It’s a familiar story.
You go to a store, buy your engagement ring, and get your bracelet from there.
The same applies for diamonds.
And now, it seems, you might have to pay for it yourself.
That’s the story of a Canadian diamond-maker who’s been charging customers for his diamonds since 2011.
The problem, according to a lawsuit filed this month in Ontario Superior Court, is that there are so many of them, they’re causing “a severe economic burden.”
According to the lawsuit, Diamond-Savers Inc., of Ontario, was founded in 2010 and has since grown into a $1.4-billion diamond-recycling business.
Customers in Ontario pay $9.95 per diamond.
The company’s website includes a “Buy, Sell, Trade, or Trade Back” section where customers can pay $1 for every diamond they trade in.
And the “Buy” option gives buyers the option to trade diamonds they’ve bought for the company’s other diamonds, the suit alleges.
But that’s not how it works, according the lawsuit.
It’s the opposite.
“The buyer gets a percentage of the diamond, which is in the order of 1 per cent,” said lawyer David Clements.
“It’s a scam.”
He says the company is violating the Ontario Securities Commission Act, which requires companies to tell customers that they’re getting a commission when they trade.
“This company is essentially a pyramid scheme, because they charge you a commission on the sale of your diamond,” said Clements, who specializes in consumer law.
“They’re charging you a fee to buy a diamond, but they’re also paying you a percentage for the sale.”
The complaint is one of several against Diamond-Save Canada Inc., filed in Ontario this week, which the company disputes.
It also claims that the company doesn’t offer a trade-in program, because the only way to trade in a diamond is to buy it.
The lawsuit alleges that the only reason customers can trade in diamonds is to recoup the money they’ve spent on diamonds, which has been a huge problem for many diamond-retailers.
“Many diamond dealers have been forced to turn away customers, and some even have had to cut corners to make up the loss in diamond sales,” said a Diamond-savers spokesperson.
“Diamonds are not for sale, they are the property of Diamond-SAVE.”
It’s not just the diamond industry that’s suffering, however.
Diamonds have been the subject of lawsuits before.
In February, a Quebec court ruled that a Montreal diamond-sales company had defrauded customers by misrepresenting the quality of its diamonds.
The ruling was part of a lawsuit against the same company filed in the Quebec Court of Appeal.
The court found that the diamond-selling company’s sales tactics violated Quebec’s consumer protection laws.
“Although they have been accused of fraudulent conduct, the defendants have been found to be in compliance with their obligations under law,” the court said in its ruling.
“Therefore, the Quebec court finds that the defendants are not guilty of any crime.”
While Diamond-Savvy’s practice has become more brazen over the past few years, the company isn’t alone.
Earlier this year, a court in British Columbia ordered the company to pay $3.6-million to a British Columbia couple after a court heard that the business had been charging $20 to $50 for each diamond it sold.
The woman sued Diamond-savvy and the two companies, alleging that they were in breach of their duty to tell the customer if they were getting a fee for the diamond trade.
The suit was brought by the woman’s husband, who told the CBC that he lost millions when Diamond-save decided to take its business online and didn’t tell him about the trade-ins.
The case is still before the court, but if the judge decides that the charges are valid, the couple will be able to claim the money.
“I can’t believe that the law in Canada is allowing this type of business to flourish,” said the woman, who asked that her surname not be used.
“When you go into a store and buy a pair of boots, that’s what you’re going to buy, not a pair.
If I buy diamonds, I want them in good condition, not in a piece that looks like a piece of jewelry.
I’m concerned about the safety of our customers, about the environment and the economy.”
The court has yet to rule on the case, but it’s likely to rule against the companies.
“Our concern is that these companies are charging customers that are going to be willing to trade,” said Paul Moulden, president of the Canadian Diamond Council, which represents the industry.
“You’re not going to get customers if they’re not willing to pay the full price.”
Mouldens says that if Diamond- Savvy and Diamond- Save fail to comply with the law, he and other trade groups could sue them.