CDG Industry Ethics & Market Knowledge 2 — Questions and Answers
Question 1: A client asks you to grade their diamond higher than it deserves to increase its resale value. What is the ethical response?
- Comply if the client signs a waiver
- Decline and explain that accurate grading protects both parties (Correct answer)
- Issue the inflated grade but note it internally
- Refer the client to another lab without explanation
Correct answer: Decline and explain that accurate grading protects both parties
Accurate grading is a foundational ethical obligation; falsifying grades harms consumers and undermines market trust.
Question 2: The Kimberley Process Certification Scheme (KPCS) was established primarily to:
- Standardize diamond color grading globally
- Prevent conflict diamonds from entering the legitimate trade (Correct answer)
- Set minimum retail pricing for rough diamonds
- Regulate laboratory grading fees across member countries
Correct answer: Prevent conflict diamonds from entering the legitimate trade
The KPCS was created in 2003 to certify that rough diamonds are not used to finance rebel movements or wars.
Question 3: Which organization publishes the International Diamond Grading System widely used by gemological laboratories?
- AGS
- GIA (Correct answer)
- IGI
- HRD
Correct answer: GIA
The Gemological Institute of America (GIA) developed and publishes the International Diamond Grading System.
Question 4: A retail jeweler inflates a diamond's carat weight on a sales receipt. Under US consumer protection law, this constitutes:
- An acceptable sales tactic if disclosed verbally
- A violation only if the discrepancy exceeds 0.10 ct
- Deceptive trade practice or fraud (Correct answer)
- A minor infraction subject only to industry self-regulation
Correct answer: Deceptive trade practice or fraud
Misrepresenting a diamond's carat weight on a receipt violates FTC regulations and constitutes deceptive trade practice.
Question 5: When a gemologist discovers a previously undetected fracture filling during estate appraisal, they should:
- Ignore it since the treatment is stable
- Disclose the treatment fully in the appraisal report (Correct answer)
- Subtract a fixed percentage from value without explaining why
- Return the stone without issuing a report
Correct answer: Disclose the treatment fully in the appraisal report
Full disclosure of any detected treatment is required in an ethical and professional appraisal report.
Question 6: The term 'trade-up' policy in diamond retail typically means:
- The retailer buys back a diamond at full original price
- A customer can apply the original purchase price toward a more expensive diamond (Correct answer)
- Diamonds can be exchanged for colored gemstones of equal value
- The store guarantees to match any competitor's price
Correct answer: A customer can apply the original purchase price toward a more expensive diamond
Trade-up policies allow customers to credit the full purchase price of their original diamond toward a higher-value diamond purchase.
Question 7: Which ethical principle requires a diamond grader to maintain the same grading standards regardless of who owns the stone?
- Confidentiality
- Impartiality (Correct answer)
- Competence
- Transparency
Correct answer: Impartiality
Impartiality means applying consistent, unbiased grading standards without favoritism based on the stone's owner or value.
CDG Industry Ethics & Market Knowledge 2
A client asks you to grade their diamond higher than it deserves to increase its resale value.
What is the ethical response?