[Federal Register Volume 77, Number 127 (Monday, July 2, 2012)]
[Proposed Rules]
[Pages 39201-39205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16119]


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FEDERAL TRADE COMMISSION


16 CFR Part 23

Guides for the Jewelry, Precious Metals, and Pewter Industries

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Guides; request for public comments.

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SUMMARY: The Commission systematically reviews all of its current rules 
and guides to ensure that they continue to achieve their intended 
purpose without unduly burdening commerce. As part of this review, the 
Commission requests public comments on the overall costs, benefits, 
necessity,

[[Page 39202]]

regulatory and economic impact of, and possible modifications to, the 
FTC's Guides for the Jewelry, Precious Metals, and Pewter Industries.

DATES: Comments must be received on or before August 27, 2012.

ADDRESSES: Interested parties may file comments online or on paper by 
following the instructions in the Request for Comments part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Jewelry Guides, 16 CFR 
Part 23, Project No. G711001'' on your comment, and file your comment 
online at https://ftcpublic.commentworks.com/ftc/jewelryguidesreview by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, mail or deliver your comment to the following 
address: Federal Trade Commission, Office of the Secretary, Room H-113 
(Annex O), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Reenah L. Kim, Attorney, (202) 326-
2272, Division of Enforcement, Bureau of Consumer Protection, Federal 
Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

    The Guides for the Jewelry, Precious Metals, and Pewter Industries 
(``Jewelry Guides'' or ``Guides'') address claims made about precious 
metal, pewter, diamond, gemstone, and pearl products. 16 CFR part 23. 
The Guides explain how to avoid making deceptive claims and, for 
certain products, discuss when disclosures should be made to avoid 
unfair or deceptive trade practices.\1\
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    \1\ The Commission issues industry guides to help the industry 
conduct its affairs in conformity with legal requirements. 16 CFR 
part 17. Industry guides are administrative interpretations of the 
law; they do not have the force of law and are not independently 
enforceable. Failure to follow industry guides may result, however, 
in enforcement action under the FTC Act, 15 U.S.C. 45. In any such 
action, the Commission must prove that the act or practice at issue 
is unfair or deceptive in violation of Section 5 of the FTC Act.
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    The Commission completed its last comprehensive review of the 
Jewelry Guides in 1996, and has modified the Guides four times since. 
As a result of the 1996 review, the Commission: consolidated certain 
provisions of the former Watch Band Guides with the Jewelry Guides; 
added new provisions, such as those regarding use of the terms vermeil 
and pewter, and the disclosure of certain treatments to diamond and 
gemstone jewelry products; and eliminated or substantively revised 
several existing provisions.\2\ Additionally, in 1997, the Commission 
revised Section 7 of the Guides regarding platinum products, to 
simplify and align its guidance more closely with international 
standards.\3\ In 1999, the Commission amended the Guides to remove a 
footnote reference to the Watch Guides, which it had rescinded 
earlier.\4\ In response to petitions from jewelry trade associations, 
the Commission again revised the Guides in 2000 to provide for 
disclosure of permanent gemstone treatments that significantly affect 
the value of the gemstone, such as the laser-drilling of diamonds.\5\ 
In 2010, the Commission amended Section 7 regarding platinum to provide 
guidance on how to mark and describe non-deceptively certain platinum 
alloys.\6\
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    \2\ Federal Trade Commission: Guides for the Metallic Watch Band 
Industry and Guides for the Jewelry Industry: Final guides, 61 FR 
27178 (May 30, 1996). As part of these changes, the industry guides 
formerly known as ``Guides for the Jewelry Industry'' were renamed 
``Guides for the Jewelry, Precious Metals, and Pewter Industries.''
    \3\ Federal Trade Commission: Guides for the Jewelry, Precious 
Metals, and Pewter Industries: Final guides, 62 FR 16669 (Apr. 8, 
1997).
    \4\ Federal Trade Commission: Guides for the Jewelry, Precious 
Metals, and Pewter Industries: Revision of the Guides for the 
Jewelry, Precious Metals, and Pewter Industries, 64 FR 33193 (June 
22, 1999).
    \5\ Federal Trade Commission: Guides for the Jewelry, Precious 
Metals, and Pewter Industries: Final guides, 65 FR 78738 (Dec. 15, 
2000).
    \6\ Federal Trade Commission: Guides for the Jewelry, Precious 
Metals, and Pewter Industries: Final Guides Amendments, 75 FR 81443 
(Dec. 28, 2010).
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II. Regulatory Review Program

    Since 1992, the Commission has systematically reviewed all its 
regulations and guides to ensure that they continue to achieve their 
intended goals without unduly burdening commerce. The Commission 
schedules its regulations and guides for review on a ten-year cycle; 
i.e., all rules and guides are scheduled to be reviewed ten years after 
implementation and ten years after the completion of each review. The 
Commission publishes this schedule annually, with adjustments in 
response to public input, changes in the marketplace, and resource 
demands.\7\
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    \7\ Since completing its last review of the Jewelry Guides in 
1996, the Commission revised sections of the Guides and addressed 
other issues raised in petitions from jewelry trade associations. 
The Commission therefore scheduled the Guides for another 
comprehensive review in 2011, but postponed it due to resource 
constraints. Federal Trade Commission: Notice Announcing Ten-Year 
Regulatory Review Schedule and Request for Public Comment on the 
Federal Trade Commission's Regulatory Review Program, 76 FR 41150 
(Jul. 13, 2011).
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    When the Commission reviews a rule or guide, it publishes a notice 
in the Federal Register seeking public comments on the continuing need 
for the rule or guide, as well as its costs and benefits to consumers 
and businesses. Based on this feedback, the Commission may modify or 
repeal the rule or guide to address public concerns or changed 
conditions, or to reduce undue regulatory burden. As part of this 
review process, the Commission now solicits comments on, among other 
things: The regulatory and economic impact of, and the continuing need 
for, the Jewelry Guides; the benefits of the Guides to businesses and 
consumers; the burdens the Guides place on businesses; possible 
conflict between the Guides and state, local, or other federal laws; 
and the effect on the Guides of any technological, economic, or other 
industry changes.\8\
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    \8\ See questions 1 through 12 in Section IV below.
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III. Specific Issues

    Inquiries received by Commission staff in recent years suggest that 
technological developments and related changes in industry standards 
and practice may affect certain provisions of the Jewelry Guides. Some 
inquiries also indicate that modifying the Commission's consumer and 
business education materials could improve industry and consumer 
understanding of the Guides. Accordingly, the Commission seeks comments 
on these issues as outlined below, as well as comments regarding any 
other issues or concerns relating to the Guides.
    First, the increased marketing of stones comprising a mixture of 
ruby/corundum and lead-glass has raised issues concerning how such 
products are advertised and sold. These composite stones (which are 
sometimes referred to as ``composite rubies,'' ``hybrid rubies,'' or 
``glass-filled rubies'') may contain a considerable percentage of lead-
glass. Moreover, the method that produces these stones may differ 
significantly from the techniques traditionally used to treat or 
enhance natural rubies (e.g., various treatments involving the 
application of heat). Informal inquiries received by staff have 
questioned whether a lead-glass-filled composite stone can accurately 
be identified as a natural ruby or gem, even when disclosures are made 
that the stone has been treated. The Commission seeks comments on 
whether it should amend the Guides to address this development and, if 
so, how.
    Second, the current Guides do not specifically address use of the 
term ``cultured'' to describe industry products created in a laboratory 
or factory that have essentially the same optical, physical, and 
chemical properties of natural gemstones. In connection with petitions 
submitted by

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several jewelry industry trade groups in 1986 and 2006, the Commission 
considered proposals to amend the Guides to state that it is deceptive 
or unfair to describe such products as ``cultured.'' After reviewing 
the record, the Commission determined there was insufficient evidence 
to conclude that using ``cultured'' in reference to laboratory-created 
diamonds or other laboratory-created gemstones would be either 
deceptive or unfair if marketers reasonably and effectively qualified 
the term as suggested in Section 23.23.\9\ The Commission now seeks 
additional evidence on this issue.
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    \9\ See FTC letter of July 21, 2008 declining to amend the 
Guides with respect to use of the term ``cultured,'' available at 
http://www.ftc.gov/os/2008/07/G711001jewelryguides.pdf.
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    Third, the Commission seeks comments regarding several issues 
relating to pearls. Specifically, the Commission seeks comments on 
whether it should amend the Guides to address disclosures concerning 
freshwater pearls. Comments submitted in the 1996 review suggested that 
use of the term ``cultured'' in reference to freshwater pearls would 
create confusion because consumers tended to associate the term 
``cultured pearls'' with pearls that were round, and freshwater pearls 
were often irregularly-shaped and smaller than other cultured pearls. 
Since then, developments in the culturing process have effected changes 
in the shape, size, quality, and color of the resulting product, such 
that freshwater cultured pearls may, in many respects, resemble 
saltwater cultured pearls in appearance. The Commission thus seeks 
comments on whether it should amend the Guides to recommend any 
specific disclosures relating to freshwater pearls. In addition, the 
Commission seeks comments on whether the Guides should advise the 
disclosure of treatments to pearl products, such as dyeing techniques 
that artificially color the final product.
    Fourth, the Commission seeks comments on whether the Guides should 
provide particular guidance on how to describe non-deceptively the 
content of alloys and alloy products that contain precious metals in 
amounts that fall below the minimum thresholds reflected in the current 
Guides. Specifically, Section 23.4 provides that it may be misleading 
to use the word gold or any abbreviation, or a quality mark implying 
gold content, to describe all or part of an industry product that is 
composed throughout of an alloy of gold that is less than 10 karats. 
Similarly, Section 23.6 provides that it is unfair or deceptive to 
mark, describe, or otherwise represent all or part of an industry 
product as silver unless it is at least 925/1,000ths pure silver, and 
Section 23.7 reflects a minimum of at least 500 parts per thousand pure 
platinum for use of the word platinum or related abbreviation to 
describe all or part of an industry product. The Commission seeks 
comments on whether it should amend the Guides to provide guidance on 
how to describe non-deceptively the content of alloys and alloy 
products that contain less than 10 karats of gold, less than 925/
1,000ths silver, or less than 500 parts per thousand platinum.

IV. Request for Comments

    The Commission solicits comments on the following specific 
questions related to the Jewelry Guides:
    (1) Is there a continuing need for the Guides as currently 
promulgated? Why or why not?
    (2) What benefits have the Guides provided to, or what significant 
costs have the Guides imposed on, consumers? Provide any evidence 
supporting your position.
    (3) What modifications, if any, should the Commission make to the 
Guides to increase their benefits or reduce their costs to consumers?
    (a) How would these modifications affect the costs and benefits of 
the Guides for consumers and businesses, particularly small businesses?
    (b) Provide any evidence supporting your proposed modifications.
    (4) What impact have the Guides had in promoting the flow of 
truthful information to consumers and preventing the flow of deceptive 
information to consumers? Provide any evidence supporting your 
position.
    (5) What benefits, if any, have the Guides provided to, or what 
significant burdens or costs, including costs of compliance, have the 
Guides imposed on businesses that conform to their advice, particularly 
small businesses? Provide any evidence supporting your position.
    (6) What modifications, if any, should be made to the Guides to 
increase their benefits or reduce their burdens or costs to businesses 
that conform to their advice, particularly small businesses?
    (a) How would these modifications affect the costs and benefits of 
the Guides for consumers and businesses, particularly small businesses?
    (b) Provide any evidence supporting your proposed modifications.
    (7) Provide any evidence concerning the degree of industry 
compliance with the Guides. Does this evidence indicate that the Guides 
should be modified? If so, why and how? If not, why not?
    (8) Provide any evidence concerning whether any of the Guides' 
provisions are no longer necessary. Explain why these provisions are 
unnecessary.
    (9) What potentially unfair or deceptive practices concerning 
precious metal, pewter, diamond, gemstone, or pearl products are 
occurring in the marketplace, but not covered by the Guides?
    (a) With reference to such practices, should the Guides be 
modified? If so, why and how? If not, why not?
    (b) Provide any evidence, such as empirical data, consumer 
perception studies, or consumer complaints, demonstrating the extent of 
such practices.
    (c) Provide any evidence demonstrating whether such practices cause 
consumer injury.
    (10) What modifications, if any, should be made to the Guides to 
account for current or impending changes in technology or economic 
conditions affecting the jewelry and precious metals industries?
    (a) How would these modifications affect the costs and benefits of 
the Guides for consumers and businesses, particularly small businesses?
    (b) Provide any evidence supporting the proposed modifications.
    (11) Do the Guides overlap or conflict with other federal, state, 
or local laws or rules, such as those enforced by U.S. Customs and 
Border Protection? If so, how?
    (a) With reference to the asserted conflicts, should the Guides be 
modified? If so, why and how? If not, why not?
    (b) Have the Guides assisted in promoting national consistency with 
respect to precious metal, pewter, diamond, gemstone, and pearl 
products?
    (c) Provide any evidence supporting your position.
    (12) Are there foreign or international laws, regulations, or 
standards with respect to precious metal, pewter, diamond, gemstone, or 
pearl products that the Commission should consider as it reviews the 
Guides? If so, what are they?
    (a) Should the Guides be modified in order to harmonize with these 
international laws, regulations, or standards? If so, why and how? If 
not, why not?
    (b) How would such harmonization affect the costs and benefits of 
the Guides for consumers and businesses, particularly small businesses?
    (c) Provide any evidence supporting your position.
    (13) Are there any provisions in the Guides setting forth 
particular requirements that do not accurately and

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fairly reflect the accepted customs, practices, and patterns of dealing 
prevalent in the industry, including the terminology and nomenclature 
customarily used in the course of trade?
    (a) If so, identify these provisions and describe the extent and 
effects of such differences in requirements.
    (b) Provide any evidence supporting your position.
    (14) To what extent, if any, does the method that produces stones 
comprising a mixture of ruby/corundum and lead-glass (which are 
sometimes referred to as ``composite rubies,'' ``hybrid rubies,'' or 
``glass-filled rubies'') differ from techniques traditionally used to 
treat or enhance natural rubies (e.g., glass-filling at fractures or 
surface fissures, application of high heat resulting in glass residue 
at surface-reaching cracks, in-filling with oils)?
    (a) What impact, if any, does this have on the grade, quality, 
size, weight, cut, color, character, substance, durability, 
serviceability, price, value, special care requirements, or any other 
material aspect of the resulting product?
    (b) Do lead-glass-filled composite stones have essentially the same 
optical, physical, and chemical properties as natural rubies? If not, 
how are they different?
    (c) Provide any evidence supporting your position.
    (15) To the extent lead-glass-filled composite stones are marketed 
and sold as ``rubies'' or other ``natural'' gemstones without 
qualification, is there any evidence of consumer misperception or 
injury resulting from the practice? If so, please provide it.
    (16) Is there a standard or consensus in the industry regarding how 
lead-glass-filled composite stones are identified and described?
    (a) Provide any evidence demonstrating the extent to which the 
industry standard meets or fails to meet consumer expectations 
regarding such products.
    (17) Should the Guides be amended to address lead-glass-filled 
composite stones?
    (a) Describe what guidance is needed to ensure that consumers are 
not misled about the composition of lead-glass-filled composite stones 
and these products' performance, durability, value, and any special 
care requirements.
    (b) Would the proposed guidance affect the costs and benefits of 
the Guides for consumers and businesses, particularly small businesses? 
If so, how?
    (c) Provide any evidence supporting your position.
    (18) Are there any treatments or enhancements performed on rubies 
or other gemstone products, such as fracture-filling, that are 
disclosed in accordance with Sections 23.1 and 23.22 of the Guides, but 
are still likely to deceive consumers?
    (a) If so, how common are these practices?
    (b) Should the Jewelry Guides include specific guidance regarding 
how these treatments should be disclosed to consumers? If so, what 
guidance should be provided?
    (c) Would the proposed guidance affect the costs and benefits of 
the Guides for consumers and businesses, particularly small businesses? 
If so, how?
    (d) Provide any evidence supporting your position, including 
evidence demonstrating the extent of such practices and evidence of any 
consumer confusion or injury.
    (19) Does use of the term ``cultured,'' together with qualifying 
terms such as ``laboratory-created,'' ``laboratory-grown,'' 
[manufacturer name]-created,'' or ``synthetic,'' to describe 
laboratory-created diamonds or other gemstones that are optically, 
chemically, and physically equivalent to natural, mined stones of the 
type identified create confusion among consumers or cause consumer 
injury?
    (a) Provide any evidence supporting your position.
    (20) Should the Guides be amended to address specifically whether 
and in what circumstances the term ``cultured'' may be used to describe 
diamonds or other gemstone products? If so, what guidance should be 
provided?
    (a) Would the proposed guidance affect the costs and benefits of 
the Guides for consumers and businesses, particularly small businesses? 
If so, how?
    (b) Provide any evidence supporting your position.
    (21) Should the Guides include a provision in Section 23.20 to 
address the circumstances in which the term ``freshwater pearl'' may be 
used in a manner that is not unfair or deceptive? If so, what guidance 
should be provided?
    (a) Would the proposed guidance affect the costs and benefits of 
the Guides for consumers and businesses, particularly small businesses? 
If so, how?
    (b) Provide any evidence supporting your position.
    (22) Should the Guides advise the disclosure of treatments to pearl 
products, such as dyeing or other artificial coloring techniques? If 
so, what types of disclosures should be made?
    (a) Are there any treatments to pearl products that are not 
permanent?
    (b) Are there any treatments to pearl products that create special 
care requirements?
    (c) Is there a disparity in value between a pearl that has been 
treated in a manner that is permanent and does not create special care 
requirements, and a pearl that has not been treated?
    (d) Would the issuance of guidance calling for the disclosure of 
treatments to pearl products affect the costs and benefits of the 
Guides for consumers and businesses, particularly small businesses? If 
so, how?
    (e) Provide any evidence supporting your position.
    (23) Should the Guides be amended to provide guidance on how to 
describe non-deceptively the content of precious metal alloys and alloy 
products that contain less than the minimum standard amounts (i.e., 10 
karats for gold, 925/1,000ths for silver, 500 parts per thousand for 
platinum)? If so, what guidance should be provided?
    (a) Would the proposed guidance affect the costs and benefits of 
the Guides for consumers and businesses, particularly small businesses? 
If so, how?
    (b) Provide any evidence supporting your position.
    (24) Are the Commission's business compliance guidance and consumer 
education materials about the Jewelry Guides useful? Can they be 
improved? If so, how?
    (a) Should the Commission consider consumer education or other 
measures to help non-English-speaking consumers obtain the information 
provided under the Guides?
    (b) Should the Commission print copies of business compliance 
guidance and consumer education materials, or is a pdf at www.ftc.gov 
sufficient for your needs?
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before August 27, 2012. 
Write ``Jewelry Guides, 16 CFR Part 23, Project No. G711001'' on your 
comment. Your comment--including your name and your state--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from 
comments before placing them on the Commission Web site. Because your 
comment will be made public, you are solely responsible

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for making sure that your comment does not include any sensitive 
personal information, such as anyone's Social Security number, date of 
birth, driver's license number or other state identification number or 
foreign country equivalent, passport number, financial account number, 
or credit or debit card number. You are also solely responsible for 
making sure that your comment does not include any sensitive health 
information, such as medical records or other individually-identifiable 
health information. In addition, do not include any ``trade secret or 
any commercial or financial information which is obtained from any 
person and which is privileged or confidential,'' as provided in 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 
16 CFR 4.10(a)(2). In particular, do not include competitively 
sensitive information such as costs, sales statistics, inventories, 
formulas, patterns, devices, manufacturing processes, or customer 
names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you must follow the procedure explained in 
FTC Rule 4.9(c), 16 CFR 4.9(c).\10\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \10\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. Accordingly, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/jewelryguidesreview by following the instructions on the web-based 
form. If this Notice appears at http://www.regulations.gov, you also 
may file a comment through that Web site.
    If you file your comment on paper, write ``Jewelry Guides, 16 CFR 
Part 23, Project No. G711001'' on your comment and on the envelope, and 
mail or deliver it to the following address: Federal Trade Commission, 
Office of the Secretary, Room H-113 (Annex O), 600 Pennsylvania Avenue 
NW., Washington, DC 20580. If possible, submit your paper comment to 
the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before August 27, 2012. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy at http://www.ftc.gov/ftc/privacy.htm.

    By direction of the Commission.

Donald S. Clark,
Secretary.
[FR Doc. 2012-16119 Filed 6-29-12; 8:45 am]
BILLING CODE 6750-01-P