When a jeweler makes an exception to the store’s return policy, it comes back to bite him. How’s he going to get out of this one?

Dustin Weber had often heard his dad say that no good deed ever went unpunished. He used to write it off as the musing of a cynic, until he took over the family business five years ago and the “good deal” requests from friends began rolling in.

ABOUT REAL DEAL

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

ABOUT THE AUTHOR

Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at This email address is being protected from spambots. You need JavaScript enabled to view it..

One day, Dustin took a call from an old college buddy, Keith Nichols. He was the guy who seemed to have it all: respectable grades, a solid family and all the girlfriends he could keep up with. Keith had landed a position with his brother-in-law’s brokerage firm and Dustin was happy to hear that he was doing quite well.

Keith was calling because he’d finally met the woman of his dreams and needed a diamond. Knowing nothing about the product or the process, he said he needed both Dustin’s expertise and the best possible deal.

After several weeks, Keith settled on a 1.38-carat G, SI1 round diamond solitaire engagement ring that Dustin sold him for $9,900. Keith paid half down and financed the balance using a six-month interest-free account.

A year later, Keith called again — this time to say that he and his fiancée had split, and he had no further use for the ring. Dustin told him that while he could not refund the purchase price, he would make a “friend exception” to the store’s normal 90-day return policy and would take the diamond back for a store credit.

Six months later, Keith came into the store and told Dustin he’d met a woman while on a trip to California and had figured out quickly that she was “the one.” He left his brother-in-law’s firm on good terms and got a new job in Los Angeles where he was now living with her. He was ready to use his credit for a new diamond. He told Dustin that his soon-to-be bride wanted a lab-grown diamond — one bigger and better than the diamond he had purchased previously.

As it happened, Dustin had gotten in a selection of lab-grown diamonds on memo. He showed Keith a 2.65-carat F, VS2 stunner with a price of $19,500. Keith loved it. He wanted to use his credit for a down payment and finance the rest using a 12-month interest-free account.

When his new job and cross-country move (not to mention a higher than usual debt-to-income ratio) created some issues with his credit application, Keith brought his brother-in-law in as a co-signer.

At the recommendation of the credit company, the ring was sold to Keith with his brother-in-law as the primary account holder and Keith as the second. Dustin made it abundantly clear that this time it would not be returnable under any circumstances.

Fast-forward to last week, 10 months after the sale, Dustin received a package in the mail. It bore no return address and contained the engagement ring he’d sold to Keith along with a note:

“Dustin — as you might guess, it didn’t work out again. I left LA and left my job, and I’m not interested in being found right now. I made a few payments on this thing, but now my brother-in-law is on the hook for the rest. Please help him out. Thanks — Keith.”

He hadn’t yet spoken to Dan, but said that he would lay the groundwork and was confident that Dan would be amenable to the idea. Nancy agreed to contact Dan the next day to discuss a plan.

That same afternoon, he got a call from Keith’s brother-in-law, explaining that Keith had vanished several months ago after the breakup, and asking what they could work out with regard to the ring.

The Big Questions

1. Dustin has the ring (his cost was just under $10,000), but the price of lab-grown diamonds has dropped significantly since he got that first shipment over a year ago. Keith’s brother-in-law is on the hook for $7,500 in remaining payments but has no interest in owning the ring. Keith is the owner of record, since his name is on the receipt. What should Dustin do?

Expanded Retailer Responses

Lou T.
Cleveland, OH

Advise the brother-in-law that he unfortunately is responsible for the remaining balance on the ring. If law permits, tell the brother-in-law that you will accept the ring to sell on consignment. After all fees, you will deduct that amount from the $7,500 that is owed. With some luck, Keith will have given up ownership of the ring, the brother-in-law will be able to consign it and Dustin will be able to get back the monies due.


Ira K.
Tallahassee, FL

Dustin should reiterate the nonrefundable aspect of the sale as he explained to Keith, then lower the balance somewhat — not down to cost — and offer to put the ring on consignment in the brother-in-law’s name and hope for the best.


Stacey H.
Chicago, IL

Dustin should seek the help of an attorney and stick to his original policy every time in the future. Maybe the ring can be put in the case and sold at a distressed price after some period of time?


Sandra L.
Vulcan, Alberta, Canada

Well, it’s pretty clear here in Canada that the co-signer is on the hook for the balance. I would call the credit finance company to get involved as they’re the ones who financed the ring. They will need to make a determination as to what the next steps are legally.


Marcus M.
Midland, TX

At this point, Dustin needs to look after number one: himself. Hold the brother-inlaw responsible because after all, the main name on the credit app is his. I would work a deal out with the brother-in-law but only after he paid off the ring. Maybe offer to sell it for him on consignment and take a low percentage fee on the sale or give him a list of companies to sell the ring to.


Shevvy B.
Louisville, KY

Dustin is under no obligation to take the ring back. The money is still owed to him; however, he can put the ring in the store on consignment and any money received for it  will be credited to the debt. Whatever the balance is must be paid. He told the client that there was a no-return policy and this time should stick to it.


David O.
Gettysburgh, PA

Sounds like the client has never been told “no”, except from the girls he tried to marry! Dustin should give the ring to the brother-in-law, as he is the rightful owner and legally responsible for payment.


Daniel S.
Cambridge, MA

This is not Dustin's problem. The brother in law co signed the note. It's his responsibility. Dustin should offer a credit for whatever would be reasonable given the drop in prices for only the diamond and a scrap credit on the ring to the brother in law. If the brother in law doesn't want it then Dustin should ship the ring to the brother in law and forget about it. It's really not his problem anymore. We're not revolving doors for when relationships don't work out. And it was the credit company too that took on the risk not Dustin. If the brother-in-law doesn't pay them, let them deal with it.


Russ H.
Stamford, CT

The answer in hindsight was simple: A fine jewelry store never traffics in anything synthetic or "lab grown" — period. There is no such thing as lab grown diamonds in our book, just worthless lab grown carbon. Had this jeweler held the line on only selling "the real deal" he would at least have a natural diamond at a quantifiable price back for resale. Beyond that, this might still be an opportunity to convert the wealthy and responsible brother-in-law into a client for life by having a true heartfelt dialog as to how this synthetic piece of crap is now unwanted on his desk and with the best of intentions, they're both harmed by his old chum's actions and try to work out a fair 50% store credit, then WOW him with a level of care and customer service he's unaccustomed to. Moral of the story for all of us: Drive these "Lab Grown" criminals out of the business the way we dealt with conflict stones!


Rick G.
Cadillac, MI

Time to cut your losses, fortunately with mark up on second deal not much real cash tied up, losses mainly in time and trust. Big profits maybe clouded decision making on extending credit to a poor risk. Situation where more often than not things don't have happy ending.


Sandra S.
Saint Paul, MN

Keep the diamond, keep the money, forgive the $7,500.


Patrick F.
Chicago, IL

There is something wrong with this whole story as it sounds completely fabricated and is actually being used to put a negative impression and connotation on "lab grown" diamonds — that being that lab grown diamonds have gone down in value. As a matter of fact just the opposite is true, lab grown diamonds are more popular now than a year ago and prices have remained stable. I know this as fact because I have been buying and selling them to consumers for over a year now. They are flying off the shelf, sort of speaking! The author of this story should be ashamed of themselves and should make the correction in the story. To put such a negative statement/connotation about lab grown diamonds in the story is 100% unfair and unjust.

This article originally appeared in the January 2017 edition of INSTORE.