permanent treatments the gems have received to improve their beauty or durability. In 1999, 12 percent of the 50 sites advertising gemstone jewelry were in compliance with this rule, up from five percent compliance in 1998.

Watch Goes On

As it did after the 1998 study, the FTC plans to send e-mail notices or letters to those sites found to post potentially deceptive claims. FTC staffers will then follow up with those merchants to ensure they are improving their practices. Although the jewelry inquiries were begun two years ago, the FTC has been “surfing” retail and other Web sites for five years to get a picture of whether various industries are providing truthful and needed information to consumers.

During that five-year period, the FTC brought more than 100 legal actions against more than 300 online companies that would not alter their online practices to comply with consumer protection laws.

“For many consumers, the Web continues to be an unfamiliar place, which makes practical, plain English information on how to navigate safely especially important,” the FTC said in a December 1999 report on its enforcement efforts. “The Commission expects that as technology thrives and e-commerce flourishes, consumer protection will be even more critical. Building on its five years of experience, the FTC will continue to work with public and private sector partners to anticipate and meet the challenges of the online marketplace.”

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