PGI USA'S POSITION AND WHAT ACTION YOU CAN TAKE

On February 26, 2008, the Federal Trade Commission ("FTC") proposed amending its Guides for the Jewelry, Precious Metals, and Pewter Industries ("Guides"), which provide guidance on what claims are deceptive when associated with precious metals and other jewelry products.  Typically, products marketed as "platinum" contain at least 85% pure platinum or contain at least 50% pure platinum in combination with other platinum group metals ("PGMs") that total at least 95% PGM.   In July 2005, the FTC issued a Federal Register notice soliciting public comment regarding whether it should revise the platinum section of the Guides to specifically address platinum/base metal alloy products.  PGI responded, taking the position that amending the current definition of platinum to include alloys of 500 ppt to 850 ppt platinum and no other PGMs would not be in the best interest of consumers or industry.  PGI provided the FTC with evidence demonstrating that opening the Guides to include products composed of 500 ppt to 850 ppt platinum and no other PGMs could lead to significant consumer confusion and a loss of consumer and trade confidence in platinum.  

After reviewing the 2005 comments, the FTC issued its proposal to amend the Guides.  The proposed amendments would require marketers of platinum/base metal alloy products that contain between 500 and 850 ppt pure platinum and do not contain at least 950 ppt PGM to clearly and conspicuously disclose: (a) that the product contains both platinum and other non-platinum group metals; (b) the products' full composition - including the percentage of each metal; and (c) that the product may not have the same attributes or properties as products containing at least 850 ppt pure platinum or at least 500 ppt pure platinum and at least 950 ppt PGM - unless the marketer has "competent and reliable scientific evidence" demonstrating that the alloy has all of the attributes or properties associated with traditional platinum that are material to consumers.  The proposal does not identify the precise attributes deemed "material" to consumers, but the Federal Register notice mentions a wide range of attributes including, but not limited to, durability, hypoallergenicity, resistance to tarnishing and scratching, density/weight, and the ability to resize or repair the product.  

The FTC based its proposal in part upon studies submitted by PGI demonstrating that a substantial number of consumers: (1) expect products marked or described as "platinum" to be pure and possess desirable qualities; (2) do not expect platinum/base metal alloy jewelry to be marked or described as "platinum"; and (3) do not fully understand numeric jewelry markings and chemical symbols.  The FTC also favorably referenced testing data in the record indicating that some platinum/base metal alloys do not possess all of the qualities of higher purity platinum jewelry deemed material by consumers.  As a result, the FTC concluded that consumer perception and product testing data support revising the Guides to address the marketing of platinum/base metal alloys.

In addition to soliciting comments on the proposed amendment, the FTC also requested data and information addressing 19 additional questions related to technical metallurgical and consumer perception issues.  The FTC requested data and information, for example, addressing whether additional disclosures are required to avoid consumer confusion, whether disclosures should be physically attached to jewelry product, whether certain disclosures may add to consumer confusion, and how consumers perceive and understand certain terminology.   The deadline to submit comments in response to the FTC's Federal Register notice has been pushed back until August 25, 2008.

PGI is encouraged that the FTC has recognized that consumers expect purity in their platinum products and generally do not expect platinum/base metal alloy jewelry to be marked or described as "platinum."  PGI is also encouraged that the FTC acknowledged the critical importance to consumers of the attributes and properties of platinum.  PGI nonetheless continues to oppose the inclusion of such products in the Guides, as PGI believes the disclosures proposed by the FTC will not be sufficient to avoid consumer confusion.

PGI is dedicated to ensuring that consumers have access to high quality platinum jewelry products that offer the properties associated with platinum.  To that end, PGI intends to provide comments to the FTC to address the current proposal and answer the FTC's questions.  PGI encourages you to participate in this process.  We ask that you provide PGI with your contact information* so that in the coming weeks we can provide you with additional news and updates on how to participate in the FTC submission process.

*Please send your name, company name and e-mail address to tkimura@pgiglobal.com.