I had lunch yesterday with the manager of a watch boutique and he shared a not uncommon occurrence in his line of business.  On several occasions, customers have brought in a watch for service and the boutique manager has had to share the bad news that the watch is a fake.  This is obviously an uncomfortable position for the boutique manager, particularly when the customer responds that he spent a considerable amount of money on the fake watch.

As we were discussing this all too frequent event, we contemplated an interesting ethical dilemma.  Assume for a moment that you receive a reasonably expensive watch as a gift, and you subsequently discover that the watch is a fake.  Do you tell the gift giver that he gave you a fake watch?  Before answering, consider the implications of both courses of action. 

If you tell the gift giver, he will be embarrassed, angry, and perhaps even subtly/subconsciously upset at you for undermining his good will.  The gift giver spent a lot of money on you, with the hope and expectation that his gift would have a big impact and be the source of enduring enjoyment and pleasure.  Do you really want to decimate these honorable intentions?  Recall the age old proverb: “Never look a gift horse in the mouth.”  The recipient of the fake watch has not lost any money, and has not been prejudiced – to the contrary, the recipient received a free watch, albeit not genuine.  Why stir the pot?  Why embarrass and upset the gift giver?  Why not allow the gift giver to continue believing that he did something very special and his gift continues to be appreciated.

On the other hand, the gift recipient now knows that the gift giver was defrauded for a substantial amount of money.  The gift giver paid many thousands of dollars for a fake watch and he may have recourse/remedies to obtain reimbursement of the cost of the watch from the original seller.  In order for the gift giver to seek reimbursement, the recipient must disclose the illegitimacy of the watch.  Doesn’t the recipient have an obligation to disclose the information to the gift giver, so that the giver can pursue reimbursement from the source of the watch?  Isn’t the giver entitled to know the truth?

The answer may depend, to some extent, on the relationship between the gift giver and the recipient.  For example, if the gift giver is a very good friend, disclosure may be the obvious choice.  However, what if the gift giver is the recipient’s boss at work?  What if the gift giver is an important client?  Mother-in-law?   

Food for thought!  I look forward to your input.

Craig