In 1979, GIA reports were not widely used. Diamonds were sold as investments, and “certs” were reserved for high-end stones. High color, VS2 or better stones over .50ct required certification, while SI goods and smaller sizes were graded by jewelry stores or suppliers. As public awareness of GIA reports grew, demand increased. Around this time, second-tier labs like EGL, IGI, and HRD emerged, offering looser standards, lower prices, mini-certificates, and faster service. Sellers realized they could achieve higher margins and offer bigger discounts by using these labs.
Retailers began promoting lab reports to protect consumers from misrepresentation. The Rapaport price list added structure to wholesale prices, with small grade differences significantly impacting price. For example, a one-carat stone graded H rather than G could cost 15% less, while an I1 instead of SI2 could be 50% cheaper. However, if a certificate inflated a stone’s grade, consumers could overpay by the same percentages.
Despite assurances of lab independence, labs do sell their services, and easier grading standards can lead to higher profits for sellers. Even reputable labs like GIA or AGS can make grading mistakes, affecting diamond prices. Many diamonds with second-tier lab reports are incorrectly graded, sometimes by several grades.
In today’s litigious society, consumers rely on lab reports to avoid being overcharged. Internet sites have capitalized on this, selling diamonds based on their reports. However, this reliance can be risky, as some diamonds are misrepresented. While some consumers buy correctly graded diamonds, others do not, creating a Russian roulette of diamond buying.
Should people return to buying non-certified goods? It’s unlikely, as the industry is entrenched in the current system. The responsibility often falls on the labs, absolving jewelers. However, the industry needs to prioritize education and gemological skill over reliance on lab reports. Consumers should consult credentialed jewelers or gemologists, compare diamonds with GIA or AGS standards, and verify doubtful diamonds with an independent appraiser.
The trend of buying diamonds based solely on certificates is problematic. What was meant to protect consumers has become the issue. Instead of relying blindly on reports, consumers should focus on the actual stones and seek expert advice.
(Note: This is an updated version of my post from October 11, 2007)
