CZ – The Great Pretender
This past September a California jeweler was arrested for passing off fake diamonds as real to at least twenty customers. Those fakes were made of cubic zirconia — CZ — the cheapest imitation diamond.
At the same time, many owners of expensive diamond jewelry are enthusiastic about buying and wearing designer jewelry set with CZ. What's going on? Is CZ a gem, or is it just fake diamond ? Should you insure it?
CZ is the least expensive and most common diamond imitation, and it's a very believable diamond "look-alike." It has impressive flash and is almost as hard as diamond. Because CZ is synthesized, it can be flawlessly clear and have the color of the highest grade diamond, with no undesirable yellow or brownish tinge. Good quality CZ can't be distinguished from diamond except by an experienced gemologist.
Just to be clear about the terms . . .
Synthetic diamond is real diamond made in a lab from the same ingredients as natural diamond found in the earth. Synthesized diamond is genuine diamond, though its market price is currently below that of mined diamond.
Simulated / fake / imitation diamond is made of completely different materials from natural diamond. These terms describe a stone that is not in any sense real diamond. The value of a fake diamond is a tiny fraction of the value of natural or synthesized diamond.
CZ resembles diamond in appearance, but its composition is completely different. CZ is not diamond, but has been used to imitate diamond.
A small amount of natural CZ was discovered in the 1930s, but CZ began to be widely produced in the 1970s. CZ has revolutionized costume jewelry, where it is used as an inexpensive substitute for diamond. It also has a major role in scams, where it's passed off as diamond to unknowing buyers. Now it has a new role: CZ is coming into its own as a centerpiece in jewelry.
Though gemologists resist calling it a gem, Internet and TV retailers of CZ jewelry have no such reticence. It has the beauty of diamond, they say, at a much lower price. And what's wrong with imitation, anyway?
There's a huge business in jewelry that mimics pieces worn by celebrities. Online sites offer "designer inspired" CZ jewelry and "original reproductions" at a fraction of the diamond jewelry prices. One site organizes its wares by celebrity name and then occasion. "Angelina Jolie at Cannes 2007" shows the star wearing diamond earrings that you can buy in CZ for $93. Or you can get "Oprah's Oscar Look," CZ version, for $65.
Market-watchers say the popularity of CZ jewelry is inseparable from the rise of home shopping networks. QVC and HSN each sells its own brand CZ diamond simulant. QVC bypasses the "diamond is forever" hype and markets its Diamonique® CZ engagement and wedding rings as a good compromise for couples on a strict budget.
Upscale marketers are selling CZ jewelry "for everyday wear" to buyers who own diamond jewelry but, for example, don't want to risk taking it when they travel. CZ jewelry that is well designed and crafted, and uses quality metal, can yield a piece of fine jewelry at a much lower price. One gem expert even said that, in view of the quality decline in mined diamonds and the prevalence of gem treatments, people are looking to CZ as "a sure thing." These buyers know what they're getting.
Well, some do but others may not. A recent ad, from a business describing itself as "the world's largest online jewelry marketplace," pictured a sparkling ring and the words "1 carat solitaire." It didn't use the word diamond — but the reader might hear that word anyway.
Some buyers don't care what the stone is, as long as it looks good and the price is right. CZ is incredibly cheap to produce, with CZ rough selling at pennies per carat. This should make the finished jewelry immensely lower in price than diamond jewelry.
But out-and-out fraud still exists. CZ maintains its role as imitation diamond. It looks like diamond to the untrained eye, and it probably will continue to be passed off as diamond.
Let's return for a moment to the story we began with, and look at a few insurance concerns. The jeweler who'd been passing off CZ as diamond had, at the time of his arrest, been selling the fakes for more than five years. Even the police spokesman was dismayed that none of the buyers had filed a police report. He noted that, in a scam going on for that long, there were likely to be a lot more victims who hadn't yet come forward.
As insurance professionals, we may wonder:
- Could it be that none of those buyers bothered to have their jewelry appraised by an independent appraiser? They may not know yet that they are victims.
- Could it be that the jewelry was insured, and that the insurers as well had accepted the seller's appraisals stating the stones were diamond? Those insurers might well become victims, as buyers realize the diamonds are imitations and “lose” the jewelry.
- Might an insured, at some future time, be told her gem was fake and that the diamond must have been switched for CZ when the ring was cleaned or repaired? This would result in a claim against the insurance company, as well as a soiled reputation for the jeweler who had done a free cleaning.
Here's another thing to ponder. The police initiated their investigation after the jewelry store had been robbed. Rumor had it that the robbery was faked, and this turned out to be the case. A bogus robbery would be a profitable insurance scam. It's an easy way to convert a lot of low value CZ jewelry into diamond jewelry profits.
FOR AGENTS AND UNDERWRITERS
CZ is a good diamond imitation and is difficult to recognize without a proper examination. Most jewelers are not Graduate Gemologists and many don't have the training or equipment to examine the gems they sell. Even without intending fraud, it is possible for a jeweler to pass on fakes as real diamonds out of ignorance. An appraisal from the seller may not be reliable.
Technology plays an increasing role in the gem industry, including
- manufacturing fakes,
- synthesizing gems, and
- developing gem treatments.
All these things have a serious effect on valuation. Be sure the appraisal states whether the diamond is natural or synthetic and whether it has been treated.
A diamond report from a reliable lab is a useful verification of the diamond's authenticity and quality. Reliable grading labs include GIA, AGS, and GCAL (see the August 2008 issue for a detailed discussion). Reports from other labs may not be reliable, especially if they include valuation.
If you have a diamond report and an appraisal, be sure the report is for the stone being insured. Check that basic information, such as carat weight and cut style, is the same on both documents.
Be sure the diamond certificate is genuine! The passing of counterfeit certificates is increasing, as sellers realize how effective they are as sales tools. To verify authenticity of certificates from the recommended labs, follow the appropriate link. You will need the report number and the carat weight of the stone.
CZ manufacturers also make colored stones — which may be passed off as fancy diamonds. Colored diamonds are extremely rare in nature and very costly. When insuring colored diamonds, use every means possible to be sure they are natural diamond — not CZ or other imitation, not synthetic (which are worth less than natural), and not low-quality color-treated diamonds. For fancy colored diamond, insist on a GIA lab report to verify the gem's quality.
Many makers of imitation diamond use brand names for their products. (Often the name is a play on the word diamond, to strike the right chord with the consumer, as in Diamonique®.) Examine the appraisal documents for mention of any brand names, as these can be important clues to valuation. If there are names you don't recognize, consider consulting a jewelry insurance expert.
For all high-value diamond jewelry, and especially for colored diamonds, use every means possible to be sure the diamond is not synthetic, color-treated, or an out-and-out fake. A mistake in this regard would result in serious overpayment.
Answers: Diamond or CZ? In both pictures, CZ is on the left, diamond on the right.
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