An Analysis of Legal and Regulatory Recourse for Deceptive Practices in the Cremation Diamond Industry

Authored by:  Robert James FGA, GG,  Global Claims Associates,  Property and Casualty Adjuster, Texas Department of Insurance #1300433

Date:  September 9, 2025

1. Executive Summary: A Briefing for Legal and Regulatory Action

The central finding of this report is that the business model of the cremation diamond industry is built upon a material and deceptive misrepresentation. The industry’s primary marketing claim—that diamonds are created from the carbon of a deceased loved one’s cremated remains—is demonstrably false. The high-temperature cremation process, as confirmed by independent scientific research and the industry’s own patent documents, consumes native human carbon, leaving virtually none in the residual ash. This deliberate misrepresentation preys on consumers at a time of profound emotional vulnerability, creating a unique and multi-faceted legal problem.

This document provides a comprehensive legal and factual basis for immediate and coordinated action by three key regulatory bodies: the Federal Trade Commission (FTC), State Attorneys General (AGs), and State Insurance Commissioners. It demonstrates how the industry’s practices fall squarely within the legal definitions of deceptive advertising and unfair trade practices under federal and state law. Furthermore, the report outlines how this deception creates a significant risk of consumer harm and the potential for a unique form of insurance fraud. The analysis concludes that ample legal authority and precedent exist to initiate investigations and enforcement actions, even in the absence of a large volume of formal consumer complaints. The recommendations herein provide a clear and actionable path forward for each agency to protect the public from these predatory practices.

2. The Nexus of Science and Law: The Foundation of a Legal Claim

 

2.1. The Factual and Scientific Basis of the Misrepresentation

The core legal argument against the cremation diamond industry is rooted in a fundamental scientific reality: the cremation process itself. Cremation is a high-temperature process designed to reduce organic matter to basic inorganic compounds. A detailed scientific study on cadaver ash confirms that the average cremation temperature of 1800°F (982°C) is sufficient to convert human carbon into gaseous forms, primarily carbon monoxide and carbon dioxide.1 This leaves no significant amount of the deceased’s original carbon in the cremated remains, which are predominantly comprised of mineral ash from bones.

Compounding this scientific reality is the industry’s own admission. A review of the U.S. Patent Application for LifeGem, one of the largest cremation diamond companies, reveals a direct acknowledgment that “conventional cremation eliminates most of the native carbon” from the body.1 This explicit statement within a technical document directly contradicts the public-facing marketing, which implies or explicitly states that the diamonds are “from” the remains of a loved one. The fundamental question that arises, therefore, is this: if human carbon is consumed during cremation, what is the actual source of the carbon used to create these diamonds? The scientific evidence indicates that the diamonds must be made from an external, generic carbon source, a fact that is not disclosed to the consumer. This crucial discrepancy between marketing and scientific fact forms the basis for a claim of material misrepresentation.1

 

2.2. Identifying the Legal Elements of Deception

The discrepancy between the industry’s marketing claims and the scientific facts fulfills the legal standards for deceptive practices. Under Section 5 of the Federal Trade Commission Act (FTC Act) and most state-level Unfair and Deceptive Acts and Practices (UDAP) laws, an act is deceptive if it meets three criteria 3:

  1. Likely to Mislead Consumers: The marketing and representations used by the cremation diamond industry are not merely exaggerations; they are direct claims about the product’s origin and composition. Phrases like “a diamond from your loved one” or “from human ashes” are designed to create a powerful, emotional connection. A reasonable consumer, seeking a unique and meaningful memorial, would interpret these statements to mean that the resulting diamond contains the unique and irreplaceable carbon of the deceased.
  2. Reasonable Consumer Interpretation: The consumer’s interpretation is entirely reasonable under the circumstances. The target audience for these products consists of grieving individuals who are seeking a way to memorialize a family member. They are emotionally vulnerable and more susceptible to marketing that promises a tangible, permanent connection to their loved one. The price point of these products, which is significantly higher than that of a standard synthetic diamond, further reinforces the belief that the unique value is tied to the unique source material.1
  3. Materiality: The misrepresentation is central to the consumer’s purchasing decision and is, therefore, material. The value of a cremation diamond is not based on its intrinsic qualities as a synthetic stone; rather, its perceived value is entirely dependent on its purported connection to the deceased. Without the remains, the product is simply a generic synthetic diamond, which lacks any sentimental significance and is far less valuable. The companies’ failure to disclose the true source of the carbon is a material omission that fundamentally alters the nature of the transaction and is designed to create a sale where none would exist if the facts were known.1 The legal standard for deception includes both misleading representations and the omission of material facts, and this practice demonstrably meets both criteria.3

A powerful legal strategy would be to leverage the absence of scientific evidence. In consumer protection law, companies must be able to substantiate their marketing claims. The FTC and State Attorneys General are not required to determine the true source of the carbon; instead, they can compel the cremation diamond companies to provide scientific evidence that their diamonds contain carbon from the cremated remains. Given the scientific reality, this is a challenge the companies cannot meet. The industry’s failure to provide such substantiation would serve as compelling evidence of deceptive marketing. This approach strategically shifts the burden of proof to the industry, making it an efficient and impactful enforcement method.

To provide a clear and organized view of how the scientific facts align with the legal elements of a deceptive advertising claim, the following table summarizes the key connections:

Factual/Scientific Finding Corresponding Legal Element of Deception
High-temperature cremation consumes native human carbon. False or misleading representation of a product’s composition.
The industry’s patent acknowledges carbon elimination during cremation. The company is aware of the scientific reality, making the public claim knowingly misleading.
The diamond is created using an external carbon source. Omission of a material fact (the true source of the carbon).
The product is sold at a premium based on a false sentimental premise. The misrepresentation is material and causes substantial financial injury to consumers.

 

3. A Multi-Pronged Legal Assault: Enforcement by FTC and State Attorneys General

3.1. Federal Authority: The Federal Trade Commission Act

The FTC possesses broad enforcement authority to protect consumers. Section 5 of the FTC Act prohibits “unfair or deceptive acts or practices in or affecting commerce”.3 The FTC’s enforcement powers allow it to challenge business conduct that “materially misleads or is likely to mislead consumers under reasonable circumstances”.6

The FTC’s authority is comprehensive and includes the power to seek injunctive relief to immediately halt deceptive practices and impose civil penalties.6 The FTC also has the ability to conduct its own administrative hearings. A significant and highly relevant precedent for this issue is the FTC’s recent action against Funeral & Cremation Group of North America, LLC, also known as Legacy Cremation Services.7 In that case, the FTC sued the company for similar predatory behavior, including misrepresenting its location and prices and exploiting consumers at a time of grief.7 This precedent demonstrates a clear mandate and a recent history of the FTC taking action against companies that engage in deceptive practices in the death care industry, effectively undermining the outdated suggestion that the agency would not act without a flood of consumer complaints.

 

3.2. State Authority: UDAP and Parens Patriae

 

Every state in the United States has its own consumer protection law, often referred to as an Unfair and Deceptive Acts and Practices (UDAP) statute or a Consumer Protection Act (CPA).8 These laws are often modeled after the FTC Act, providing State Attorneys General (AGs) with a powerful framework for consumer protection. State AGs are the primary enforcers of these laws within their jurisdictions.8

The authority of State AGs is expansive. They have the power to investigate, settle with, and litigate against violators of consumer laws on behalf of the state and its consumers.8 Remedies available to AGs under these statutes are robust and can include 8:

  • Injunctions and Cease and Desist Orders: To immediately stop the deceptive practices.8
  • Monetary Civil Penalties: To punish past misconduct and deter future violations. Some states, like Florida, authorize penalties of up to $50,000 per violation.13
  • Consumer Restitution: To recoup financial losses for consumers who were harmed.8

A coordinated, multi-state enforcement action presents a powerful and efficient legal strategy. The research indicates that AGs frequently “work together and collaborate with other enforcers”.8 Given the uniformity of state UDAP laws, an action initiated in one state would have a similar legal basis in dozens of others that have adopted the Uniform Deceptive Trade Practices Act (UDTPA).9 This enables a more impactful legal response by allowing AGs to pool resources and send a unified message to the industry. The collective force of multiple states acting in concert would be more effective than scattered, individual lawsuits in compelling a change in the industry’s practices.

 

4. The Shadow of Fraud: Implications for Insurance and Valuation

 

4.1. The Role of Insurance Commissioners

 

State Insurance Commissioners are tasked with regulating the insurance industry to ensure fair practices and prevent fraud.14 Their authority extends to the valuation of assets and the integrity of insurance policies. They have the power to enforce state insurance laws, conduct examinations of companies, and investigate potential fraud.14 The marketing and sale of cremation diamonds create a unique challenge that falls directly within their regulatory purview.

 

4.2. The Predicate for Fraud: Inflated Valuation

 

The legal issue for insurers begins with the product’s valuation. Cremation diamonds are sold at a premium price, not because of their intrinsic value as synthetic diamonds, but because of the false, sentimental premise of their origin.1 Jewelry insurance policies, whether through a homeowner’s rider or a stand-alone policy, are typically issued based on an appraised value of the item.16 An appraisal that does not account for the fact that the diamond’s source material is generic carbon is, by definition, based on a fraudulent valuation. If a consumer were to purchase insurance for a $15,000 cremation diamond that is, in reality, a synthetic diamond worth a fraction of that amount, they would be obtaining a policy under false pretenses. This creates a systemic problem for the insurance industry, as claims for lost or damaged cremation diamonds would be paid out on a fraudulently inflated value.

 

4.3. The Unwitting Participant: A New Form of Insurance Fraud

 

The most concerning legal implication is that the cremation diamond companies’ deception turns a vulnerable consumer into an unwitting participant in a felony. State laws define insurance fraud as an act where a person “willfully makes a false statement or misrepresentation of a material fact for the purpose of obtaining… any benefit or payment”.20 A consumer, believing the misrepresentation and having a fraudulent appraisal, could file a claim for a lost or damaged cremation diamond. Without knowing the truth about the diamond’s composition, the consumer would be making a false statement of material fact to their insurer, which is a specific intent crime.21

The cremation diamond company’s initial act of deception is the predicate for the consumer’s potential unwitting crime. The company’s business model creates the conditions under which a consumer could unknowingly violate state insurance fraud statutes. This legal chain of events exposes grieving families to criminal liability and harms the integrity of the insurance system. An Insurance Commissioner’s primary concern would be to protect policyholders from such schemes. A legal strategy that connects the company’s deceptive act directly to the consumer’s potential for committing fraud is a powerful way to frame the issue for this audience.

 

5. Addressing the Regulatory Barrier: Overcoming the “Lack of Complaints” Argument

 

A primary obstacle to regulatory action has been the stated lack of consumer complaints. The research includes a direct quote from a 2009 FTC attorney who said, “Without consumer complaints, there is no reason to act on this”.1 However, this viewpoint is a strategic red herring that can be overcome with a comprehensive legal argument.

First, the FTC Act and state UDAP statutes do not require a quantifiable number of complaints to initiate action.1 The legal standard is whether an act is “likely to cause substantial injury” to consumers.3 Given the emotional vulnerability of the consumer base and the significant financial harm from the misrepresentation, the likelihood of injury is inherent in the practice itself.

Second, State Attorneys General have the authority to sue on behalf of the public interest through the legal doctrine of parens patriae.8 This doctrine empowers the AG to protect the general populace from systemic harm, and its application does not depend on a backlog of individual consumer complaints.

Finally, and most importantly, the provided research material includes a much more recent FTC enforcement action against Legacy Cremation Services from 2023.7 This case is particularly relevant as it involved a company that preyed on grieving families through a variety of deceptive practices, demonstrating that the FTC is indeed willing to act in this sensitive industry. This powerful and modern precedent directly contradicts the outdated 2009 statement and proves that the “lack of complaints” is no longer a valid barrier to action. The strategic use of this recent case law turns a potential weakness in the legal argument into a strength, providing a clear path forward for consistent and timely enforcement.

 

6. Recommendations for Action

 

Based on the detailed analysis of the scientific facts, legal statutes, and regulatory precedents, the following actions are recommended for each agency:

For the Federal Trade Commission:

  • Initiate a Formal Investigation: Open a formal investigation into the cremation diamond industry.
  • Compel Substantiation: Utilize its authority to issue Civil Investigative Demands to compel companies to substantiate their marketing claims about the carbon source.
  • Seek Injunctive Relief: Pursue injunctive relief to immediately halt deceptive marketing practices and require clear, non-misleading disclosures about the true source of the diamonds.
  • Impose Penalties: Impose significant civil penalties for past violations of the FTC Act.

For State Attorneys General:

  • Launch a Coordinated Action: Initiate a coordinated, multi-state enforcement action based on their respective UDAP statutes.
  • Utilize Parens Patriae: Use parens patriae authority to sue on behalf of all consumers in the state, removing the burden of requiring individual complaints.
  • Demand Restitution: Pursue consumer restitution to recoup the financial losses of those who were deceived.
  • Seek Injunctions and Penalties: Demand injunctions and civil penalties to deter future misconduct.

For Insurance Commissioners:

  • Issue a Formal Advisory: Issue a formal advisory to all insurance carriers regarding the fraudulent valuation and potential for false claims related to cremation diamonds.
  • Mandate Appraisals: Recommend that carriers require certified appraisals from independent gemologists that explicitly verify the origin and composition of any memorialized jewelry.
  • Review Policies: Encourage a review of existing policies and claims for these products to identify and address potential fraud.

 

7. Conclusion: The Path Forward

 

The cremation diamond industry’s business model is fundamentally based on a material and emotional misrepresentation that exploits consumers at their most vulnerable time. The scientific evidence, the industry’s own documents, and the robust legal frameworks of federal and state consumer protection laws all provide a clear and compelling case for intervention. The legal tools available to the FTC, State Attorneys General, and Insurance Commissioners are more than sufficient to address this issue. A coordinated, multi-agency response is necessary to protect consumers, uphold market integrity, and ensure that deceptive practices, particularly in such a sensitive area, are not allowed to continue. The time for action is now.

Works cited

  1. Insuring and Litigating Cremation Diamonds – Southern Jewelry News, accessed September 9, 2025, https://southernjewelrynews.com/columnists/insuring-and-litigating-cremation-diamonds/
  2. Are Cremation Diamonds Real? A Scientific Investigation into the Cremation Diamond Hoax – YouTube, accessed September 9, 2025, https://www.youtube.com/watch?v=CiFtdbVDCSU
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  13. Chapter 501 Section 72 – 2024 Florida Statutes – The Florida Senate, accessed September 9, 2025, https://www.flsenate.gov/Laws/Statutes/2024/0501.72
  14. 31–4701. Valuation of reserves by Commissioner. | D.C. Law Library, accessed September 9, 2025, https://code.dccouncil.gov/us/dc/council/code/sections/31-4701
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About the Author

Robert James, G.G. (GIA), FGA, RGA
Founder, Global Claims Associates insurance services company.

Robert James is a Graduate Gemologist (Gemological Institute of America), Fellow of the Gemmological Association of Great Britain, and a Registered Gemologist Appraiser. He is the founder of the Global Claims Associates, and member of the National Association of Independent Insurance Adjusters. He founded the International School of Gemology, which has trained students worldwide in gemology, jewelry appraisal, and ethical practices in the gemstone industry.

In addition to his gemological credentials, Mr. James holds a Property & Casualty Insurance Adjuster’s license from the Texas Department of Insurance (#1300433). He has extensive experience in forensic investigations involving jewelry and consumer claims including as an expert witness and litigation consultant on high value jewelry investigations in the United States and United Kingdom. He previously worked with the Special Investigations Unit and Gem Lab for USAA in San Antonio, Texas. His work has been cited in cases related to gemstone fraud, consumer protection, and ethical standards within the jewelry industry.

He holds the Business Law Certificate from Cornell Law School and is an Associate Member of the American Bar Association. He also holds the Higher Education Teaching Certificate from Harvard University.

With over 50 years of professional experience, Mr. James brings a unique combination of gemological expertise and insurance forensics to the investigation of deceptive practices in the jewelry and memorial industries.

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