Underkarating Fraud in the Jewelry Trade

Underkarating is a fraudulent practice whereby a jeweler represents a piece of jewelry or gold as containing more precious metal than it actually does.

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HomeLearning CenterJewelry and LapidaryUnderkarating Fraud in the Jewelry Trade

In the last few years the sale of gold jewelry has been consistently making headlines over this issue of underkarating. What's happening is that, despite federal laws to the contrary, many merchants are advertising and promoting sales of gold at a much higher karat level than the buyer is actually receiving.

These fraudulent transactions are occurring mostly in discount stores and regular retail stores which have taken on gold sales as an extra income provider. And provide they do. Many investigators have found that retailers who promote 14K and 18K are actually selling gold that is below 10K - the minimum below which a metal may NOT be described as gold. Unfortunately, underkarating is widespread.

How do you protect yourself against the kind of fraud? It's difficult because any gold must be tested, 1) by an assay examination which is the most accurate, or 2) using the nitric acid scratch test described earlier, or 3) using an electronic old tester which gives an L.C.D. indication of gold content. The electronic tester - which costs in excess of $300 - can also verify platinum and silver.

In the absence of the above three tests, deal with a reputable jeweler and absolutely insist that the jeweler - and especially any non-jeweler merchant - carefully and accurately describe the article and gold content on any gold purchase. You must have this for any refund demand or action on fraud that may be necessary later.

As a final caution, avoid those "50% off on gold" promotions. Invariably you end up paying more than the going retail price offer.

Keep in mind that many states fail to enforce their own laws which require that merchandise must be sold at regular retail prices for a certain period before it can be promoted in a markdown. NO ONE can take 50% off the price of gold and make an acceptable profit because gold is a commodity, money… it isn't jewelry. If you don't like the price of gold in New York, go to Tokyo, Istanbul, Berlin, or Rome: the price is the same there - and all over the rest of the world.

Dr. Gerald Wykoff GG CSM

Dr. Gerald Wykoff is GG (Graduate Gemologist), a CSM (Certified Supreme Master gemcutter), educator, and author of several gemology books. He founded the American Society of Gemcutters in the 1980s and served for more than 10 years as the editor of its monthly magazine, American Gemcutter.

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