I’m sure many diamonds will be changing hands today. But what about all the money that’s been wasted in the past?

Did you know that if you bought a diamond between 1994 and 2006, you’re entitled to a refund? But as usual, the lawyers are the big winners again.

From MSN:

Buy a diamond? Get a refund

hoboken-diamonds.jpgYou may be owed a cut of a $295 million class-action settlement for gems purchased as long ago as 1994. Here’s how figure out whether you’re eligible and how to make a claim.

How would you like a little refund on that diamond nose stud you bought in your wilder days? Or the diamond engagement ring you purchased for your sweetie when you settled down?

If you bought a piece of diamond jewelry — or jewelry with a diamond in it — between Jan. 1, 1994, and March 31, 2006, you may be eligible for a refund as part of a recent settlement of a class-action lawsuit alleging that De Beers, the big South African diamond company, had cornered the market for diamonds for decades, keeping prices artificially high.

In settling, De Beers is shelling out $295 million to put the trouble behind it — $135 million of which is earmarked for consumers rather than wholesalers.

“While we don’t accept the allegations, we do believe that settling this suit is in the best interests of our clients, our shareholders and consumers,” De Beers says in a statement on its Web site.

See how to get your refund after the jump.

How refunds are calculated

Your share, if any, will be small. Everyone has to split the pot, so the size of each refund depends on how many other consumers file claims, and for how much. There could be hundreds of thousands — even a million — consumer claims, says Joseph J. Tabacco Jr., the managing partner at Berman DeValerio Pease Tabacco Burt & Pucillo in San Francisco. He’s one of the lawyers behind the lawsuit.

Theoretically, a $10,000 diamond ring is eligible for a $4,500 refund. But realistically, lots of competing claims will dilute that payout considerably. There’s no way of knowing yet how big a refund the $10,000 purchase could bring, says Tabacco.


How to make a claim

Even if the payout is diluted, who doesn’t like a bit of cash back? You have until May 19 to make your move. Here’s how to do it:

  • Go online to the settlement site to file a claim online. Or download a .pdf claim form to mail it to the address on the form, postmarked no later than May 19. Or phone 1-800-760-5431 to get a form mailed to you.
  • Contact the claims administrator if you have questions or need more help: 1-800-760-5431 or administrator@diamondsclassaction.com.
  • For purchases under $10,000, no receipt is required to make the initial claim, though you may need to produce one later. You’ll be asked to confirm on penalty of perjury that your claim is accurate.
  • For purchases of more than $10,000, include a copy of a document, not the original, showing the jewelry’s value and the diamond’s cut, clarity, color, number of carats and anything else that helps establish the purchase and price.

If you paid less than $96 for jewelry with diamonds only, or $166 for a piece that includes stones other than diamonds, your refund wouldn’t reach the $10 minimum payout, so don’t bother. And the refund covers only the diamond, not the other elements in your jewelry, such as the gold, the setting or the labor.

Claim administrators can’t yet say when refunds will be mailed out.

The big winners

The suit is one of a string of legal actions that have dogged De Beers over the years. Not long ago the company, founded in 1888 by Cecil Rhodes, controlled as much as 90% of the world’s diamond trade.

Victims of the alleged monopoly were anyone who bought diamonds at pumped-up prices, including jewelers, jewelry companies and retail buyers of polished diamonds and diamond jewelry.

The real winners of the lawsuit are — surprise!– the plaintiffs’ lawyers, says Rob Bates, senior editor at Jewelers Circular-Keystone, a diamond trade publication. “The only people who are really enriched by this are the lawyers,” who stand to collect $20 million to $30 million in fees, as Bates points out in his blog, Cutting Remarks.

“That’s kind of pathetic,” he says. “That’s just the way our legal system works. Consumers aren’t going to get a lot.”

Recently, De Beers has lost market share to new diamond-mining companies. The competition should have driven prices down, but, Bates says, with no new diamond finds and high demand from China, India and other emerging consumer nations, prices have remained high.

The settlement helps the whole industry, Bates says. “It shows that diamonds are no longer controlled by a cartel. It’s a sign of a more modern industry, that people can have greater confidence in the price.”