Alternative Investments: Be on the watch for fakes

There has been a huge increase in the number of people being duped into buying fake watches

• The Watch Register1 has seen a 116% increase in the number of checks or registrations of luxury watches which reveal they are fakes
• 10% of all checks on The Watch Register database flagged the item being checked as a fake watch
• One in 10 fake watches can only be identified by specialist authentication

 
Analysis of The Watch Register’s database,2 which holds £1.5 billion worth of lost and stolen watches, reveals over the last three years there has been a 116% increase in the number of counterfeit watches identified as a result of checks against the database.

The Watch Register team uses serial number checks to identify fakes which are being offered on the open market by collecting known counterfeit serial numbers from international police forces, insurers, members of the pre-owned watch trade, auction houses and from other proprietary sources.

Genuine luxury watches each have a unique serial number but this would be a costly process to replicate on fakes, so it is common for the same serial number to be seen repeated on many different counterfeit watches.

While members of the public may see buying a knock-off watch at a fraction of the cost of the genuine article as a bit of harmless fun this is most definitely not the case, as there are many dark and criminal elements interwoven in the trade in counterfeit luxury watches.

The intricate networks involved in the production, distribution and sale of fake luxury watches operate across international borders and are deeply entwined with international crime networks, fuelling a vast underworld economy, exploiting forced and child labour as well as providing funding for other criminal activities ranging from drug smuggling to human trafficking.

Although these fake products are produced to closely mimic the appearance of genuine luxury watches they also come with serious health risks attached due to the use of unregulated, toxic and harmful materials used to produce them.

Over the last few years sophisticated counterfeiters have mastered the art of visually replicating brand logos, serial numbers and packaging.

Unfortunately, many of these counterfeit products will eventually find their way into the second-hand watch market. The Watch Register team routinely discovers them being passed off to unwitting buyers as legitimate luxury time pieces. Increasingly these watches are also being offered with faked documents, boxes and guarantee cards all designed to further mislead and deceive consumers and making it increasingly challenging for authorities to distinguish between real and fake watches.

Last year alone 10% of The Watch Register database’s alerts to its customers were to flag that the watch they were checking was a known fake, rather than a lost or stolen genuine luxury watch.

Ten per cent of the 40 million fake watches estimated to be produced each year3 are now deemed almost undetectable as counterfeits, unless inspected by a professional authenticator or the manufacturer for servicing.

Research4 from The Watch Register reveals that owners of fake watches have purchased their counterfeit timepiece from a range of sources, including the most popular source of street markets (38%). The next most popular source was online marketplaces (35%), followed by jewellers (27%) and friends (25%).

Katya Hills, Managing Director at The Watch Register commented: “Counterfeiting is an area of watch crime that is of increasing concern and one that is growing in sophistication. The trade in fake watches is not just about creating knockoff products, it is about deception and manipulation on a global scale. Counterfeit watches are often produced in sweatshops that exploit vulnerable workers. Additionally, the profits

generated from such activities are often funnelled into other criminal enterprises that help to perpetuate a cycle of crime and corruption, while undermining the high-end brands they are seeking to imitate.

“As the fakes get better and better, the ability to search for known counterfeit serial numbers on The Watch Register database is a vital first step in preventing some of these fakes being traded as the real thing. Any trader or private buyer who wants to check the legitimacy of a watch they are planning to buy can run the serial number through our database. If a potential fake status is flagged then they can use this to challenge the authenticity and provenance of the item.”

The Watch Register database is a simple way to check if there is a known issue with any watch offered for sale or loan. This comes against increased regulation and compliance requirements for the pawnbroking industry, so this additional due diligence measure helps to demonstrate fit and proper business culture. THE WATCH REGISTER theft checks have been adopted by two of the UK’s largest pawnbroker chains to identify lost and stolen property.

The Watch Register actively searches for lost and stolen watches on the global pre-owned market until they are recovered. The database is used by watch dealers, jewellers, pawnbrokers and auction houses to identify stolen watches prior to transactions. From the moment a stolen watch is located, The Watch Register’s specialist recoveries team steps in to secure the watch and facilitate a recovery for the rightful owner. The Watch Register finds four lost and stolen watches per day on average. 50% of watches it finds are located within a year of the theft and 35% within six months. One third of the stolen watches located by The Watch Register database are offered with box and papers, many of which are fake, therefore buyers should not assume that the presence of paperwork indicates legitimacy of ownership.
 
Analysis of The Watch Register’s own database of the actual percentage increase over the last 12 months in the number of checks on a watch’s serial number that revealed a counterfeit item.

Adrian Hailwood, founder of The Watch Scholar and an expert in watch authentication.

The Watch Register commissioned independent research agency Viewsbank to interview 1121 UK consumers, of which 247 currently own or have previously owned a luxury watch between 14th July and 17th July 2023