Wrong Item received, higher value, uglier item

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alibaba

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I need some advice on this topic.

I purchased a watch on the internet. The watch I received was not the watch i ordered, but was worth twice as much.

I didn't hear from the company and figured the watch was either sent as a substitution (since the one I ordered was now sold out) or that they didn't care, whatever.

They contacted me about 20 days later stating that they made a mistake and they wanted the watch back. I stated that I gave it as a gift and it would be impossible to get back.

They responded stating that they put the originally ordered watch in the mail to me and I should be receiving it, and if I didn't return the mistake watch, they would charge me 4K.

What is the legal position? I am an individual, they are a merchant (not ebay). Online transaction, over $500.

Do I have to get the watch back, what if it has been used? What if I don't want to return it? What if I no longer want the original watch (e.g. I purchased it somewhere else)?
 
what about the original issue? Do they have the right to charge me for something I didn't order 20 days after they made the mistake. I already paid for what I ordered. That's the charge that was authorized. Your argument is like saying best buy can charge you anytime they want since you used a card to buy a tv a year ago.
 
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