Editor’s Note
This article discusses a recent recommendation by the National Advertising Division (NAD) for Diamond Foundry to clarify in its advertising that its diamonds are lab-grown. The company has stated it will comply.
BBB National Programs’ National Advertising Division (NAD) has recommended that Diamond Foundry modify some of its advertising to better communicate that its diamonds are grown in a laboratory.
Diamond Foundry—which recently disclosed raising $200 million in funding in an SEC filing—said it will comply with the recommendations. The Santa Clara, Calif.-based company manufactures and sells lab-grown diamonds through an office in Dubai, United Arab Emirates, and via its e-tail subsidiary Vrai.
In its decision released March 30, the NAD, responding to a complaint from the Natural Diamond Council (NDC), found that certain Diamond Foundry and Vrai ads could “create confusion” about the origin of their diamonds.
In particular, the NAD took issue with some social media ads and posts that label products as “diamonds” without accompanying modifiers or descriptors.
The NAD advised Diamond Foundry to make “clear and conspicuous disclosures [about the diamonds’ origin] immediately preceding, with equal conspicuousness, the word *diamond*,” as prescribed by the Federal Trade Commission’s Guides for the Jewelry Industry.
It also recommended that Diamond Foundry and Vrai not describe products as “created diamonds,” “diamonds created aboveground,” “sustainably created,” “sustainably grown,” and “world positive,” as those terms “do not sufficiently communicate that the diamonds are laboratory-grown.”
The NAD acknowledged that the Diamond Foundry and Vrai sites feature “clear messaging” about their diamonds’ origin, citing the slogan “Just diamond. No mining.” Yet it warned that consumers “may not be exposed to that general messaging.”
The group also expressed concern about a webpage where Diamond Foundry called its diamonds “real.”
The NAD did dismiss the NDC’s objection to the term *Diamond Foundry–created*. That term, it said, is “not misleading.”
The NAD noted that nothing in its decision precludes Diamond Foundry from using the phrase *diamonds created aboveground* if it appears in a context that clearly discloses the diamonds are man-made. It can also use the phrase *world positive* “if it is tied to a specific benefit or feature of Diamond Foundry’s LGDs, when accurately disclosing the diamonds’ origin.”
Diamond Foundry said it will heed the NAD’s counsel “out of respect for the self-regulatory process.” It also told the NAD it disagreed with certain aspects of its decision.
This is not the first time Diamond Foundry has faced controversies about its advertising. In 2019, the FTC sent warning letters to Diamond Foundry and seven other companies about how they described their diamonds.
Prior to that, the Jewelers Vigilance Committee complained of fuzzy descriptors in Diamond Foundry’s collaborations with Barneys New York and Jennifer Fisher.
David Kellie, CEO of the Natural Diamond Council, which has said it is taking a less confrontational stance toward lab-grown gems, tells JCK that while the group’s focus remains on promoting natural diamonds, it does seek “to protect the integrity of our industry on behalf of the businesses and tens of millions of employees, their families, and communities whose livelihoods depend upon diamonds and diamond jewelry. Unfortunately, this means that from time to time we need to raise issues of concern and seek resolution and remedy through appropriate channels.”
In related news, Diamond Foundry is being sued in Canadian court by Ofer Mizrahi Diamonds (OM), for allegedly poaching its people and stealing its secrets.
The complaint, filed March 16 in the Supreme Court of British Columbia, charged that, in August 2019, one of OM’s Canadian employees left the company for a position as vice president of Diamond Foundry. Four other OM employees subsequently joined her, it said.
According to the complaint, the move may have violated the woman’s employee agreement, which forbade her from accepting a job with a competitor, or inducing other employees to leave for six months after her departure. OM is part owner of Green Rocks, a lab-grown diamond company.
The complaint alleged that the ex-employees gave Diamond Foundry access to OM’s customer database as well as other confidential information. It charged breach of contract, unjust enrichment, and other counts, and seeks $5 million in damages.
Diamond Foundry tells JCK it does not comment on pending litigation.