Letter from Reenah L. Kim, Staff Attorney, Division of Enforcement, Bureau of Consumer Protection

COWAN
LIEBOW
LA'
BY FEDERAL EXPRESS
Federal Trade Commission
May 29, 2012
6th Street and Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Attention: Donald S. Clark, Esq., Secretary
Cowan, Liebowitz & Latman, P.c.
1133 Avenue of the Americas
New Yorl<, NY 10036
(212) 79~9200 Tel
(212) 575-0671 Fax
www.cll.com
CJ. Erickson
(212) 790-9274
cje@cU.com
Re: 	Advisory Opinion Request of MJJ Brilliaut Jewelers, Inc.
Marking/Advertising of Precious Metal Jewelry
Dear Secretary Clark:
On behalf of our client MJJ BriJliant Jewelers, Inc., New York, New York ("MJJ" or the
"Company"), 	and 	as 	discussed 	with 	Federal 	Trade 	Commission 	Counsel 	via telephone
conference, [ 	.J
In light of the expected solicitation of public comments governing proposed revisions to the
Jewelry Guides, the Company believes it will be more beneficial to address these general issues
in concert with the comments of other interested parties. 	The Company does, however, seek
guidance on its proposed marking and advertising 	of certain products to ensure that its
procedures are within the letter and intent of the existing Jewelry Guides. 	This request is
appropriate under the Commission's Rules of Practice because the proposed marketing andlor
advertising claims involve a novel question of fact or law for which there is no clear Commission
or court precedent.
Product
the escalating cost of precious metals, notably gold, coupled with increasing demand,
has resulted in an industry demand for more reasonably priced alternatives. 	MJJ has inve.sted
JFK Aml"ORT·OFF[ClI • 2016 LINDEN BIND. Surra 18, ELMONf, NY 11003 • (212) 790-.9200

Cowan, Liebowitz & Latman, P.C.
FTC Bureau of Consumer Protection
May 29, 2012
Page 2
significant resources in developing an alternative alloy formulation that preserves the appearance
and functionality of gold at a more reasonable cost to consumers .. The proprietary alloy,
identified as [ 	J (hereinafter, 	the 	"MJJ 	Alloy"), 	and is
composed of [ 	]% gold (periodic IJlement Au), [ 	)% silver (periodic element Ag), [ 	]%
__ _palladi urn (neriodic elemenLP_a),_and_[_]O,-'"-hase_metals.
Law
The issue herein is whether MJJ Brilliant's proposed use of the term "gold" as part of its
attempt to accurately identify the specific composition of the MJJ Alloy in jewelry is proper
under Section 5 of the FTC Act, which declares ''unfair'' or "deceptive acts or practices"
unlawful. 	The Cotrunission's Policy Statement on Deception! states that the Commission
analyzes deceptive business practices under the following rubric:
1. 	There must be a representation, omission or practice that is likely to mislead the
consumer. This includes the "use of bait and switch techniques."
2. 	The 	practice 	is 	examined 	from 	the 	perspective 	of a 	reasonable 	person 	in 	the
circumstances. If the practice "is directed primarily to a particular group," such as
Internet users, "the Commission examines reasonableness from the perspective of that
group."
3. 	The representation, omission or practice must be a material one, i.e" it is likely to affect
the consumer's conduct or decision regarding the produce or service.
Thus, an advertisement is "deceptive" if it includes material information that is false or
that is likely to mislead a consumer acting reasonably under the circumstances. Likewise, an
advertisement is deceptive if it omits material information, and that omission is likely to mislead
a consumer acting reasonably under the circumstances. 2 Requiring accurate disclosure of
material terms allows consumers to compare sirhilar services offered by one or multiple
providers and weigh the different terms being offered in making decisions about what services to
purchase.
The Commission has formulated guides for various industry products, which set forth the
Commission's "current thinking" about claims for certain products. 	The Jewelry Guides, which
! Federal Trade Comm'n, Policy 8Mement on Deception (Oct. 14, 1983)
2 Cliffdale Assocs" 103 F.T.C. at 175 (appending FTC Policy Statement on Deception).

Cowan, Liebowitz & Latman, P.c.
FTC Bureau of Consumer Protection
May 29,2012
Page 3
are found at 19 C.F.R. Part 23 ("Jewelry Guides"), are administrative interpretations of Section 5
of the FTC Act prohibiting "unfair or deceptive" statements or claims in a product's marketing if
that marketing misrepresents a product's true composition. The underlying intent of these policy
statements is to ensure that the representations in advertising "will put consumers on notice that
____ ---.:th.e_p.I~t.Jl.<mtains..Jlertain-precious-metals,-thereb¥-putting_them-in-a-posith;>D-to-inquireof'-th~---- ---
jeweler as to the relevant value of the different metals and the overall value of the product.,,3
Section 23.1 of the Jewelry Guides expressly states that "It is unfair or deceptive to
misrepresent the type, kind, grade, quality, quantity, metallic content, size, weight. .. or any other
material aspect of an industry product." 	Note 2 to § 23.1 further provides that "To prevent
deception, any qualifications or disclosures ... should be sufficiently clear and prominent." 	The
clear intent of the Jewelry Guides is to avoid deception of, or confusion among, consumer
purchasers offmished articles of jewelry by prohibiting use of the term "gold" as an adjective for
finished jewelry. 	They cannot be read to preclude advertisers from using truthful and accurate
statements of product content, nor can they be interpreted in a way that prohibits the use of new
materials developed and recognized throughout the industry subsequent to implementation of the
Jewelry Guides.
Industry Standard and Pra1:tice
Precious metal alloys have become common in the jewelry trade over the past several
years due to the escalating price of precious metals. 	The industry is replete with examples of
advertising, marketing and labeling to such an extent that consumers now require greater content
detail and clarification of the items they are purchasing. 	Attached are examples of current
advertisements that evidence this trend. None of these identify the finished item of jewelry as an
article of "gold," but rather provide content information to the consumer to avoid confusion and
deception. 	We believe the truthful, accurate and complete description of product contents not
only meets the requirements and intent of the Jewelry Guides, but is mandated by it. 	The failure
to disclose this information is inherently deceptive as the broad range and use of precious metal
alloys 	in the jewelry trade 	afford consumers no 	basis to assess the value of purchased
merchandise.
3 Guides for the Jewelry, Precious Metals, and Pewter Industries, 62 Fed. Reg. 16,673,
16,674 (Apr. 8, 1997).

Cowan, Liebowitz & Latman, P.C.
FTC Bureau of Consumer Protection
May 29, 2012
Page 4
Moreover, many of these products are the same color as 10kt., 14kt. and 18kt. gold. The
similar color, coupled with the high price point of these products, imply a precious metal content.
Prohibiting a truthful disclosure of the actual precious metal content serves only to exacerbate
consumer confusion by creating an inability to distinguish between gold alloys of between 1kt
_ ancllQJ,<:t. This is clearl)l an unintended.Qonsequence,anda.violationof-atieast-the-intent-of-the----·
Jewelry Guides.
The Jewelry Guides were originally designed, in part, to prevent consumer deception and
confusion when purchasing "finished articles of gold jewelry. 	A standard was implemented to
provide a threshold for which a consumer can be assured of obtaining a known value. The 10 kt.
minimum standard was implemented as the basis for identifying a "finished product as "gold."
Products consisting of less than 10 kt. cannot, absent more, be identi"fied as gold. 	The Jewelry
Guides do not, however, relate to, restrict or limit the use of gold in the construction of finished
jewelry. In fact, in light of the introduction of new alloys which appear indistinguishable to the
consumer in terms of look, color and feel, the Jewelry Guides must be read to permit accurate
and truthful content information.
In addition, The FTC has previously acknowledged the value of harmonization of U.S.
and Canadian regulations applicable to trading partners in both jurisdictions. 	This stems from
FTC comments on the Canadian Guide to the Precious Metals Marking Act and Regulations.
The U.S. and Canadian Guides are strikingly similar, both prohibiting a dealer from selling,
importing or advertising any precious metal article in a manner which is false or misleading as to
the precious metal content. 	The Canadian Guides do not restrict the use of the term "gold," or
prohibit providing an assay report to identify the contents of a gold alloy article, if used in a non-
deceptive and non-misleading manner. 	We believe the U.S. jewelry guides can be read
consistently with the Canadian guides in allowing MJJ's proposed marketing and advertising, as
set forth below.
MJJ Proposed Marketing and Product Stamping
MJJ is aware that it cannot stamp or market its gold alloy jewelry with the traditional
karat marking standard as the alloy is admittedly less than 10 karat fineness. 	The articles are,
however, constructed of an alloy consisting of the precious metal elements gold, silver and
palladium, with the appearance and feel of gold. 	Due to its unique new nlUlle and content, the
composition of the MJJ Alloy is not yet nnderstood within the industry or the public based on

Cowan, Liebowitz & Latman, P.C.
FTC Bureau of Consumer Protection
May 29,2012
Page 5
name alone, 	As with other trademarked or newly created products, market recognition and/or
customer understanding of the product is based primarily upon information supplied by the
trademark/patent owner or producer of the goods, 	Without such efforts, the consumer would be
unable to malee a well-informed decision as to the product. 	Our reading of the Jewelry Guides
. mandate£.thtLl:lcQurateJdentificationof ihe.specificcomposition of the·precious and-nQn-preciQus·
metals contained within the MJJ Alloy,
As discussed, MJJ proposes to market its gold alloy jewelry by fully declaring the
contents, By doing so it is not describing the item as a gold product, but identifying the contents
in an accurate, truthful, non-deceptive manner. 	Specifically, MJJ proposes use of the following
in advertising and marketing materials, and requests confirmation that each is acceptable:
(1) 	use of the term: consisting of a proprietary alloy of gold, silver, and platinum,
(2) 	a link to a third party assay report identifying the precious metal content of the
finished article. A representative report is attached.
(3) 	identification of the specific percentage content of all precious metals in the
finished article,
(4) 	stamping its merchandise with the company's [ 	1trademark.
All of the above are in compliance with the Jewelry Gnides as they do not misrepresent
the advertised articles as gold and non-deceptively describe the items in a way that enables
consumers to evaluate and compare the items against similar jewelry widely marketed and
distributed to the public. 	As set forth above, we believe the proposed language eliminates
consumer confusion,
Conclusion
In light of the Commission's clear jurisdiction and its enforcement activity in this area,
MJJ has exercised due care in seeking advance direction from the Commission on proposed
advertising of its jewelry. Based on the foregoing, and in accordance with Section l.3(c) of the
Commission's Rules of Practice and Procedure, 16 C,F.R, § 1.3(c), we respectfully request that
the Commission of FTC Staff issue an advisory opinion confirming that the marketing language
is in accordance with existing law, agency regulations and applicable guidelines governing

Cowan, Liebowitz & Latman, P,C.
FTC BUl'eau of Consumer Protection
May 29, 2012
Page 6
precious metal jewelry, as the proposed 	qualifying statements are accurate, truthful, and
complete, providing consumers with non·deceptive information regarding the construction and
value of our client's merchandise. 	Moreover, the proposed language does not mis-identify the
wholesale and retail products as gold, nor does it in any way misrepresent the constituent
__ materials._ 	- 	----- ---- 	----- ---- 	-
Should you have any questions or require additional information, please do not hesitate to
contact our office.
Sincerely,
C.J. Erickson
cc: 	MJJ Brilliant Jewelers

Division of Enforcement
Bur~au of Consumer Protection
VIA FEDERAL EXPRESS
C.J. Erickson
United States of America
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
August 7, 2012
Cowan, Liebowitz & Latman, P.C.
1133 Avenue of the Americas
New York, NY 10036
Re: 	Advisory Opinion Request ofMJ] Brilliant Jewelers, Inc.
Dear Mr. Erickson:
This letter responds to MJJ Brilliant Jewelers, Inc. ("MIJ" or "Company")' s request for a
staff opinion concerning MIJ's proposed marking and advertising of jewelry constructed of an
alloy comprising gold, silver, palladium, and non-precious metals.! 	.
You state that MIJ has developed a proprietary alloy fOmlulation composed of. 	%
gold (periodic element Au), 21 % silvcr (periodic eloment Ag), .' % palladium (periodic element
Pa), and. 	% base metals, which MJJ will use in jewelry merchandise ("Jewelry Alloy,,).2
Acknowledging the provisions in the Jewelry Guides3 that address misrepresentations regarding
the content of gold or gold alloy in an industry prodUct, you ask whether your client's anticipated
use of the term "gold" in its advertising and marketing materials to identifY the specific
composition of the Jewelry Alloy would be "propel''' under Section 5 of the Federal Trade
ConunissionAct ("FTC Act;'), 15 U.S.C. §45(a). Specifically, you request guidance on the
acceptability of each of the following: (1) using the phrase: "consisting of a proprietary alloy of
gold, silver, and platinum;" (2) proViding a link to a third-party assay report that identifies the
precious metal content of the finished article; (3) identifying the specific percentage content of
.all precious metals in the finished article; (4) stamping merchandise with the Company's
", 	(" trademark. You did not provide any specific advertising or marketing materials for
I 	Your letter requests "that the Commission of [sic] FTC Staff issue an advisory opinion,"
which could be interpreted as a request for a Commission advisory opinion. You also indicate,
.however, that yourrequest is jn accordance with Section 1.3 (c) of the Commission Rules of
Practice, by which FTC staff may render an opinion without prejudice to'the right of the
Commission to rescind the advice at a later date and, as appropriate, to commence an
enforcement action. 16 C.FR. §1.3(c).
2 Your letter also states that the MIJ alloy.is "identified as
• 	The Federal Trade Commission's Guides for the Jewelry, Precious Metals, and Pewter
Industries ("Jewelry Guides" or "Guides"), 16 C.F.R. Part 23.

Mr. C.J. Erickson
August 7, 2012
Page 2
our consideration, nor did you make clear whether MJJ intends to use any of the proposed
marketing claims in combination.
As you are aware, the Jewelry Guides Ill'e administrative interpretations of Section 5 of
the FTC Act, which prohibits unfair or deceptive acts or practices. The Guides state, in pertinent
part, that "[iJt is unfair or deceptive to misrepresent the presence of gold or gold alloy in an
industry product, or the quantity or karat fineness of gold or gold alloy contained in the
product. ..." 16C.F.R. §23.4(a). The Guides also provide that it may be misleading to use the
word "gold" or any abbreviation, or a quality mark implying gold content (e.g., 9 karat), "to
describe all or part of an industry product that is composed throughout of an alloy of gold of less
than 10 karat fineness." 16 C.F.R. §23.4(b)(9). In addition, the Jewelry Guides provide that "[i)t
is unfair or deceptive to mark, describe, or otherwise represent all or part of an industry product
as silver, ... un.less it is at least 925/1000ths pure silver." 16 C.F.R. §23.6(b). Additionally, the
Jewelry Guides provide that "[i)t is unfair or deceptive to use the words 'platinum, ...
'palladium,' ... or any abbreviation to mark or describe all or part of an industry product if such
marking or description misrepresents the product's true composition," and further provide that it
may be misleading to use the word "platinum" or any abbreviation ''to mark or describe any
product that is not composed throughout of at least 500 parts per thousand pure Platinum."
16 C.F.R. §§23.7(a), 23.7(b)(3).
You concede that MJJ "cannot stamp or market its gold alloy jewelry with the traditional
karat nmrking[, ... J as the alloy is admittedly less than 10 karat fineness." Indeed, given your
representation that the Jewelry Alloy is comprised of 	'% gold by weight, the gold content of
the product more closely approximates 6 karats, which falls short of the 10 karat minimum
fineness set forth in the Guides. Likewise, your description of the Jewelry Alloy indicates that it
contains, , % silver, which is below the 92.5% level stated in the Guides. The Jewelry Alloy
also includes 	% palladium, but does not contain any pure platinum.
As part of the 1996 review, the Commission considered whether to amend the Guides to
permit gold alloys containing less than 10 karats of gold (i.e., less than 41.6% gold) to be
marketed as containing gold. 61 Fed. Register 27185-86 (May 30, 1996). In addressing this
issue, the Commission noted that it had previously sought comments in 1977 regarding a
proposal to lower the 10 karat minimum threshold to permit sellers to market gold of less than 10
karats If the quality was accurately disclosed. and also to lower the 92.5% level for silver. Based
on the record and comments it received in response to the 1977 proposal, the Commission
retained the 10 karat minimum fineness which appears in Section 23.4 of the Jewelry Guides,
and the Commission also retained the 92.5% level for silver which appears in Section 23.6. ld
at 27185 0.99.
The Commission included the minimum of 500 parts per thousand pure platinum for
platinum markings pursuant to its 1997 revisions to the Guides. 62 Fed. Register 16673 (Apr. 8,
1997). In developing the 1997 guidance, the Commission indicated that referring to an article
containing less than 500 parts per thousand pure platinum as "platinum," without qualification,
may be deceptive. 61 Fed. Register 27225 (May 30, 1996). When revising the platinum section
agaln in 2010, the Commission noted that it had previously found that deception would likely

Mr. C.J. Erickson
August 7, 2012
Page 3
result if marketers were to describe platinurnlbase metal alloys as "platinum" without disclosing
information regarding their composition and attributes. 75 Fed. Register 8 I 449 (Dec. 28,2010).
In light of the foregoing, it is our opinion that MJJ's proposed use of the phrase
"consisting of a proprietary alloy of gold, silver, and platinum" would contravene the plain
language of the current Jewelry Guides. As discussed above, the Guides advise against using the
word "gold" or any quality mark implying gold content on any product oflesa thim 10 karat
fineness. 16 C.P.R. §23.4(b)(9). The Guides also advise against using the word "silver" to
describe all or part of an industry product unless it meets the 92.5% threshold, 16 C.P.R.
§23.6(b), and advise against using the word "platinum" to describe all or part of any product that
is not composed throughout of at least 500 parts per thousand pure platinum. 16 C.F.R.
§23. 7(b )(3). Furthermore, using the phrase "consisting of a proprietary alloy of gold, silver, and
platinum" may misleadingly imply that the Jewelry Alloy is comprised solely of those three
precious metals (gold, silver, platinum). Therefore, this claim would likely run afoul of
Section 5 of the FTC Act, which prohibits deceptive acts or practices.
The Jewelry Guides do not explicitly address the use of marketing claims that identify the
total precious metal content of a jewelry product. Thus, in our opinion, the Guides would not
prohibit MIJ from stamping the Jewelry Alloy merchandise with its .'" 	" trademark.
Youxletter does not indicate whether MJJ's proposed "identification of the specific
percentage content of all precious metals" would specifically describe the Jewelry Alloy as
containing gold, silver, or platinum, not did you attach a copy of the "representative" assay
report that MJJ anticipates using to market the product.4 On that basis, we cannot provide an
opinion regarding those proposed practices.
Marketing of the Jewelry Alloy would nevertheless be guided by the provisions cited
above that prohibit misrepresentations regarding gold, silver, and platinum content, as well as the
general prohibition against deception contained in Section 23.1 of the Jewelry Guides. MJJ's
marketing would also be SU"Qject to Section 5 of the FTC Act. Your letter does not make clear
whether the Company's marketing and advertising materials would adequately disclose the .
Jewelry Alloy's full composition and attributes, such as by giving consunters complete
information regarding all components of the product (including disclosure of the fact that 	'10 of
the alloy consists of non-precious base metals). Moreover, to the extent MJJ anticipates
providing qualifications or disclosures regarding the content of its Jewelry Alloy, any such
disclosures or qualifications must be sufficiently clear and prominent, and proximate to the
claim, to prevent deception. In evaluating whether a representation is misleading, the
Commission examines not only the claim itself, but the net impression of the entire
advertisement. Finally, to the extent MJJ provides disclosures through a hyperlink reference to a
third-party assay report, the information in such report must be truthful and non-misleading.
4 We understand that an assay usually reflects a test made to determine the quantity of
precious metal in a product compared to the weight of the whol" product.

Mr. C.J. Erickson
August 7, 2012
Page 4
In our opinion, a literal reading of the provisions in the Guides that discuss misuse of the
words "gold," "silver," and "platinum" does not address how to describe the content of an alloy
that contains those precious metals in amounts below the minimum thresholds. Pursuant to the
Commission's systematic review process for all of its mles and industry guides, the Commission
recently published a Federal Register notice soliciting comment on all aspects of the Jewelry
Guides, including disclosures that relate to the content of precious metal alloys. 77 Fed. Register
39201 (July 2,2012). We encourage MJJ to submit comments and supporting consumer
perception evidence on this and any other issue relating to the Guides before the deadline of
August 27, 2012. 	'
This letter sets out the views of the staff of the Bureau of Consumer Protection, as
authorized by the Commission'S Rules of Practice. Those views are based on information you
provided to Commission staff. Staff has not engaged in independent factual investigation
regarding the proposed marketing and product stamping. In accordance with Section 1.3(c) of
the Commission Rules of Practice, 16 C.F.R. § 1.3(c), this is a staff opinion only and has not
been reviewed or approved by the Commission or by any individual Commissioner, and is given
without prejudice to the right of the Commission to rescind the advice at a later date and, as
appropriate, to commence an enforcement action. In accordance with Section 1.4 of the
Commission's Rules of Practice, 16 C.F.R. § 1.4, your request for advice and this response will
be placed on the public record.
Thank you for contacting the Federal Trade Commission. If you have any questions,
please do not hesitate to contact me at 202·326·2272.
Sincerely.
,;. ':. f .
. ,
, , .