CDG Regulatory Compliance & Legal Framework 2

Question 1

Under FTC guidelines, which term is permissible without a qualifying disclosure when describing a lab-grown diamond to a consumer?

Accepted Answer

Lab-created diamond

Answer

The FTC explicitly permits 'lab-created,' 'lab-grown,' 'man-made,' or '[manufacturer name]-created' as standalone descriptors without additional qualification.

Question 2

The Kimberley Process Certification Scheme (KPCS) was established primarily to prevent trade in diamonds that finance:

Accepted Answer

Rebel movements against legitimate governments

Answer

The KPCS was created in 2003 to stem the flow of 'conflict diamonds' used by rebel movements to finance wars against legitimate governments.

Question 3

A retailer selling a fracture-filled diamond must disclose this treatment because the FTC considers non-disclosure to be:

Accepted Answer

An unfair or deceptive act or practice

Answer

The FTC's Section 5 prohibition on unfair or deceptive acts requires disclosure of any treatment that significantly affects the stone's value or durability.

Question 4

Which U.S. federal law requires companies to conduct due diligence on supply chains for conflict minerals, including diamonds, when sourced from the DRC region?

Accepted Answer

Dodd-Frank Act Section 1502

Answer

Section 1502 of the Dodd-Frank Wall Street Reform Act mandates that SEC-reporting companies disclose the use of conflict minerals originating from the Democratic Republic of Congo or adjoining countries.

Question 5

When a U.S. jeweler describes a diamond as 'flawless' in advertising, FTC regulations require that the grade be based on:

Accepted Answer

Industry-standard examination under 10x magnification

Answer

The FTC Jewelry Guides state that clarity grades must reflect examination by a trained grader using 10x magnification under standard grading conditions.

(CDG) Certified Diamond Grader Practice Test

(CDG) Certified Diamond Grader Practice Test

CDG Regulatory Compliance & Legal Framework 2