Don’t Be Duped by Fake JISO Appraisal
We keep recommending the insurance industry’s JISO appraisal forms for jewelry. Can you recognize a JISO appraisal?
A leading U.S. insurer called us about a claim they were working. They asked us to verify the authenticity of a jewelry appraisal — apparently written on a JISO 78 form. They also asked us to verify that the appraiser was a Certified Insurance Appraiser™ (CIA), as claimed, and that the jewelry store existed.
We’re not sure what made the adjuster suspicious, but we immediately recognized the appraisal as a fake. This is what their appraisal looked like:
Fake JISO Appraisal, front & back
(click to see enlargement)
Here’s how JISO 78 really looks:
JISO 78 form, front & back
(click to see the actual form - PDF will open in a new window)
The fake is a cut-and-paste patchwork of a real JISO 78 form.
After seeing the appraisal, we were not at all surprised to find that the jewelry store and phone number did not exist, though they were similar to those of an existing store. No one with the appraiser’s name had ever taken the CIA course, and it’s most likely the appraiser’s name is as bogus as the store’s name. And you know what that means for the appraisal’s descriptive content and valuation.
Some Questions
The case suggests several possibly scenarios. The policyholder claimed to have purchased the ring on Craig’s List. So we might ask:
- Was the buyer snookered into overpaying, because the value was supported by a fake appraisal created by the seller?
The very existence of such sites makes fraud easy. Internet sites such as eBay and Craig’s List basically allow anonymous sellers to pass goods to anonymous buyers. A fictitious business or anonymous individual has no reputation to protect. A naïve buyer could accept the “official-looking” appraisal as genuine, assume the store is real, and never have the jewelry reappraised to verify its value.
In the September 2007 issue we discussed in some detail the dangers of purchasing jewelry online and of trusting appraisals and certificates that accompany such jewelry. If the buyer overpays, will there be a “convenient loss” down the line?
Another scenario:
- Did the policyholder herself create the fake appraisal, basing it on the insurance industry’s JISO standard specifically to defraud the insurer?
And even:
- Since the appraisal is so obviously a patchwork, and there is no photo with the appraisal, did the jewelry even exist?
This is an instance of using the insurance industry’s own standards to commit insurance fraud. In recent months, a Certified Insurance Appraiser was found to be using his credential to write appraisals at 3 times the jewelry’s value — an egregious violation of the CIA Code of Ethics. In that case, JIAI voided the jeweler’s CIA credential.
So one last question might be:
- Is this an isolated case, or are counterfeit JISO appraisals the next scam?
This is a real question. We’d like to know what’s out there, so we can tell our readers what to watch out for. If you have encountered suspicious jewelry appraisals, contact JCRS. We’ll do our best to investigate and let you know the results.
FOR AGENTS & UNDERWRITERS
For expensive jewelry, say $25,000 or more, be absolutely sure you have a legitimate appraisal. Some steps to take in verifying an appraisal:
- Call the jeweler’s phone number.
- Check whether there’s a jeweler/appraiser at that address.
- Be sure the owner’s name is on the appraisal (not “walk-in” as in the case above, and not the previous owner’s name, but the name of the person applying for insurance).
- Check with the GIA to verify that the appraiser is a Graduate Gemologist. Go to this page
- For a JISO appraisal, check with JIAI to verify that the appraiser is a CIA™.
- For expensive jewelry, always have a second appraisal, preferably on JISO 78/79, by a Graduate Gemologist who is also a CIA.
For less expensive jewelry it would not be cost effective to do such a thorough verification, but you might spot-check appraisals that you receive. Perhaps 1 in 50 or 100.
Always check that the photo matches the appraisal description, the sales receipt and the diamond report. That is, be sure all documents are talking about the same piece of jewelry.
FOR ADJUSTERS
If you suspect a bogus appraisal, follow the same steps outlined above for verifying an appraisal.
Your job always is easier if you are dealing with a JISO 78/79 Jewelry Appraisal, or JISO 806 Jewelry Document for Insurance Purposes, or JISO 805 Sales Receipt, since they will give complete information in a standardized format.
If one of the above is not available, use JISO 18 to analyze data from the documents you have. This is especially helpful if you're faced with a "narrative" appraisal. JISO 18 allows you to order the information from other documents in a useful way and see what details may be missing.
If you’re in doubt about the legitimacy of a JISO appraisal, be sure to compare it with the form found at one of the above links. You may also want to consult a Jewelry Insurance Agent.
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