Lesser Law Group

Lab-grown diamond companies warned over advertising

California-born celebrity Leonardo DiCaprio is one of the investors in a diamond company that recently received a warning letter from the Federal Trade Commission over advertising practices. Diamond Foundry, which counts the actor among its backers, is a purveyor of laboratory-created diamonds. These man-made diamonds have chemical properties equivalent to those of natural, or mined, diamonds. However, rather than being mined from the earth, these diamonds are grown entirely inside a laboratory, typically through the use of a small plasma reactor that allows chemical elements to form a final stone.

Several lab-grown diamond companies received these warnings in April 2019. The statements noted that these companies must make clear that the diamonds they sell are lab-grown rather than "natural." The FTC letter said that it was concerned that consumers could believe that they are buying mined diamonds instead of man-made versions because of the terminology in the advertisements, especially on social media. For example, some ads called the stones "aboveground forged" or "real diamonds created in America" without using the term "laboratory-grown."

Some lab-grown diamond companies responded positively to the warning from the FTC, saying they would benefit from greater clarity on the jewelry advertising guidelines used by the agency. In addition, they said that they did not intend to deceive customers about the provenance of their gemstones, especially as many of the companies tout environmental or ethical reasons to opt for human-made diamonds. The FTC warned against making environmental claims without evidence, but Diamond Foundry noted that it uses solar power to fuel its lab-creation process.

Companies that are developing innovative technologies in an existing space may face challenges in how they advertise and market their products. A business law attorney can provide advice and guidance on how a company can legally spread the word about its offerings.

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