Luxury Briefing: The Rolex she bought was fake — is she owed the appreciated value?

The lack of papers made her a bit leery, but she took it to a Rolex store to get the strap resized and no one at the store said a word about it. A few days later, Covid-19 hit and the watch went mostly unworn for the next three years.

Then in September of 2023, the watch stopped. She took it to a different Rolex store and was told servicing the watch could take four to six weeks. But to her surprise, she received an email only a few hours later saying the watch was ready to pick up. The price for servicing it, which she was expecting to be over $1,000, was listed as $0. The rep from the Rolex store said the watch couldn’t be serviced because it contained aftermarket parts.

“I could tell by the look on her face that it was a fake,” Elizabeth said. She brought the watch back to The RealReal where an authenticator confirmed that it was a superfake, one of the many watches flooding the market that are such high-quality facsimiles of the real thing that even the brands themselves can be fooled, as was the case when Elizabeth brought her watch to Rolex the first time.

The RealReal agreed to refund her the $9,295 she paid for the watch, but there was a hitch. When Elizabeth brought the watch to Rolex, the company’s initial assessment was that the watch had appreciated by several thousand dollars in the years since she bought it. The exact same watch now sells on both the resale market and through Rolex for nearly $15,000.

“If I want to replace that watch, whether I buy it new or from another secondhand source, no matter what, I lost a $5,000 investment,” Elizabeth said. On top of that, the $9,295 that Elizabeth is getting back today isn’t worth as much as the $9,295 she spent three years ago, thanks to inflation. Anyway you cut it, she suffered a financial loss.

Elizabeth’s predicament reveals an interesting quirk of the booming luxury resale market. Consignment platforms like The RealReal, Rebag and Fashionphile have encouraged customers to think of their watches and handbags as financial investments, ones that can store value and appreciate the same way that investments like fine art do. It’s a selling point to the whole model. These platforms already take authentication seriously, but when customers are buying things with the expectation that they’ll be able to sell them in the future and make — or, at least, not lose — money, the stakes are higher.

And the investment angle is one that resale companies do explicitly emphasize. Numerous luxury resellers have told Glossy for years that consumers thinking of their luxury products as financial assets that can be bought, appreciate and sold down the line is a benefit of the model. That extends to initiatives like Rebag Infinity, where customers are guaranteed at least a 70% return on any items they resell within six months, and eBay’s Terapeak, which lets customers see the historic prices for pieces they buy so they can predict if it’s a good financial investment in the long run.

Elizabeth said The RealReal has offered to refund her for the rest of the appreciated value in store credit. It’s more than The RealReal is obligated to do and Elizabeth said she appreciates the effort the company has gone to to remedy the situation.

“Obviously, I would rather get it as cash,” Elizabeth said. “I’m starting from scratch, and I’m honestly turned off by the whole idea of buying secondhand again. Now if I want to use this money for another watch, if I even end up doing that, I have to do it through them.”

Most of the major luxury resale companies have clauses in their terms and conditions for when products can be returned. Usually, companies like Rebag will accept a return for any reason within a period of seven days. Often, companies like The RealReal will offer to reauthenticate any product at any time. When reached for comment, a rep for Fashionphile said the company has a lifetime return policy for items proven to be counterfeit and will refund the full price. Neither Rebag nor The RealReal responded to a request for comment.

Resellers know that counterfeits are a bad look for their credibility. There’s been a slew of efforts to beef up authentication processes across companies like Ebay, Fashionphile and StockX. These efforts range from opening new authentication centers and working with new authentication tools including AI. Both Fashionphile and eBay have started to work automated authentication tools into their process. EBay even went as far as to buy 3PM Shield, an AI-powered authentication startup, in February.

The ability to accurately authenticate luxury goods by resale platforms has been challenged by the brands themselves, as Chanel has done to The RealReal. But, as Elizabeth’s story shows, even the brands can be fooled sometimes.

Rania Sedhom, a lawyer with Sedhom Law Group who specializes in working with fashion companies, said resale platforms aren’t obligated to refund any excess value beyond what the buyer originally paid for the product.”

She noted that The RealReal, along with many other online resellers, specifically state in their terms of service that they are not liable for any damages including loss of profits.

But for Elizabeth, the experience of not just losing out on $5,000 of appreciated value but also missing out on three years of sentimental value to the watch has turned her off resale, at least for a while.

“The trust has been degraded,” she said. “The next time I get a luxury watch or Cartier jewelry or something, I’ll just go and buy it from the brand. I’ve lost all trust in the secondhand market and the discounts aren’t even worth it anymore.”