With the collapse of Diamond Exchange this week, many people are doubting whether or not it is safe to buy diamonds online.
The problem with such as statement is two-fold:
- Despite popular belief, buying “online” is just as safe as buying from a brick and mortar retailer.
- So-called “online” companies are usually at the forefront of innovation and quality. For example, we were the first, and remain the only jeweller in Australia to provide detailed analysis (Ideal-Scope, ASET, photos, videos etc) on each diamond we sell. In addition, I believe online retailers were responsible for GIA certificates becoming the standard for high quality diamonds in Australia.
Whilst media reports have centred on the collapse of Diamond Exchange and how buying diamonds online is bad, I have put together a list of tips for consumers to take note of when buying diamonds online. Whilst mostly relating to online purchases, a lot of these tips can be used when buying from a brick and mortar store that sell diamonds that are listed from manufacturers and wholesalers overseas.
Never pay in full before the diamond arrives in the retailer’s stock.
If you are forced to pay in full, then it means that the retailer does not have enough working capital to support your purchase. Whilst the collapse of Diamond Exchange highlighted the fact that many people who paid for diamonds did not receive them, paying in full before the diamond arrives in the retailer’s stock is fraught with many other dangers. As I wrote about early this year, things can go wrong, like the diamond being lost in transit or the diamond not being eye-clean. If you have paid in full, then chances are, if something does go wrong, then the retailer will not be in a position to refund you immediately.
Communicate with the retailer.
The majority of problems with buying a diamond online are due to a lack of communication between the retailer and customer. Make sure you communicate things like deadlines and requirements such as budgets and expectations regarding the diamond, ie: no black marks.
Always pay by credit card.
Credit cards give consumers a lot of protection. For a myriad of reasons, if you are not happy with your purchase, or did not receive it, you can lodge a dispute with your credit card provider, who will investigate and refund your money if need be. These disputes usually have a time limit of between 60 and 100 days, so it is best to check with your card provider. In addition, with Mastercard and Visa merchant rates so low nowadays, there should really be no reason for a retailer to charge extra for these cards. AMEX on the other hand, charges jewellers quite a lot, so it is reasonable for there to be a surcharge on AMEX transactions.
Check whether the diamond is in stock or not.
Having the diamond in stock means that the retailer owns the diamond and it is part of their inventory. This should have many benefits such as immediate delivery, a longer return period, an upgrade policy and detailed information on the diamond. If it is a “listed” stone, or on consignment, it means that the retailer is acting as a broker between you and the manufacturer or wholesaler. Whilst this will result in a lower price, it usually means a shorter return period and a longer delivery time. In addition to this, there may be costs involved in returning the diamond as the diamond has to be shipped back to the manufacturer or wholesaler. All good websites should differentiate between the diamonds they have in stock and the ones that they don’t.
Research the retailer.
A lot of people Google themselves, their friends and colleagues, so it comes as no surprise that you shouldn’t Google a diamond retailer. However, Google wont provide background and financial information about a retailer. To get this you need to go to ASIC (if the retailer is a company) and Dun and Bradstreet. For less than $100, you’ll be able to find out quite a bit of financial information from ASIC and Dun and Bradstreet about any business.
Check insurance and prepare for delivery.
The retailer should have an insurance policy called a “jewellers block policy”. This is a policy that insures jewellers for pretty much anything, including goods in transit. However, once the package is signed for, then liability falls into your hands. Therefore, you should prepare for the delivery by making sure you are there on the day of the delivery and letting the secretary or mail room staff know that you have an important package arriving.
Obtain shipping and return costs, either from the website or in writing.
All good websites should include the cost of shipping and the cost of returning the diamond. If not, then obtain this information through email.
Obtain a return policy either from the website or in writing.
Again, all good websites should include this information. Make sure you understand the return policy and if there are any costs involved in returning the diamond.
Obtain extra information about the diamond you are considering purchasing.
All good online retailers should be able to provide at least a photo, video and an Ideal-Scope or ASET image. This information is vital to assessing the cut and clarity of a diamond, and, in most cases will provide you with more information about a diamond than if your went to a brick and mortar store.
Always buy a GIA or AGS certified diamond.
Unless you are on a super limited budget, it is imperative that the diamond you are buying has the correct colour and clarity grade, given that neither you, nor a diamond professional has evaluated the diamond. Whilst diamonds with certificates from lesser quality labs such as EGL or IGI may seem cheap, they are simply too inconsistent to be taking such a big risk with when buying sight unseen.
Don’t be too worried if there is a shipping delay of a few days. Remember that whilst buying a diamond online may seem automated, there is a lot of work done behind the scenes.
Ask for laser inscription if needed.
Times are changing in the diamond industry, and nowadays, more and more diamonds are being laser inscribed when certified. However, there are still a lot of diamonds that aren’t laser inscribed. If you require laser inscription on a diamond that isn’t laser inscribed, ask the retailer to get it laser inscribed and the also the costs. The retailer will usually give you the choice of getting it laser inscribed locally, or sending it back the originating lab for laser inscription and certificate re-issue.
Ask for an escrow service if needed.
Usually the escrow service is provided by an independent third party, such as a jeweller or appraiser. There will usually be a fee involved with this that is not refundable, as this is an extra service that you have requested.
Don’t buy online if you are not 100% comfortable with buying online.
This is the probably the most important tip. Put simply, if you are not 100% comfortable with buying online, even if the price is great and the diamond looks great, then don’t – it will put undue stress on both yourself and the retailer.