Imagine investing your hard-earned cash in a rare pink diamond for your Superfund, only to discover that it’s worth 2.5% of its supposed value. Megan Austin explains the benefits of having your online purchase checked by a National Council Of Jewellery Valuers (NCJV) registered valuer.
My client bought a cushion cut 0.73ct Fancy Brownish Purple-Pink diamond (Photo 1) through an online auction with supporting paperwork that seemed to tick all the boxes. One of these documents was a GIA report (see below Photo 2), dated the 1st of February 2017. Usually, if you are offered a GIA report with a purchase, you would be on solid ground. However, in this case, and unbeknownst to the buyer, the diamond was laser drilled and fracture filled sometime after the GIA report was created, drastically reducing the value of the diamond.
The second document (see below Photo 3) supplied by the auction house was a formal valuation for $95,000 that was completed by a non-registered, non-gemmologist valuer – who despite his lack of qualifications operates a Fine Jewellery Valuation and Consultancy service – stating that the diamond was worth ten times what she paid for it. These two documents together provided the basis upon which my client decided to bid for the diamond in the online auction, which she won.
In a further twist to the tale, my client says she contacted a diamond broker in Queensland, and after examining the diamond with a loupe he instructed her merely to put it in her safe until she retired. If my client had followed the broker’s instructions, she would’ve not only been paying excessive premiums for decades, but she also would have reaped absolutely no return with potentially no recourse for recovery of her funds.
Despite having the documents provided by the auction house and the subsequent discussion with the diamond industry so-called 'expert', some red flags had been raised and the buyer decided to make an appointment with me to get another opinion of the stone. After examining the gem with a loupe and subsequent testing by Spectra Gemmological Laboratory on the Gold Coast, the report confirmed that the diamond had been laser drilled and fracture filled. Not only this but it was worth about a quarter of the purchase price paid.
What is laser drilling and fracture filling? Laser drilling is a technique whereby a channel is burnt from the surface of a diamond to meet with an inclusion (generally black) with a laser. The channel is used as a conduit to allow for chemical treatment of the inclusion, usually changing its appearance from black to white. Fracture filling is a technique involving the occupation of part or whole of the diamond with a substance, e.g. glass with the purpose of making the fracture less visible.
Many may think that a valuation higher than the purchase price indicates a bargain; however, I urge consumers to beware of online purchases that come with an inflated valuation certificate. The fact is this auction house deliberately uses overstated or incorrect valuations from non-registered valuers as a sales tool; they’re designed to convince customers that they’ve got a great deal when, in fact, they are potentially overpaying. Worse, this inflated figure also becomes the figure upon which years of insurance premiums are paid.
The sad truth is that anyone can claim to be a valuer and this is not illegal; however, there are industry bodies that specialise in jewellery valuation, and it’s up to the client to choose a suitably-qualified professional. Always select a valuer who is registered with the National Council of Jewellery Valuers as they must undertake many years of formal training in gemmology and other specialist areas to become registered and then commit to ongoing education for the duration of their registered status to remain up-to-date with industry changes.
Even though non-NCJV registered valuers are not answerable to the NCJV they are still expected to comply with Australian Consumer Law (ACL) which makes it illegal for a business to engage in misleading or deceptive conduct, by failing to disclose that gemstones have been treated and are not natural, even if they didn’t intend to mislead or deceive.
Furthermore, sellers in the jewellery industry also have a responsibility to comply with ACL which states that a customer is entitled to a refund if an item is significantly different from the description. If a retailer uses a valuation misleadingly or deceptively, irrespective of whether he/she knew it was misleading then the retailer will have contravened the Act. In addition, if the valuer knows the retailer is using the valuations misleadingly and deceptively and does nothing to prevent that misuse, then the valuer may also contravene the Act as a person knowingly concerned in the contravention.
Louise Sylvan, a former Deputy Chair for the Australian Competition and Consumer Commission says “The problem for consumers is that very few consumers have the expertise to be able to determine if the gemstones they are being sold are as authentic as is claimed, and in particular, if the price they are being quoted is a genuine bargain. In short, in most cases, consumers are relying on the honesty and reputation of the jeweller”.
Even if a diamond comes with a diamond certificate from a reputable diamond grading laboratory, ensure you use a registered valuer to verify it. Also, even though the vendor may issue you with an ‘in-house’ valuation certificate, a ‘Certificate of Authenticity’ or if it has a reputable laboratory grading report – as in this case – it’s still important to have the item checked over by a professional and valued for replacement in the Australian marketplace.
Fortunately, this story has a very happy ending as my client managed to recover her funds from the Auction house, and additionally was reimbursed the cost of the laboratory report and my valuation.
To obtain a valuation on your purchase, call today on (07) 3162 5424 and let qualified experts help you.