Last year the Tourism Authority of Thailand (TAT) received more than 400 complaints from tourist about over – priced, low quality gems and jewelry they say they were tricked into purchasing in Bangkok. That’s in addition to more than 1,000 complaints filed at the Commerce Ministry and Office of Consumer Protection by tourist who in some cases were charged 200-300 times the true market value of gem and jewelry items. No one knows how many such cases go unreported.

            The problem of well-organized gem and jewelry scams has grown into a major threat into the credibility of the Thai gem and jewelry industry. TAT attempted into crack down on the tourist rip offs by issuing a quality emblem for companies which passed its screening committee. Unfortunately, some of these shops proved unscrupulous as well and TAT realized that it lacked the expertise to validate a shop’s honesty or prices.

            Now TAT has asked the Thai Gem and Jewelry Association of Thailand to join in the battle against the rip-off artists. The result is the emblem issued by the association certifying the credibility of gem and jewelry shop.

            “Formerly, the association was only interested in exports, but now it has come to consider retail problems because these problems can destroy the image of Thailand,” said Seree Wangpaichitr, deputy governor of TAT.

            As an additional measure, Mr. Seree would like to distribute pamphlets warning of gem and jewelry scams to all foreign tourists arriving at the Bangkok airport. However, the thought of shoppers being greeted upon their arrival to the “land of smiles” by such a pamphlet has brought frowns to the faces of many retailers.

            “Right now I’m negotiating with the jewelry association to see whether the association can take the matter into their consideration and possibly control the situation themselves by selecting reliable shops to be their members,” Mr. Seree said. “The best way [to reduce jewelry scams] is to have the private sector control their own business and take care of their members.”

            Mr. Seree said that if the association can come up with a reliable way to protect tourists from gem and jewelry con artists then TAT will support the association’s efforts.

            A typical gem scam targets young Western backpackers or other budget travelers who are sold on the notion that they can buy loose sapphires in Thailand for way below the market price, then sell them when they return home for three or four times what they paid, thus covering the cost of their holiday.

            The tourists are typically approached by English-speaking Thais who claim to be doctors, nurses, lawyers or teachers but are actually con artists. The con artists concentrate on Bangkok tourist spots such as Khao San Rd, Wat Po and the Grand Palace. To establish a trusting rapport, the Thai shows the tourist various sites in Bangkok and offers then food and drink. Sometimes a drug is slipped into the drink which makes the tourists feel congenial and more susceptible to trickery.

            Once the tourists believe they have found a reliable new friend the tout uses one of many excuses to lure them into a gemstone or jewelry shop. “Haven’t you heard on the radio that there’s a government sales promotion on precious stones with over 25 percent off?” is one frequently used line. “Today is the King’s birthday, so there is no tax on top of a special bargain,” is another line.

            Once the beguiled guests, who have probably heard before that Bangkok has an excellent selection of top quality gemstones at reasonable process, are in the showroom, the pressure is on. Professional sales people offer the tourist a drink, demonstrate how stones are cut and how to distinguish between genuine and fake stones. The salespeople the offer some genuine stones for sale and try to convince the tourists that they can pay for their holiday or extend their holiday by reselling the stones at two to three times their purchase price.

            Mack sales may sometimes be conducted by the touts who bring the tourists to the shop. They may purchase a lot for their “relative” only to return it later in the day.

            To overcome any doubts the tourists may have at this point, the salesperson show receipts from other sales, and provide addresses of companies around the world which they say will buy the stones. An official looking “Certificate of Guarantee” comes with the stones offered for sale and is stamped with this promise:”Unreal Items are Refundable.”

            The sure-sell line is that if the buyer cannot sell at two to three times the purchase price, he or she can get a full refund at any Thai embassy since the company is government supported.

            In one complaint letter to TAT a tourist wrote: “Apparently the new Thai government, lacking in sufficient foreign funds to send the students and the army officers abroad, was offering to sell these stones to help pay for their travels.”

            Another disgruntled Australian tourist wrote: “While in Thailand recently on holiday my friends and I were persuaded by a Mr. Paul Suksan of Phayathai Gems to invest in five sapphires, which he and the company guaranteed were valued at B74,000 (US$3,000). These prices were claimed by the company to be duty and tax free due to a “special government incentive program.” The gem were posted by the Phayathai Gems Center back to Sydney, where I collected them upon my return. A subsequent valuation of the stones, made by [an appraisal service] in Sydney, placed their value at B8,752 (US$350). This is the most disgraceful and fraudulent example of criminal business practice that o have ever seen.”

            After purchase, the salesperson inevitably offers to mail the pieces to the tourist’s home address, which makes receiving full or partial refund virtually impossible.

            If the tourist changes his or her mind before leaving Thailand and returns to the store for a full refund, the shop owner points to the “no refund” printed on the sale receipt. Since on paper nothing illegal has occurred, only many verbal deceits, retrieving a full refund is nearly impossible. However, a partial refund after lengthy negotiations involving the tourist, TAT and the tourist police is possible.

            Another common method for ripping off tourists is through cheap package tourists, especially with Taiwanese visitors. Some tour agencies sponsored by such jewelry shops offer Taiwanese a tour package costing only US$6-7 per day. The tourists are taken on bus tours which involve frequent stops at jewelry shops which specialize in overcharging tourists and will not even permit a Thai shopper to enter the door.

            Since these tourists primarily buy the jewelry for personal use or for gifts and not for resell, they rarely have the items appraised when they return home, Mr. Seree said. As a result, TAT has difficult time keeping track of how many scams such as these are operating in Bangkok.

            As the problem grows and the complaints pile up at TAR headquarters, TAT and the tourist police have found it difficult to close down such shops since they never sell fake gemstones, only poor quality genuine ones. “It’s free enterprise if it’s not fake,” Mr. Seree said.

            In the past, Mr. Seree ad the tourist police tried to help tourists gain refunds but they usually could only collect 60 to 80 percent of what the tourists paid, and the tourists must return the items. The unscrupulous retailers kept 20 to 40 percent off the sale and then resold the merchandise to another victim the following day.

            TAT attempted to put such retailers out of businesses by forwarding complaints to the Revenue Department, thus ensuring that the tax department has a record of the outlandish prices charged and could ask to check the store’s accounts. Mr. Seree also attempted to crack down on such shops by forwarding complaints to the Ministry of Registry which can cancel a company’s registration permit.

            When such companies are closed down, however, they simply move and re-open under a new name, Mr. Seree said.

            TAT also reports shops to America Express which has cooperated and refused to allow such companies to accept American Express credit cards. The shop owners easily dodge this barrier, however, by persuading their customers to use their credit cards to withdraw cash from banks.

            So far, TAT and the tourist police have only been able to harass such companies without making much of a dent in their lucrative business. With the help of the Thai Gem and Jewelry Traders Association, Mr. Seree hopes that such gem and jewelry scam artists can finally be eradicated.