Diamond expert explains why grading reports are 'not carved in stone'

DENVER - Diamonds are a multi-billion dollar industry in the United States. However, when it comes to purchasing one, there's a lot more to diamonds than sparkle and shine.

Neil Beaty is a certified Independent Gem Appraiser based in Denver. He talked with 7NEWS Investigative Reporter Amanda Kost about a side of the diamond industry he says few consumers know about. It has to do with diamond grading reports, produced by gemological laboratories and potential misrepresentation from jewelers.

"The stone is whatever it is, the lab doesn't make it, the lab is just grading it, but the price is going to be based on the labs, explained Beaty.

A diamond is graded based on four aspects, commonly known as the "four c's," cut, color, clarity and carat.

Those qualities are graded by the labs, driving the market price for each diamond. 

"People believe that these grades are carved in stone as it were, and they are not," said Beaty.

Dozens of different gemological labs grade diamonds and Beaty tells us standards also differ from one lab to another. 7NEWS found stores and retailers often send a diamond to several labs for different reasons. Although, according to Beaty the most common reason normally involves the price retailers can charge for a diamond.

"The usual reason to choose a lab is because it produces the most money for a stone," explained Beaty.

7NEWS obtained several diamond grading reports consumers rarely see side by side when shopping for diamonds in the store. In one case, we reviewed two diamond grading reports for the exact same one carat round brilliant stone.

The first grading report was analyzed by the Gemological Institute of America, commonly referred to as GIA. GIA's report graded the diamond as near colorless and given the designation "J" on their scale. Clarity was graded at I1, meaning some inclusions or blemishes are visible to the naked eye. GIA listed the diamond's cut as poor, which is its lowest cut grade. Beaty explained how based on the specifications provided by GIA, the diamond's retail price would be around $3,200.

The second report we reviewed for that exact same one carat round brilliant stone was produced by the European Geological Laboratory, International (EGL International). Based on its report, Beaty said the retail price would be nearly double GIA's starting at $6,000. The diamond's color was graded two levels higher as near colorless at level "H." Clarity also improved to SI2, meaning inclusions or blemishes were only slightly visible to the naked eye. EGL International's report also did not list a cut for the diamond, which GIA had rated poor. 

"The fact that a particular one has been eliminated will go unnoticed," said Beaty.

Kost then asked, "Do they keep that off every report?"

"No," replied Beaty.

Beaty explained to 7NEWS that out of all the gemological laboratories, GIA is the standard in the industry.

Kost asked, "So why would anyone go to anyone else?"

"Because they can get a higher price," said Beaty.

"If the jeweler is properly representing what they have, I don't really have a problem with these EGL's, the problem is when they say things they know are false," further explained Beaty.

Kost and producer Jennifer Kovaleski went undercover in five metro-area jewelry stores to find out what sales associates would say about diamond grading systems.

At each location, Kost asked for a GIA graded diamond with the same specifications "ideal cut, one karat, SI2H."  Even though Kost asked for a GIA graded diamond, only one store was able to show her one. At the other four stores, diamonds graded by different labs or in-house gemologists were offered.

"We don't have a paper on each stone, our gemologist just does the appraisal," said the fourth store they visited.

When they asked employees how grading standards differed from lab to lab, every sales associate had a different answer to their questions.

"The standard, the scales are the same," said a sales associate at the third store.

Kost then followed up by asking, "You're saying for clarity, color, cut, all that?"

The sales person answered, "Yeah, there's like an overall - like the Diamond Council has an actually, has a standard."

"That's what matters, what's prettiest to you, what sparkles the most, what you like, not what is printed on the paperwork," an associate from the second store told them.  

"If you go to an honest jeweler you don't need to get a GIA cert [certification]," said the sales associate at the fourth store.  

"So they're going to give you the exact same specs [specifications], it's just different people certifying it," said an employee at the first store.

The fifth store provided this response, "Not all HSI1's or HSI2's are going to be the same. It depends on who they are graded by."

When Kost and Kovaleski asked for further clarification, sales associates at three of the stores explained the value of a GIA diamond grading report.

"They have the strictest guidelines as far as grading."

"Everybody in the industry kind of considers GIA the world authority."

"The truth is GIA is God in this business."

Employees at the other two metro area jewelry stores, stuck with their pitch.

When Kost asked, "This is a different lab, are they using the same standards as GIA?"

A sales associate from the first store quickly responded, "Oh, exactly."

At the other jeweler, a saleswoman from the third store explained, "Like, there's an overall guideline, it's just a different company.

"So they're going to give you the same [specifications]?"

The woman replied, "Yeah, they should be."

Beaty showed 7NEWS several examples of different grading reports for the exact same diamonds where the findings varied drastically. As an independent diamond appraiser, he said he has seen hundreds of examples like the ones he showed us.

"These guys [EGL International] are selling sales documents, these guys [GIA] are selling consumer protection documents to consumers," said Beaty. "But merely because you bought an EGL [International] diamond, does not make it a bad diamond, it does not make it in anyway defective. It might be defective, we don't know."

Beaty's advice to consumers is to insist on a diamond that is graded by GIA and ask to have an on-site gemologist confirm that's what they're getting. He also recommends consumers ask for a receipt that clearly states the grade of diamond they are purchasing.

"Then get it checked out by your own guy," further explained Beaty. "It's an important issue, that's why I'm talking to you about it."

7NEWS reached out to all five metro-area stores for comment regarding the labs each company uses to grade its diamonds as well as how each company trains its sales associates. To date, only the Zale Corporation has provided us with the following response.

"Zale Corporation uses independent laboratories for diamond certification. Diamond certification is not done in house.  We provide extensive training to our Jewelry Consultants on the technical aspects of diamonds including diamond certification and how to read the cert.  75% of our eligible Jewelry Consultants have completed Diamond Counsel of America (DCA) training.  We also provide our own proprietary training on diamonds and on our exclusive, branded collections (Vera Wang LOVE and The Celebration Diamond Collection)."

We also reached out to EGL International for comment on our report, but never heard back.

Print this article Back to Top