GIA hacking is a symptom of deeper problems in our industry

Cyber attack concept in word tag cloud isolated on black background

Cyber attack concept in word tag cloud isolated on black background

By now, most people in the jewellery industry probably know about GIA invalidating over 1000 diamond grading reports due to someone hacking into their database.  Grades were changed before the reports were printed.  This comes on the heels of other issues including more than 400 diamond reports recalled because of an undetected treatment, a client submitting diamonds with false inscriptions, and the suspension of their diamond sealing service when a sealed diamond sent in for verification did not match the original report.

GIA must be commended for being open and honest about these issues.  In each case they made public announcements and worked diligently to find, expose and seek prosecution of the culprits.  Many people are quick to blame GIA for not having an ironclad security system in place.  But we need to remember that security can only go so far.

Whether it is against cyber-attacks, airport safety, or even your store’s loss prevention systems; security is always playing catch-up to those trying to breach the defences. Anyone with enough skill and determination can by-pass virtually any security system.  Many large businesses and even highly secure government networks have been hacked.

The roots of the issues facing GIA are greed and fear.  Greed has always been a factor in problems within the jewellery industry.  Undisclosed treatments, labs with overly generous grades, synthetics passed off as real, inflated appraisals, under karated metals; the list goes on nearly forever.  In each case it is someone trying to defraud the next person in order to add more profit to the transaction.  This is why the jewellery business is perceived by consumers to be unscrupulous.

Fear will be a motivator for more fraudulent activity.  As diamond prices continue to plummet we will see more attempts to falsely recover the value of inventory bought at higher prices.  Those that try at the industry level will eventually be caught as labs and diamond bourses fortify their security and internal controls.

The biggest threat is at the retail counter where consumers have little knowledge and no access to accurate grading.    They must rely on the honesty of the person behind the counter.  This is the weakest link in the supply chain.  Most of the questionable transactions will never be discovered. But those that are found out inevitably get a lot of media attention, further eroding consumer trust on our industry as a whole.

Fortunately, most industry professionals try to operate with integrity and honour.   They understand the value of trust and strive to protect their good name.  The good ones acknowledge the fact that markets and values change and accept any losses gracefully.

However, there will always be a few that will give in to greed, fear, and desperation.  All we can do is be honourable in our own dealings and try to expose those that are willing commit fraud.

Leave a Reply