Diamonds may be forever. But the price you paid for them may not.
Millions of American consumers who bought diamond rings or other diamond jewelry could be in for a sizable rebate thanks to the pending settlement of a series of class action lawsuits that accused the giant De Beers diamond company of price-fixing and monopoly practices.
Translation: You got bling? Ka-ching!
Now, there are a few "inclusions," as they say in the diamond business. You must have purchased the diamond between 1994 and early 2006. You need a receipt or other proof of purchase price. And the amount of the rebate depends on factors such as the value of a diamond and the total number of consumers who end up filing claims under the settlement.
At the end of the day, you could get refunded 30 percent or more of the price you paid for that sparkling engagement ring.
"This is nothing but good news for consumers," said Peggy Jo Donahue, director of public affairs for Jewelers of America, a retailers association. "We know consumers love giving and receiving diamonds, and now those who have made diamond purchases in the past may have some money coming back to them."
Notices of the proposed class action settlement, which must be approved by a federal judge in New Jersey in April, began appearing in national newspapers and magazines this month. Diamond buyers have until May 19 to file a claim by visiting the www.diamondsclassaction.com Web site.
Under the settlement's terms, De Beers, the South African mining conglomerate that controls 40 percent of the world's diamond trade, has agreed to pay $295 million, which would be divided roughly in half between consumers and diamond merchants and resellers.
It doesn't matter whether your diamond came from a De Beers mine in Namibia or a competitor in Russia or Canada - in fact, no one but a forensic scientist could figure out a diamond's source.
The proposed settlement covers all diamonds, whether purchased at a jewelry store in a modest neighborhood in Chicago or in Beverly Hills, Calif. That's because the class action lawsuits alleged that De Beers, from its dominant position atop the world diamond market, conspired to fix, raise and control the prices of all diamonds - something many purchasers have long suspected.
De Beers officials point out that they are admitting no wrongdoing in agreeing to the proposed settlement, which is equivalent to roughly six months of the company's earnings.
"Look, I'm not naive," said David Prager, De Beers' director of communications in London. "I'm fully aware of the perception that a lot of people have" that De Beers controls the price of diamonds. "But the facts are that it's a very competitive industry."
Prager added: "The confidence consumers have in their diamonds is the most important thing for us. We haven't accepted the allegations, but we decided to take this step to make sure that consumers still have confidence in the value of their diamonds."
Translation: The fact that you might be due a rebate on your diamond doesn't mean you paid too much for it.
The settlement formula sets up a scale for determining the highest potential rebate a consumer could receive. For example, diamond jewelry that cost $1,000 to $5,499 would be eligible for a maximum rebate of 32 percent of the purchase price, with higher percentages for more costly diamonds and lower percentages for less expensive stones. On a $2,000 ring, that means you could get a check for $640.
These carats come with a caveat: The more people who apply for a rebate, the less each individual will receive.
That's because the consumer portion of the De Beers payout is capped at $135 million, minus up to 25 percent in fees due to the many law firms that brought the multiple class action suits between 2001 and 2004.
The figure looks even smaller when compared to the total value of the diamonds sold in the U.S. during the 12-year period covered by the settlement: about $294 billion, according to Ken Gassman, a leading diamond industry analyst in Richmond, Va.
Working through the complicated math, that means that if every eligible diamond buyer makes a claim under the settlement, the rebates would amount to about one-tenth of a cent on the dollar. Which would mean just $2 back on that $2,000 ring.
Howard Witt writes for the Chicago Tribune.
Diamond settlement primer
What's it about?
Under a proposed settlement of class action lawsuits against the De Beers diamond company, consumers who bought diamonds between Jan. 1, 1994, and March 31, 2006, can apply for rebates.
Anyone who bought diamonds or diamond jewelry in the U.S. during the covered period.
How much can I get?
Payments could range from 6 percent to 59 percent of the retail price, depending on the value and type of jewelry. For example, diamond rings priced between $1,000-$5,499 are eligible for a maximum 32 percent refund.
Where do I sign up?
Details of the settlement and online claim forms are available at www.diamondsclassaction.com
What's the catch?
The total value of the settlement is $295 million, so the more consumers who make claims, the smaller each individual rebate will be.