The diamond industry is facing a crisis after numerous reports surfaced of synthetic melee being sold undisclosed alongside natural diamonds in parcels.

In October, the Rapaport Group issued a “trade alert” warning of “persistent reports that large amounts of synthetic lab-grown diamonds are being mixed with natural diamonds in parcels of melee and pointers.”

Similar reports have come from Israeli publication Diamond Intelligence Briefs and The Times of India.

“There are mixed parcels out there,” says Rapaport Group chairman Martin Rapaport. “I don’t believe people should think all is well. It really is a big concern if diamond people can’t trust their supply chain.”

Rapaport notes this issue doesn’t really affect big diamonds, which are commonly sent to labs that can detect a stone’s origin. But smaller diamonds are generally not cost-effective to check.

Jewelers Vigilance Committee president and CEO Cecilia Gardner notes that, under the Federal Trade Commission’s Guides for the Jewelry Industry, any stone that is grown in a lab has to be labeled as such.

“The law is not ambiguous,” she says. “That is what the statute says.”

The World Federation of Diamond Bourses issued a statement calling nondisclosure “fraud” and vowing to punish those who flaunt the rules.

Meanwhile, gem labs tell JCK they haven’t noticed any increase in the number of synthetic diamonds submitted undisclosed.

GIA has seen “no appreciable upturn in the number of synthetics, disclosed or not, submitted for grading,” says spokesman Stephen Morisseau.

International Gemological Institute co-CEO Roland Lorie feels a lot of the concerns are ­“exaggerated.… For the moment, I consider this a panic without fundamentals,” he says. “We have checked a lot of melee in the last week and everything is okay.”

But he adds: “The industry needs to take this thing in hand. We probably have waited too long; we all knew this was coming. But hopefully now people will react a bit. Synthetic diamonds are a genuine market, but it needs to be done carefully. The worst thing for everyone is that we have a scenario where consumers don’t trust the product anymore.”

Indeed, these incidents have increased calls for an easy way to detect smaller lab-grown diamonds. De Beers has developed what it calls a synthetic melee detector, but for the time being, it is offering it only to its sightholders. And a New York City lab, Analytical Gemology and Jewelry, has developed a screening service for lab-grown melee.