Fake gems are far more than a nuisance. They’re an unkind, expensive problem for consumers. Gem scams are serious financial and legal risks for both consumers and gems businesses, particularly online.
These scams often linked to crime. Some people are targeted for bizarre but dangerous scams like the rightly infamous “Goa scam”. Fake gems scams are common in big time money laundering.
Identifying fake gems isn’t easy, even for the professionals. One look at a How To Identify Fake Gems article would convince anyone you need to be trained to do it.
The multi-levels of fraud for gems and jewelry businesses
We’ll need to explain the issues here:
For consumers, the risks are real enough and common enough to be a serious turnoff for buying gems online. The kindly gift for a wedding or a friend can be a disaster, in multiple ways. It’s not hard to see why. Most people aren’t jewelers and don’t know the basics of gem identification.
People who’ve been ripped off probably won’t buy again. The damage is done to their confidence and the insult to their bank balances won’t be forgotten.
At the business level, even for jewelry professionals, however, the risks are truly grim. For jewelry businesses, fake gems can do incredible damage to the bottom line. Jewelry businesses turn over a lot of gems. Supply and resupply are critical business operations. A single transaction can be a true disaster.
There’s no quick comeback for the purchaser. Getting your money back is time consuming and uncertain. Even if you can take successful legal or police action, and the money is gone. The cashflow damage can be lethal to the business. You can literally be in business one minute, and out of business the next.
Arguably worse are the ramifications of selling fake gems. Some businesses sell fake gems in good faith, honestly thinking they’re real. (The big hit to professional pride is an “added bonus” in these miserable situations.)
That has no impact on the legal issues:
- The gems are fake and were sold as genuine.
- That’s fraud, intentional or otherwise.
- Any consumer or receiving business can sue.
- The cost to the seller is a separate legal issue and nothing to do with the consumer. The legal obligation on the seller is to sell authentic gems.
If that sounds like a murderous, unwinnable situation, it is, and it can be incredibly expensive. Imitation gems are sometimes sold for large amounts of money. This scam is at plague levels, and it’s a massive liability for online gems businesses.
Photo: © AFP
Interview: Tales from the front line
I happened to get talking to a jewelry business professional on social media. Rajesh Kumar is one of the leaders at RMC Gems, an online B2B and B2C jewelry supplier.
Rajesh has seen it all, first hand. I thought it’d be worth asking about how these scams work and what can be done to minimise the damage.
How common are fake gems scams in B2B jewelry?
Scams in B2B jewelry are not easy. In B2B, most of the buyers are very much experienced and they know how to buy, when they purchase online… they ask for many details like videos in day light, normal light, videos on hand, fingers, etc. For high-end expensive stones, they will also demand certificates.
There may be other kind of fraudulent scams in B2B when making payment via hacking if buyers and suppliers are ignorant and are not careful while sharing their credit cards or bank details. Hence, it should be cross checked before making payment each time.
Scams can happen in B2C… where buyers are not aware how to check the authenticity of the real gemstones and will only depend on what appears to the eye. They may mistake glass or a fake stone for a natural gemstone.
For example: A buyer who is searching for a blue stone may find a 5ct+ Aquamarine priced at just 50 USD. He/she may go for it thinking that they got a fair deal in auction or during sale at any marketplace where they usually shop. They will not stop to think whether the product is genuine or not because they will trust the marketplace they are purchasing from.
At the same time, a gemstone educated buyer will speculate as to how that stone can sell for so less and may ask the seller a number of questions as to the authenticity of the stone which the seller may fail to provide. An experienced buyer will only purchase from a genuine supplier.
What are the options if you spot fake gems?
Your options could be:
- Try negotiating with the supplier in private first requesting him/her for a genuine replacement or a refund.
- In case the supplier is not willing, you can provide him proof of his fake supply by showing him the lab report or whatever evidence you have against the product.
- If the supplier is yet not willing to take responsibility, negotiate with the supplier before you write a negative review with evidence on the product page.
How easy is it to identify fake gems?
First, lab test to find out if the gemstone is natural or synthetic. The certificate should come from an International reputable gem lab, like GRS, GIA, SSEF, AIGS, etc., and not from any small local lab.
After ascertaining the authenticity of the gemstone, the next step should be to check the colour of the gemstone. These days, all the gemstones are treated to enhance its colour. The gemstone you intend to buy should have a vibrant colour and should be even and eye-pleasing. To determine if this is the case, look at it from under a magnifying lens to see if the stone has an unusual opacity and colour concentrations.
How do you reduce risk when buying gems online?
- Ask for the authenticity certificate of the gemstone in question.
- Check the credibility of the seller.
- Read reviews.
What sort of buyer protection is available for B2B purchases?
Gemstone educated and experienced B2B buyers are mostly aware and they know what and from whom to purchase.
In the wake of the Covid19 pandemic, many new B2B suppliers have started selling online like us. However, check… Payment methods, Return policy, Shipping details, etc., before purchasing.
Most businesses order online. Can you build in any safeguards into the ordering process?
• Shop with reputable retailers
• Beware ”amazing deals”
• Look for online reviews and search the Better Business Bureau website for complaints. Check the “contact us” page on the website.
• Check site security before you buy. Before entering any personal or credit card info on to a shopping site, check if the web address on the page begins with “https”, NOT “http”. The added “s” tells you the website is secure and encrypted to protect your information.
- Don’t fall for email scams
- Pay with credit, not debit
- Add extra security with a virtual credit card
- Keep an eye out for fraud
- After you make the purchase, keep the details in a safe place. Hang onto the receipt, your order confirmation number and the tracking number the seller provides. If you have a problem with the order, this information will help you get the issue resolved quickly.
- Track your purchase
- Report scammers
- Password should be unique
- Always check the company’s shipping terms
- Use a reliable Internet Security Program
I’d like to thank Rajesh for his time and insights. Let’s hope businesses and consumers can finally get some relief from these very nasty scams.
