[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