Unmasking the Deception in High-End Watch Market: A Digital Opposition Against Counterfeit Production
In the world of luxury watches, high value, portability, and ease of transport have made them attractive targets for crime. The booming pre-owned watch market, driven by demand and limited supply, is a key driver of theft and fraud in the watch industry.
To combat this, recording and verifying a watch's serial number has proven to be a crucial weapon. Every modern wristwatch is inscribed with a unique serial or edition number, allowing each watch to be identified. This number is essential for fighting watch crime and fraud, as it can help prevent paying out for a watch that has been reported stolen or claimed by another insurer.
Insurers can detect problems such as fictitious losses, defective title, counterfeit items, and multiple insurance claims for the same item by running systematic checks on all watch serial numbers at the underwriting stage. The global lost and stolen database further facilitates recovery and offers opportunities for fraud detection.
The COVID-19 pandemic has shifted watch theft modus operandi from robbery to online fraud, as jewelers closed and streets became deserted. Online fraud in the watch market has taken various forms, including elaborate refund scams, use of counterfeit watches, cryptocurrency scams, customer-not-present transactions, and fraudulent finance applications.
Online tools and AI-generated documentation contribute to the fertile ground for fraud in the watch market. The market is awash with fake watch paperwork, including blank watch guarantee cards and genuine watch paperwork sold online. It's estimated that the production of replica watches is twice the volume of genuine watches manufactured each year, with 10% of the fake watches produced each year being so convincing as to be effectively undetectable as counterfeits.
The Watch Register, a global database, holds records of stolen watches dating back to the 1970s and 1980s, with thefts reported from various countries worldwide. In the second quarter of 2020, the number of watch theft incidents reported to The Watch Register dropped by 40% compared to the same period in 2019. Recovery operations for lost or stolen watches have identified that 10% of overall cases are linked to suspected or proven fraud, with the true figure expected to be much higher.
Economic pressures and easy access to new technologies have contributed to a rise in opportunistic insurance fraud, with luxury watches becoming an asset of choice. Luxury watches have also become a currency for criminals and an effective medium for transporting illicit funds globally. Rolex watches, for instance, were particularly targeted in London street robberies in the 1990s.
However, no specific insurers have been identified in the past years as conducting non-serial number-based security checks for luxury watches, according to available information. This underscores the importance of implementing robust serial number checks to combat watch crime and fraud.
Despite the challenges, there is hope. Five lost and stolen watches are currently located by The Watch Register database every working day, with 75% of all recoveries for the benefit of insurers. The fight against watch crime and fraud is ongoing, and with the help of technology and a global network, progress is being made.
