Counterfeit Watches on the Web
Reprinted from National Jeweler
By Bob Bahr
Web Posted: February 24, 1999.
Appears in the March 1, 1999 issue of National Jeweler.
New York-A consumer could always go to certain areas of big cities to find counterfeit Rolexes, Omegas or Patek Philippes, but now they might be finding them by surfing the Internet and stopping at sites that auction goods.
Two of the biggest and most reputable auction sites on the World Wide Web-eBay and Yahoo! Auctions-regularly have apparently counterfeit Rolex watches among the listed items available for bidding.
Selling watches and clocks on such sites is becoming increasingly popular and accounts for a significant portion of online auction site business.
Genuine watches vastly outnumber the apparent fakes currently available on eBay, but the apparent Rolex replicas are easy to spot-and cheap to purchase. The offerings on two auction sites on one recent day ranged from a probable knockoff of a Presidential Rolex selling for $77 to a lot of eight Rolexes going for a bid of $285.
EBay has a program set up to curtail trade in counterfeit merchandise, but there's only so much the company can do within its current setup. The auction site stays out of the selling process as much as possible to avoid being legally bound to sellers. That means a seller posts what he or she wants on a page at eBay, with no filtering done by the company.
EBay makes its money through a nominal posting fee (currently between 25 cents and $2) and a follow-up fee (up to 5% of the final bidding price).
"We simply act as an avenue for trade, buying and selling items online," said a source at eBay. "We have certain rules and guidelines that we expect our users to follow. We do not want to get into more than that. It puts us into a liability role and that's not what we are supposed to be doing."
EBay does have a "Legal Buddy Program," with a staff of 24 so that manufacturers can easily monitor eBay's auctions, spot potentially counterfeit merchandise and alert eBay so the items can be removed. Customized e-mail addresses and search mechanisms are given to participating manufacturers to facilitate the process.
But companies such as Patek Philippe say the Internet is expanding too quickly for the manufacturer or its lawyers to track all the sites. Patek relies on eBay's Legal Buddy Program.
Rolex, on the other hand, decided to work with eBay but not through its Legal Buddy Program. Staff at Rolex's law firm surf the Web for counterfeit Rolexes, be they on auction sites or someone's personal Web site. The law firm contacts sellers and Internet service providers telling them to remove the counterfeit watches from the Web. EBay is essentially treated the same as others.
"They made an informal agreement with us that when we bring to attention the offering for sale of counterfeit merchandise they'll get rid of the site immediately," said Brian Brokate, an attorney with Gibney, Anthony & Flaherty, the New York firm that acts as general counsel for Rolex. "We give the seller an official cease-and-desist e-mail and send a copy to eBay, and they eliminate sites on a daily basis."
"The Buddy Program says we agree not to pursue them legally, but we believe that they are already obligated to cooperate with us to get rid of these sites," Brokate said. "That's the reason we did not sign the Buddy agreement."
Unscrupulous sellers are already scrambling to circumvent measures like the Legal Buddy Program. The seller of the aforementioned lot of eight apparently fake Rolexes, for example, included a message on the page advertising his wares that said, "This is all wholesale priced to move. Hurry before eBay cancels this." He included his e-mail address, Rolexman50@aol.com, so consumers could continue with the purchase should eBay remove the item from the site.
Watch industry figures who track the growth of counterfeit watches on the Internet say most of the fakes are coming from China. National Jeweler e-mailed one seller of Rolex replicas and asked if the watches came from China and what would happen if Rolex learned of a transaction involving a fake. The response: "No, these watches are made in the USA, and if Rolex finds out you do life in jail. Ha, ha. How will they find out?" The sellers are clearly unfazed by the fact that trafficking in counterfeit goods is a felony.
Some of the replicas are convincing. Patek Philippe gets calls from watch collectors who are fooled by the fakes and call the company to ask if they somehow missed hearing about the introduction of a new model. Recently, a knockoff Patek Philippe listed simultaneously in auctions on both Yahoo! and eBay looked good enough in photos to fool some watch industry surfers. Advertised as a "Patek Philippe Geneve Clatrava Chronograph" (the genuine watch is spelled Calatrava), the watch was selling for $177.50 and the seller boasted that "I have many available, like 10."
A traveling representative for Patek Philippe said, "The tipoff when you look at this particular dial is that we generally don't put the Calatrava cross over the name Patek Philippe. This is an interesting watch, but we could not offer a chronograph at the level of Patek Philippe quality for anywhere near this price."
A comparable watch from Patek would retail for about $27,500.
The old saying, "if it's too good to be true, it probably is" may work for the most part, but there are some great, genuine deals on the Internet. Consider the offerings of Alan France, owner of Afantiques, a business in England. Recently, France posted a watch for auction on eBay billed as a Lady's Rolex Tudor Royal. The 9-karat gold watch had an opening bid of $1, and on the last day of the weeklong auction, the high bid was $108.50. It may seem like a fake, but it isn't.
"Mine are always priced at $1 when the sale starts, but they do not finish that way, despite the lack of a reserve price because I show decent pictures, know what I am talking about, and sell them amid a mass of good and genuine things," France said.
France's advice to buyers is simple: "The more flashy the hype, and the less technical description, the more likely it is that the great bargain is a great steaming pile of crap."
The Federal Trade Commission is keeping an eye on the issue but has done little more than create a guideline about online auctions for consumers.
The FTC lists six tips for surfers:
o Try to pay by credit card.
o Ask about using an escrow agent or paying by c.o.d.
o Verify the seller.
o Ask how you'll get follow-up service if you need it.
o Avoid impulse bids and purchases.
o Ask about return policies.
"We realize that consumers might get great deals on the Internet, and they might find some interesting products there," said Laura DeMartino, an attorney with the FTC. "But they do have to be careful."
What responsibilities do the auction sites have to the consumers and the manufacturers hurt by counterfeit watches?
"It's an open legal question," said Lisa Hone, the attorney with the FTC who works with the auction sites. "We are in discussions with all of the auction houses about adopting consumer protection guidelines. We'd like to see more done, but we are pleased with what eBay's done so far."