For years I owned a chain of luxury jewelry stores in one of the wildest, most flamboyant, most duplicitous jewelry markets of them all: Dallas, Texas. With Valentine's Day coming up, I will tell you what sort of jewelry scams are popular throughout...
Gertrude Vanderbilt Whitney, courtesy of the Smithsonian Institution
For years I owned a chain of luxury jewelry stores in one of the wildest, most flamboyant, most duplicitous jewelry markets of them all: Dallas, Texas. I won’t tell you every kind of subterfuge I learned from when I first started in the business at age fifteen (the owners of that notorious store that taught me all I know eventually went to federal prison), but with Valentine's Day coming up, I will tell you what sort of jewelry scams are popular throughout the world now. And just to make it easy, I’ve boiled them down to ten basic maxims. Follow these simple rules, and you will never go wrong in buying luxury jewelry. You’ll even seem like an expert. And that’s rule number one, which I’ll give you for free: If you seem like you’re in the know, if you come off as someone who’s in the business, most jewelers will be hesitant to try to dupe you. Never act like this is your first—or even fifteenth—time in a jewelry store. You cannot be intimidated by your salesperson. You must be confident and in complete control. Better still, tell the salesperson you don’t know much about jewelry at all—and then let slip, through the tricks I teach you below, subtle hints that convince him you’re an expert in disguise. Then the dealer will suspect you are trying to dupe him. And he will fear you.
1. All colored stones are treated.
There is simply no such thing as a “natural”-colored gemstone, particularly not in a jewelry store, and certainly not if it’s been set in a piece of finished jewelry. (Incidentally, “finished jewelry” is a term you should remember: It means a piece that has been completely assembled, rather than, say, a ring setting that is still waiting for its center stone.) So if someone is telling you a stone is natural, you can smile and say, “Oh, it hasn’t even been heated?” Now your salesperson must either admit that it’s been heated or lie to you or simply reveal his incompetence. In any event, you have established your superiority. There are natural pearls, but they are so rare that you should insist on a certificate guaranteeing their authenticity (more on such certificates below) and only buy from an established business that specializes in natural pearls. The most respected jewelry stores and auction houses in the world have been fooled into selling cultured pearls as natural and into selling treated colored stones as untreated.
What you want to avoid is stones that have been irradiated or injected with colored glass or silicon—currently the most popular treatment techniques, especially for expensive rubies and sapphires. The only way to guarantee that the stone you are buying has not been treated in this way is to be sure that you can return the stone after having it appraised by an independent expert. A friend of mine is one of the leading ruby experts in the US, and he recently paid $300,000 for a large ruby that turned out to be injected with colored glass. He bought it from a private individual, and the stone, after the test to detect treatment, was what he described as a “$300,000 gray paperweight” (the chemical test drains out the colored glass). In the world of colored diamonds, irradiated and entirely synthetic stones are becoming commonplace. In short, when shopping for colored gems and diamonds, insist on full disclosure about how the stone acquired its color, get those disclosures written on paper, and explain that you will have an independent appraiser test the stone to be sure that the disclosures are accurate. If they are not, you will be returning the stone. This will also give you great leverage in price.
2. Any set stone is a suspect stone.
Small stones (under half a carat) are generally set in a piece of jewelry, and that’s to be expected. Nevertheless, you should ask for the piece to be cleaned before you inspect it, examine it carefully with your naked eye, and then ask for a loupe—a kind of magnifying glass—with which to appraise it more carefully. Don’t bring your own loupe; that looks silly and amateur. And if the piece is inexpensive—say, $1,000 or less—loupe it only very casually, if at all. The more expensive a piece is, the more time you should spend assessing it. If a stone is large, you should ask to have it pulled so you can inspect it loose. Flaws are hidden under prongs. Pink gold can enhance pink stones. A common trick is to set a brownish diamond in yellow gold prongs to make it appear more like a canary. A bezel-set stone—a stone wrapped entirely in metal—is almost certainly being misrepresented in terms of its color, weight, or proportions. Jewelers use metal to hide or improve the quality of what they are selling. If the jeweler will not pull the stone for you, assume the worst. Use that as part of your bargaining leverage. Again, explain that you will have the stone pulled as part of the appraisal process. If it’s an antique or designer piece, he may protest that removing it would spoil the integrity of the ring. Nonsense. Any expert jeweler can re-inlay a stone that has been set in a bezel. This is an easy way to obscure a chip or even a crack.
A client of mine, who had made a fortune in the helicopter business, brought me an oval 15-carat diamond that was bezel-set in a turn-of-the-century ring. He wanted to refashion it as a necklace. When we pulled the stone we discovered that the diamond weighed only about eight and a half carats. It had been cut very shallowly and had been partially hidden by the setting of the ring.
Southern Methodist University, Central University Libraries, DeGolyer Library
3. A hallmark—a stamp of karat weight, of metal type, or of a designer’s signature—is easily faked. And always only buy 18-karat gold or platinum.
Anyone can make a stamp that says Pt (for platinum, stamped on white gold), 18k (stamped on 14-karat gold), or JAR (for the great jeweler Joel A. Rosenthal). This is very, very easy to do. But you never want to accuse anyone of that—this is the sort of accusation that will make you seem naïve rather than sophisticated. So if it’s platinum, weigh it in your hand. If there’s a similar piece in white gold, ask to hold it, and weigh that one too. The white gold will be lighter, shinier, and usually a little yellower. As for hallmarks, if it’s a dealer—of Elizabeth Gage, for example—you needn’t worry. But if it’s a one-of-a-kind piece, like an alleged Louis Comfort Tiffany, Fabergé, or Cartier, be on your guard. Look at the workmanship very, very carefully under a loupe. If you see imperfections or crudeness, if there is not elaborate attention to tiny details, if there are not unnecessary flourishes—in short, if it doesn’t look like the jeweler was showing off—chances are it is not an original. In any case, ask about “proof of provenance.” That expression alone will carry you a long way. Ask to speak to the owner, and then ask him about the history of the piece. Where did it come from? What is the paper trail? How is he certain it’s original? And of course remind the seller that you will be checking the authenticity with an independent expert.
The jeweler himself may be innocent: I once had a craftsman working for me who substituted white gold for platinum whenever making small pieces for our newer salespeople. At that time, the platinum he was taking home was worth more than double the white gold he was replacing it with. Naturally, everything was stamped Pt.
4. Never buy on your first visit to the store.
Always leave without buying. Take a card, and do not leave your personal information. Explain that you “may be in touch.” Next visit, have some easy facts in mind about similar pieces you have seen. Feel free to quote lower—but realistic—prices than the those you’ve actually seen. Surf around online. Do your homework on the kind of piece in which you are interested.
But do not boast about what you know. Understatement is key here. It is ideal if you bring along a friend. Let’s say you’re seeking an oval two-carat pink diamond. Then you can say to the friend, just loud enough for your salesperson to hear, “The 2.55 vivid pink at Gump’s had richer color saturation, and they quoted me 10,000 less.” Recognize that the salesperson is desperate to close you. And never worry about the money. Never worry about how you are dressed. Do not overdress; if anything, underdress. You should just be comfortable in your clothes. Remember that you are not there to impress anyone. And never, ever wear your best jewelry into the store (unless it is just one piece). Allow the salesperson to do all the work—while letting on, with little remarks, that he’s not working as hard as the jeweler down the street. But never make up a “friend in the business” or “cousin in the business”: The jeweler will immediately think that if you have relations in the business you are either wasting his time or outright lying. Bad for you, either way.
And please—bargain, bargain, bargain. The best deals I ever gave to customers were to those who insisted on a low price—too low—and then simply would not leave or kept coming back until I relented. You must be shameless in bargaining. It doesn’t matter whether you’re in Cartier or Neiman Marcus or De Beers or Barneys or Graff; it doesn’t matter whether you’re spending $1,000 or $100,000. Offer less. Offer half. When the jeweler laughs and takes the piece away, ask what his best price is. Look around some more and leave. Then return. Offer slightly more than half. The more time you are willing to invest, the more money you will save. You are not here to make a friend or to impress someone. You are here to buy the piece as close to the jeweler’s cost as you can. For all you know, this jeweler is in a cash-flow crunch or has been sitting on the piece for two years and will take a price under his cost. There’s only one way to find out.
And if he says (as he probably will), “That’s below my cost; I have to make a profit,” just reply, “I know what a fair price is. I know what I am willing to pay. Your cost and your profit are your business, not mine. I can pay you…,” and lowball him again.
A used-car salesman would regularly buy stainless-and-gold Rolexes from me at my cost, and sometimes below it. How? He’d simply make me an offer and refuse to leave. He’d come back again and again. He’d wear me down. Eventually I’d sell him the damn watch just to get rid of him.
Also, you probably shouldn’t buy from “a friend of a friend.” This can be a good idea, but it will often interfere with the killer instincts I am trying to instill in you here. If you are buying from a family friend, you simply must treat that person’s merchandise in the same way you would treat a complete stranger’s.
Library of Congress
5. No piece of jewelry is “an investment.”
If a jeweler tells you that you are buying any piece of jewelry as an investment, ask him if he will write you a piece of paper guaranteeing to buy the piece back in a year at a 5-percent premium over what you paid. (Make sure it’s the sort of jeweler who will still be in business in twelve months’ time.) The jeweler will be horrified by this suggestion. But if he can’t guarantee you 5 percent in a year, that’s not an investment. A jeweler who tells you that jewelry is an investment is lying to you. Yes, in 50 years it will increase in value if it is a rare, excellent stone or piece. But if you want an investment, learn how to buy real estate, stocks, or art. Not a yellow diamond or a Patek Philippe.
I admit it: I often told a client—especially when it was time to revolve our line of credit—that I had “just made a fantastic buy in an estate, the kind of piece you dream of stumbling over. I didn’t realize myself what I’d bought until I was sitting here going through the inventory carefully.” He’d drive up from Waco or down from Oklahoma City, and I’d show him the 100-carat emerald necklace I’d just had my runner pick up from a wholesaler in Dallas. Then the investment pitch would start: “If we tore this into loose stones we could already double our money. But as it is, in a piece this rare….” Why didn’t I wholesale it off for a greater profit instead of selling it to my friend, if it really was such a steal? Customers don’t ask this question as often as you’d expect. When they do, the jeweler will simply say, “If I don’t give the best buy to my best customer once in a while, he won’t stay my best customer.” Or he’ll claim money is tight in the industry right now: “Everyone had a horrible season.” The point of all of which is that jewelry is never an investment. It’s a luxury good. Imagine you are buying Manolo Blahniks, or a Gucci tie, or a Porsche.
6. Never look at a diamond in the sunlight. And don’t trust a jeweler who insists that you should see it in the sun.
This is the oldest trick in the book. Every diamond, no matter how poorly cut, sparkles wildly in the sun once it’s clean. Do not trust this jeweler, and, in my opinion, don’t buy from him.
Once it’s almost time to close you on a particular stone, he’ll tell you, “Let’s get out from under these halogens—they’re designed to make diamonds sparkle—and see how the diamond really looks.” Lo and behold, the diamond you like best is sparklier still. It’s true that a diamond should shine, but your jeweler shouldn’t be selling you on its luster.
7. Any certificate can be faked—including the Gemological Institute of America (GIA) and the American Gem Society (AGS), as well as “Kimberly Process” papers and conflict-free papers—and any such warranty should always be checked with its issuing agency.
The two most recognized diamond- and gem-certifying agencies in the world are both based in the United States: the GIA and the AGS. If you are buying a serious diamond it should have GIA papers; if you are buying a serious colored stone—such as a ruby, sapphire, tsavorite garnet of size, alexandrite, or natural pearls—it should have AGS papers. But the tricky part is, jewelers forge and photocopy these papers all the time. So check your stone against the certificates. Ask for a millimeter gauge and check the measurements. Ask for a scale and check the weight. Use a loupe to make certain that the imperfections shown on the papers match the imperfections you can see in the stone. Ask the jeweler to show you how the proportions of the cut or “make” (another good industry term to know—see rule 9 below) of the stone match what is indicated on the papers. None of this is bad manners: It’s good business. It also increases your prestige and your bargaining power.
When I was a kid, we used to show our customers the Rapaport Report—a US industry price book for wholesale diamonds—as a technique to demonstrate that the customer was buying at wholesale. But the report is based on stones with ideal or near-ideal cut, and it takes an expert eye to discriminate the proportions of a stone.
As for buying “conflict-free diamonds”—well, the bad news is we simply don’t have reliable ways of tracing a diamond’s origin. People buy diamonds in Africa and then laser-engrave “Mined in Canada” on them. No responsible jeweler can guarantee for you that your stone is not a blood diamond. They are simply too easy to manipulate and too hard to track. Until blood-diamond mines are closed—until all diamonds in every country are mined and cut with ethically responsible, government-regulated processes—this is an unfortunate fact you may as well accept. Paying a premium for a conflict-free diamond is, I am sorry to report, probably a waste of money. When Sotheby’s recently sold a 56-carat pink diamond for $83 million, they admitted that the stone was from Africa and that they had “no information on the exact geographic origin.” Of course not. A wholesaler I know in New York sends all of his stones to a little lab in Vancouver to have the girdles engraved as certified Canadian diamonds. This fellow buys most of his diamonds from other distressed wholesalers here in the US. A diamond may have passed through dozens of hands and changed its “official status” as many times before it winds up on your fiancée’s finger.
Nevertheless I hesitate to discourage you from asking for conflict-free diamonds, because there are indeed ethically motivated jewelers and diamond dealers who are doing their best to develop a market without blood diamonds.
Southern Methodist University, Central University Libraries, DeGolyer Library
8. Always have a significant purchase appraised by an independent appraiser—and know that person’s name before you buy.
If you are buying any piece of jewelry for more than $5,000—even, depending on your means, for more than $1,000—you should spend the $100 it will cost to have that piece examined and tested by a real expert. Do not ask your jeweler to recommend someone. Do your homework online and find out who the best independent jewelry expert in your area is. Only use the best. Then do not tell that person where you bought the piece or what you paid. Give him no information at all. Just ask him for a detailed and comprehensive evaluation of the piece. It doesn’t matter so much what you paid—that’s no longer the issue. The question is: Did you get what you paid for?
If a customer told me that he was taking his jewelry purchase straight over to Patti Geolat—at the time I was in the jewelry business, probably the most reputable independent appraiser in the Dallas–Fort Worth market—frankly, the whole transaction would immediately change. I would become exceptionally scrupulous about everything I said and did. Calling Patti after you sold something only made her look at your piece that much more carefully; it put you on the radar. Of all the techniques I am teaching you here, this is the most valuable.
9. It’s not enough to know the Four C’s (cut, color, clarity, and carat). Ask also about the “make,” the proportions, of the diamond.
When it comes to significant diamonds—which you should only buy “loose,” or unmounted—you simply must educate yourself. Watch several of the tutorials online. (Here’s a good one.) Do not show off what you’ve learned—it is canny to act like an innocent—but practice using a loupe, practice using tweezers, and practice how to clean a stone with a diamond cloth and how to properly inspect a diamond. You can practice all these simple techniques in any jewelry store, with someone you don’t expect to buy from. A sophisticated diamond buyer understands how important an excellent cut is to the value of a diamond, and it takes patient practice to appreciate the nuances of diamond cutting. Take the time to learn those things.
If a customer cleaned the lens of the loupe with the diamond cloth, for example, you’d know he’s not an expert: Diamond dust on the cloth will scratch the glass lens. If he asked for a tissue to clean the loupe, however, I’d immediately wonder. If he knows that, what else does he know?
10. Never buy a Swiss watch used—unless the seller has been in the jewelry business for many, many years.
Forgery has become rampant in the Swiss-watch business, and even the experts may be hard-pressed to tell the difference. So if you want to be sure, buy from a registered dealer. Depending on the brand, you should demand a 40-percent discount from the sticker price (on a Bertolucci, say, or a Vacheron Constantin); a 30–35-percent discount on most popular brands (like TAG Heuer, Cartier, and IWC); and a 20–25-percent discount on the most desirable brands (like Rolex and Patek Philippe). I should add that I would only buy a Swiss watch used, because that’s the only way to get a real bargain. But if you are going to do that, make absolutely certain that the person you’re doing business with has been selling used Swiss watches for a very long time—and that you can return the watch, if necessary, for a complete refund, after having had it checked out by another expert. Real Rolex bracelets, buckles, and links are replaced with fake after-market parts: sometimes with the counterfeit stamp, sometimes without. Real Rolex movements are replaced with fake movements. Every authentic part of a Rolex or a Patek is valuable, which means that replacing any part of it with a counterfeit adds a little profit to the jeweler’s bottom line.
I’ve made this process sound scarier than it is. If you follow these simple rules, it is almost impossible to be cheated. And most jewelers are honest business people—within reasonable bounds. They often do not fully understand the products they are selling, and that’s where they can—quite innocently—get themselves and you into trouble. So do your due diligence. The more you’ll be spending, the more time and intelligence you should invest in the purchase. And what you’ll find is that, as with any collectible item, the more you learn, the more fun it is to buy. Look at it as a game. It’s you against the jeweler. Use these techniques, and you will win.