If you tried to check a GIA report online and saw a screen like this, it's because GIA's database has been hacked. Your report has an error and GIA wants to reexamine the diamond.
In early October, the Gemological Institute of America (GIA) reported that more than a thousand of its lab reports were found to have exaggerated color and clarity grades. This was a serious crisis for GIA, an internationally respected authority on diamond grading.
Investigations revealed that former employees of GIA's database support contractor had remotely accessed the system and made unauthorized changes to some reports on behalf of certain clients. GIA was able to determine exactly which reports were tampered with and has invalidated those reports. The clients who submitted the diamonds in questions are suspended from further dealings with GIA pending further investigation.
Most of the affected diamonds were submitted from India, where over 90% of the world's diamonds are cut and polished. They were submitted not by individuals but by gem manufacturers and processors, who use GIA reports to verify the quality of the gems they offer for sale. The GIA report is passed along with the gem to all subsequent buyers—gem wholesaler, jewelry manufacturer, retail jeweler, and consumer.
If the GIA report has inflated grades—as do these reports that were altered by hackers—everyone along the buying chain is cheated, especially the consumer, because they all got a lesser stone than what they paid for. And if an adjuster relies on the lab report's inflated grades, the replacement stone would be of greater value than the original and the insurer would also be cheated.
GIA's website lists the report numbers of lab reports that were altered, along with the carat weight and shape of the diamond. Owners of the diamonds are invited to send them in to be re-evaluated free of charge. GIA must receive the request by January 30, 2016. By late November, only a handful of the diamonds had been sent in to GIA for reevaluation.
The hacking was done by parties unrelated to GIA or its database consulting firm.
GIA's internal controls had flagged certain grading discrepancies, leading to the discovery of unauthorized changes on reports over the course of a year. The situation has prompted GIA to strengthen its controls and procedures for accessing its grading information database.
FOR AGENTS & UNDERWRITERS
You should still rely on GIA. It was hacked because it's the best and most respected diamond grading authority; its own internal controls discovered the problem; and the company is offering to reexamine the diamonds in question at no cost.
Always verify a lab report. Most of the GIA reports with inflated grades are still out there, but you and your client don't have to be victims.
Sometime impressive-looking appraisals and similar docs have descriptive details that were simply copied from the lab report. This may even be stated on the appraisal. The point of having two or more documents is to have two or more independent professional opinions testifying to the quality of the jewelry. The appraiser must have the training and equipment to personally examine the stones.
The best appraisals include the JISO 78/79 appraisal form, written by a trained gemologist (GG, FGA+, or equivalent) who has additional insurance appraisal training. One course offering such additional training is the Certified Insurance Appraiser™ (CIA) course of the Jewelry Insurance Appraisal Institute.
GIA is the most highly regarded authority on diamond grading. Other labs may use more flexible grading.
Whenever a lab report was used for insuring the diamond, your replacement diamond should be certified by the same lab. That is, replace a GIA-graded diamond with a GIA-graded diamond of the same qualities; replace AGS with AGS, IGI with IGI, EGL with EGL, etc. You'll find that GIA stones are more expensive, because GIA has more rigid standards, but getting a stone certified by the same lab ensures that the replacement is the same quality as the original.
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