Buying Diamonds on the Internet

Seems like yesterday (it was) that companies selling diamonds over the Internet were thought of as a novelty, but today there are literally thousands of such sites. This is how it works: You locate a diamond merchant on the web and look over a selection of stones.
Full-color, high-resolution images of the diamonds are displayed on the screen. The diamonds are graded by carat weight, cut, clarity and color. You select a stone you like, enter your credit card number and your diamond will be shipped.
My major concern is the quality of the stone’s proportions. In my cyber travels I find lots of “off-makes” (poorly proportioned stones). I could tell they were taking rough which if properly cut would have yielded shy-carated stones and cutting them heavy to reach full-carat weights even if it meant sacrificing sparkle for size.
In the process, they offer lots of full-carated diamonds and a very few opportunities to “buy shy”. They try to force the buyer to their strong suit where their inventories are the heaviest. If you want a .90ct SI-1, I then don’t be pushed into a 1ct SI-1, G, unless you get it for the .90ct price and all the parameters of cut are at least Class II.
In short, you’re forced to hunt for the needle in the haystack. Carefully consider the following pros and cons before you decide it it’s worth the search.
Cons

1.) The Scams:

A. Treated Diamonds:
Every form of treated diamonds is detectable by a lab with the exception of a baked or heat-treated diamond. These are diamonds that two weeks ago might have been yellow but due to the treatment they are are now white! Baked diamonds are brittle and can break and must be avoided. The only way to avoid being stuck with this type of loss is to make the sale contingent on a breakage guarantee and or money back guarantee.

B. Fake Lab or Duplicate Grading Reports:
Diamonds are popping up all over the country whose lab grading reports don’t match their diamond. A lot of people believe that if a diamond has been graded by a third party, there is no need to have it independently checked when you get it. What good is it if a lab grading reports say a diamond is great if it doesn’t match the diamond? With today’s home computers knocking off lab grading report has become a piece of cake. Or, a crook can take a good diamond and obtain a lab-grading report two or three times, then take the extra lab-grading report and put it with a similar-looking but lower quality diamond.

C. “Hot Diamonds”:
Another quick hustle for an on-line vendor is selling diamonds he hasn’t paid for and never plans on paying for. In the jewelry industry diamonds are routinely handled on consignment. This is where the owner loans diamonds to a retailer, with the agreement that he will be paid when the retailer sells the stone. But the dishonest vendor sells the diamond on-line below his cost to attract a quick sale but never pays his supplier. In a few months he declares bankruptcy and the spoils are his. In this case you might get a nice diamond at an unbelievable low price, but not for long. The FBI is now looking into these cases as interstate theft. How would you feel a year and a half from now when someone knocks on you door to say they’re confiscating your stolen diamond!? You’re out of the money and the rock!

D. The Shell Game:
You order a diamond on-line, get it appraised and the appraiser says it’s a fake! “Cubic Zirconia!!!!” You scream foul play, go to the police and the retailer claims he’s innocent. But the police have no way of knowing who the real crook is. Did the seller mail a fake like the appraiser says? Or did the appraiser switch the real diamond for a fake and he’s the crook or better yet, did the customer cook the whole thing up to get a free diamond and they switched the diamond for the fake before going to the appraiser? Find the crook? What a mess indeed.

E. Handling Fees Scam:
Some on-line jewelers build their profit into handling fees, not the diamond. That way whether you keep it or not they just made a sale. Avoid jewelers who charge handling fees that are not refundable.

F. The Return Authorization Number:
R.A.N. for short. Here’s what some “smooth operators” do. They talk about how your satisfaction is the only thing important to them and if your not happy you can return it for a full refund. Then they stick it to you by using a R.A.N., which is a way for an outfit to deter or even eliminate returns. These companies make you call back to get an authorization number for return approval, or you can’t return the item. This benefits the vendor in two ways:

1. In most cases anyone who uses R.A.N.(s) have limited return policies, like 30 days. They know that the more difficult they make it for you to return or the more procedures you have to undertake, the clock will always be ticking. Usually from the very second it was postmarked. If they can stall you long enough and make the return policy time period lapse, they win.

2. Also if you want to return something they shuffle you off to another department. Forget about talking to that nice salesman who sold it to you, you’re about to get the gorilla of a salesman on the line who will do everything in his power to talk you out of it. Look, if I want to return something I don’t want to spend an hour justifying my return.
3. They tell you all returns must be mailed back in the original packaging. Then, they pack it in such a way as to make it impossible to not destroy the packaging and hope you will accidentally throw it away so they can avoid a refund altogether.

2). Lack of Multiple Stone Viewing:
I’ve yet to find an Internet diamond company that has said, “Let me mail you a dozen diamonds, keep the one you like and mail the rest back.”
Comparative shopping is the American way. How can we appreciate anything without something to compare it to? Unless you’re willing to do your comparative shopping locally before buying on-line, having one or more stone mailed to you at a time is a waste of time.

3). Poor Warranties:
The best these companies seem to be able to come up with are 30-90 day return policies. That’s it, period! What if your fiancée breaks up with you after four months and you don’t need the diamond anymore? Tough! What if a couple of years form now you want to exchange or upgrade? Tough! What if your diamond is chipped or breaks? Tough! What if the diamond turns out to be treated? Tough! Tough! Tough! Tough! After the limited return policy is over if any thing goes wrong, you’re stuck with a diamond that you don’t want. Compare that to bonded jewelers that offer lifetime breakage guarantees, lifetime buy backs, lifetime trade-ins and exchanges and on-line jewelers are outmatched. Who cares how good a deal something is if you don’t need or want it? Ask yourself this question, would you buy a car with only a 30-day guarantee?

4). Service:
I need my prongs tightened, I need my ring sized, my ring broke. What’s the Internet company going to do for you now? All they can say is mail it back. What about the annual inspection a ring needs? I haven’t found one on-line jeweler that brings this up much less say they will take care of you free of charge. When it comes to service after a sale, there is no beating a local jeweler in your area if it is at all possible. Don’t get me wrong, I know some people live in remote areas and finding a good jeweler is hard but that should always be the first place you should begin your search. Only buy out of town when a local jeweler lets you down.

5). Will they be here tomorrow?:
According to the Bloomberg Network, only 2% of online retailers will survive! What are the odds you’ll pick the one? Is it important to you that one of the biggest purchases you’ll ever make is from somebody that will stay in business?
Look at Levi Strauss, they threw in the towel. The couldn’t sell blue jeans on-line! In the end they realized there is no way to know a perfect fit unless you try it on! Can’t do that on the Internet. So if an American icon like Levi Strauss can’t make it on the Internet selling $45.00 blue jeans, what makes these non-brick and mortar cyber peddlers think they will? If I were dealing with an on-line retailer, I’d be pretty damn sure they had an actual location I could visit and had been around for a while. Because for my money, I want to do business with someone who’s going to stay in business. To be sure there are silver linings.
Pros

1.) Price:
Certainly the prices at these Internet sites are very appealing. They lure you in like bees to honey. The one thing all these diamond companies must believe is the man with the lowest price wins. They should however check their stats. In a recent customer survey conducted by Jewelers Circular Keystone, only 35% of jewelry buyers said finding the lowest price was their primary concern. Regardless, the frosting on the cake looks very appealing and I’ve seen little or no price gouging on-line.

2.) Selection:
The companies seem to have endless inventories. Walk into your typical jeweler and ask to look at specific a loose diamond and you’re lucky to see two or three stones. In some cases they don’t have any and say they have to bring some in. The one thing I find interesting though, is on several occasions I decided to add up these virtual inventories that many companies claim are theirs and in one case the total value of one inventory exceeded $2.1 billion and in another case their inventory exceeded $5 billion. How does a typical start up Internet diamond seller get billions of dollars worth of inventory that they say they own with start up capital of $15-20 million dollars? That’s a nifty trick!

3.) Lab-Grading Reports and Appraisals:
Every diamond bough online has some kind of piece of paper talking about how good it is. Considering there are a lot of jewelers that only hand over a sales receipt with purchase; a third independent evaluation with sale is a plus.

4.) Sales Tax:
It’s hard to overlook, at least for the time being, that buying a piece of jewelry online from an out-of-state vendor can save a lot of money. In Texas where the sales tax is 8.25% in some places, purchasing a $10,000 diamond on-line would save you $825!! It’s important however, to not let shipping charges, credit card charges and handling fees eat up this legitimate cost saving feature.

Conclusion

These are still shark-infested waters; unless you have to surf the net, stay on dry land.

Final Thoughts:
Well Fred, are you telling me that there is no way you would recommend buying on-line? No I’m not saying that, but before I did, these would be my requirements:
1. The retailer would have to be in business, with a brick and mortar location for at least ten years. (That way I would know they weren’t going anywhere.)
2. A guaranteed lab appraisal or lab-grading report with the purchase. Also, never accept a lab-grading report older than six months! You never know where the diamond has been or what’s been done to it since it was graded. If they are convinced their old diamond is so wonderful have them regrade it.
3. A bonding document guaranteeing the diamond is 100% natural and not treated.
4. Lifetime breakage guarantee to guard against baked diamonds.
5. Lifetime cash buy back to guarantee against any future customer dissatisfaction.
6. A lifetime exchange policy.
7. A lifetime trade-in policy.
8. A fair provable price.
9. Free annual service.
10. Knowledgeable salespeople.
11. Good store reputation.
12. Takes all major credit cards.
Related Video: Baked Diamond, Shattered Dreams


by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®