In response to my blog post last week, Don Palmieri, president of the Gem Certification & Assurance Lab (GCAL) wrote in with his view on how to solve the problem of variable lab standards:

We need an industry organization to enforce the Standard of Care of diamond grading, and go after the cheaters and abusers of the current standard. If the public knew the state of our industry, in regards to inflated grades and inflated appraisals, and the indifference of major public companies, independent retailers, and others who have made a practice of putting so much pressure on lower price points, that they wink and nod at so-called independent labs to inflate grades or values to dupe them, I believe two things would happen. First, a major drop in consumer confidence, sales, market share, market value, etc. The second thing would be lawsuits that would make the case in Nashville look like child’s play.

Laboratories work under a moral hazard. “Mr. Lab owner, if you want my business, you have to grade this way.” “If you want this diamond program, you must inflate the values and grades, if necessary, to prices we will never charge, but well above what we do charge.”

International Standards Organization testing, monitoring and certification of all labs, would be a good start. We do it. It was painful in the beginning, but once all employees embrace the zero-defects method of operation, it is a refreshing, objective, and continual look at your operation. The ISO testers are all scientists. Their sole purpose is to make sure you and all your employees (top to bottom) do what you say you do, consistently. Testing and accreditation is performed and awarded on an annual basis…no grandfathering, no uncorrected deficiencies.

But first the industry must want diamond-grading reports to be credible, accurate, and consistent. That is the question you must ask your readers. 

I like the idea of an independent authority—whether ISO, a trade group, or some third option—verifying that labs are grading consistently and to accepted standards. This would essentially be a third-party verification for the third-party verifiers.

In the absence of such an authority, we have different online trading networks making their own decisions on the validity of the various labs. So far, three different networks have announced three different policies. Granted, this is a complex issue, but there needs to be a better way to sort this out.

Rob Bates

JCK News Director