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Nashville News Story


cjdw
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I was in Nashville the past two days and came across this news story.  It's a 7 minute video w/ accompanying story.  I'd love to hear input from the pro's on here as to their thoughts.  I have my own thoughts and critiques but will withhold them until others have had a chance to watch it.  

 

It involves many things discussed in this forum.

 

http://www.wsmv.com/story/25447233/what-happens-when-seeking-refund-at-popular-nashville-jeweler

 

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I have only read the transcript/article. If the video contains more/different info, apologies in that respect. There's at least three issues here:

 

1. The battle of the labs

 

2. The specifics of the case in point

 

3. Transaction costs for consumers when buying/selling diamonds and jewellery

 

On theme 1., it is a long-standing issue of consumer education. The facts are out there, if people can be bothered to research a little, but most people cannot be bothered, and it's not in the interest of most of the jewellery industry to clean their marketing approach. Nor (I think) is it going to be a matter that can be solved through the introduction of binding legal standards: which ones? GIA's? And why "theirs"? And how should they be enforced? This would leave GIA with an "official" position that does not belong to them, and that they probably would not want - it would turn them effectively into a public body.

 

Theme 2. is difficult to comment on, since we are told very little about (for example) the specifics of the diamond and the ring. Sold for $5000, and "appraised" at $1200 but what was it? Some of the shop's arguments are a bit spurious (e.g. "people only will want "new" items" - true for the ring, but the diamond? And how much was the setting in the equation?), but some are largely correct if not good news for consumers (e.g. lots of jewellers will offer 25-30% of "new retail" for a piece that was not bought there, and not all will offer 100% credit after a few months). Why did the consumer return to the seller only "a few months" after the events? Surely he should have had an appraisal done well before then? Why didn't that appraisal point out the issue? Or did Michael find a difference "simply" due to retail and resale-to-trade prices?

 

Which brings us neatly to theme 3. Transaction costs for consumers are huge in diamonds - and this is something that has relatively little to do with profit margins, but much more with the structure of the industry. Incidentally, transaction costs for consumers are huge for many other categories of goods: from cars to books to clothes to electronics. Try selling that (e.g.) Armani suit or Valentino dress six months down the line, even if you only wore it once (or never) and then tell me how much you get... yet somehow diamonds and jewellery are treated in a different way.

 

The issues have been described and discussed to a certain depth here: http://www.diamondreview.com/forum/topic/9246-curious-about-diamonds-in-general/ I'm not sure if what we are seeing here is a store that is skirting the borders of "honest" (i.e. stating that the only reason the price is different between equally graded "EGL" and GIA" diamonds is because of the piece of paper), but fundamentally staying well within established practices and not acting in any different way from pretty much any other jeweller without an extended "cash back" policy (and that's 99.9% of them, BTW), or the "consumer ripoff" case that the news report is portraying.

 

In other words, let's assume that Michael had bought a GIA-graded stone; would the proportion of money back 6 months down the line been more generous? Probably not. Has he got a "bargain" (or even a fair deal) buying an EGL stone? Almost definitely not, but the two issues are not the same!

Edited by davidelevi
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I think you're spot on.  I think this guy bought a diamond and things didn't work out, then tried to see what he could get out of it and got a rude awakening "a few months" later.  

 

I thought the piece was slanted against the retailer because others badmouthed EGL, which we all do here.  They may very well walk the line of honesty by letting the consumer draw their own conclusions, but I doubt they are lying to them or telling them something blatantly false.  

 

The report bothered me a little, maybe because I did my homework I guess.  And if I didn't, I wouldn't put it back on the store unless I felt like I was completely misled.  The store sells GIA stones too, so I'm sure he was offered both.  I'm sure there are other dealers in Nashville that sell EGL diamonds that are glad the story wasn't about them.  I'm not sure I would buy from them, but it kind of reminded me of dealing with Diamonds Direct in Birmingham when I first started looking. I don't think they lied to me, but one of the owners jumped in to help their salesperson, I guess, and was very aggressive in trying to get me to at least put down a deposit on a stone.  He led me to think I could get a better deal with a non-GIA stone (even non-certified, saying I didn't need to pay for the piece of paper if I was happy with the diamond), but never out and out lied.  

 

Just for background, I figured out that the value of the stone was about $3,600 and the setting the rest.  It was an EGL International certification, .90 carats G color and SI1 clarity ( I think).   For a retail store that doesn't seem way out of the ballpark to me.    

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