10 Most Common NFT Scams and Techniques to Avoid Them in 2023
In Brief
NFTs have only been available for a short while, yet already there have been a number of high-profile scams involving them.
Before making an investment in any NFT, keep in mind to exercise caution and due diligence.
NFTs, or non-fungible tokens, are digital assets that are unique and cannot be replicated. They have emerged as a popular way to represent ownership of digital items such as art, music, and in-game items. While NFTs offer many benefits, they also come with some risks. This is because NFTs are often bought and sold online, which makes them susceptible to fraud and scams.
The popularity of NFTs is on the rise these days, as they allow musicians and creative individuals to sell their NFT collections for hundreds of thousands, if not millions of dollars. Even though NFTs have only been around for a few years, there have already been several high-profile scams involving them.
Here are some of the most common NFT scams.
Top 10 common NFT scams
1. Fake NFTs
There have been several instances of people selling fake or counterfeit NFTs. In some cases, the seller may not even realize that the NFT is fake. In other cases, the seller may be deliberately trying to scam people by selling counterfeit NFTs. Either way, it’s important to be cautious when buying NFTs online, as there is no guarantee that they are genuine.
2. Phishing Scams
Since NFTs are often bought and sold online, scammers have started using phishing scams to try and steal people’s NFTs. In a phishing scam, the scammer will send an email or message that looks like it’s from a legitimate NFT platform or website. The message will usually contain a link that leads to a fake website that is designed to look like the real thing. Once the victim enters their login details on the fake website, the scammer will then have access to their account and can steal their NFTs.
3. Ponzi Schemes
NFTs have also been used in Ponzi schemes, which are illegal investment schemes that promise high returns but only end up paying out to early investors with money from new investors. Ponzi schemes are often run by fraudulent companies that claim to be involved in the NFT market, but are really just looking to take people’s money.
4. Investment Scams
There have also been some scams involving people claiming to be able to help others invest in NFTs. These scammers will often promise to help their victims buy NFTs at a discounted price, or to sell their NFTs for a higher price than they paid. However, these claims are usually false, and the scammer will simply take the victim’s money without actually buying or selling any NFTs.
5. Fake NFT Auctions
Another common scam is fake NFT auctions. In these scams, the scammer will create a fake auction for an NFT that doesn’t exist. They will then encourage people to bid on the NFT, with the promise that the highest bidder will win the auction. Of course, there is no NFT to be won, and the scammer will simply keep all of the bids for themselves.
6. NFT Hacking
Since NFTs are stored on the blockchain, they are theoretically secure from hacking. However, there have been some instances of people hacking into NFT wallets and stealing people’s NFTs. This is usually done by tricking the victim into providing their private key or seed phrase. Once the hacker has access to the victim’s wallet, they can then transfer the NFTs to their own wallet.
7. Fake NFT Marketplaces
There are also some fake NFT marketplaces that have been created by scammers. These marketplaces usually look very similar to legitimate NFT platforms, but they are really just designed to steal people’s money. They will often charge high fees for listing NFTs, or they may not deliver the NFTs that people have purchased.
8. Counterfeit NFTs
Just like with physical items, there are also counterfeit NFTs. These are NFTs that have been created by copying another NFT. They are usually created by people who don’t have the permission of the original NFT creator, and they are often sold at a fraction of the price. Counterfeit NFTs are often of lower quality than the original NFT, and they may not be compatible with all NFT platforms.
9. Pump and dump schemes
In a pump and dump operation, fraudsters often disseminate false or deceptive information to spark a purchasing frenzy, “pump,” up the price of a stock, and then “dump,” sell their own shares at the elevated price, of the stock.
10. Social media impersonation
Digital identity theft takes the form of social media impersonation. With the help of personally identifiable information (name, photo, location, and background information) that has been taken from a specific person, a cybercriminal or fraudster builds a profile on a social platform.
How to avoid NFT scams
Do your research
Before you invest in any NFT, make sure to do your research. This includes reading up on the NFT and the company that is selling it. Be sure to check out reviews and see what other people are saying about the NFT and the company. If something sounds too good to be true, it probably is.
Be wary of promises of high returns
If someone is promising you that you will make a lot of money by investing in an NFT, be wary. Remember that there are no guaranteed returns when it comes to investing, and anyone who tells you otherwise is likely trying to scam you.
Don’t give away your private key or seed phrase
Your private key and seed phrase are the keys to your NFT wallet, so never give them to anyone. If you do, the person will have access to your wallet and will be able to steal your NFTs.
Use a reputable NFT marketplace
There are a lot of different NFT marketplaces, so be sure to use a reputable one. Do your research and make sure that the marketplace is legitimate before you buy or sell any NFTs.
Keep your NFTs in a secure wallet
Once you have purchased an NFT, be sure to keep it in a secure wallet. There are a variety of different wallets that you can use, so find one that suits your needs.
By following these tips, you can help to avoid becoming the victim of an NFT scam. Remember to be vigilant and do your research before investing in any NFT.
FAQs
Rug-pull, phishing, bidding, pump-and-dump schemes, and fake NFTs are some of the most common scams. Create secure passwords for your NFT accounts and turn on two-factor authentication to protect your NFT. Additionally, avoid disclosing your seed phrase and clicking on dubious links that ask for your private wallet keys.
A Google reverse search will help you learn crucial details about any NFT artwork you want to purchase, like how many variations of a picture have been circulated online, how long the image has been around, and even the date of its initial post.
Despite the fact that there is currently no formal law governing NFTs, there are still ways to hold people criminally accountable and bring them to justice, particularly for fraud, money laundering, and of course conspiracy to commit fraud and money laundering.
What steps should you take if your NFTs are stolen? For any future reports, OpenSea stated that it would wait for a police report within 7 days, indicating that any user who is the victim of the theft must file an official police report before the NFTs are made unavailable for purchase.
In most instances, non-fungible token theft falls into one of two categories (or a combination of the two): Deceptions used to deceive users into transferring money or granting access to their full cryptocurrency wallets, exploiting the current security flaws in an NFT platform or other online community.
Owning a work by Leonardo da Vinci is not precisely the same as photographing the Mona Lisa at the Louvre. In the case of NFTs for digital art, the same idea might be used. Taking a screenshot of an NFT does not grant you ownership of the work of art.
By clicking on a malicious link, disclosing your secret word, or through user error, your NFT could be taken. Technically, a hacker would need access to your wallet in order to steal your NFT; otherwise, they would just be pulled out of thin air.
In contrast to markets like OpenSea, where users can produce, buy, and trade the digital assets, lawsuits over NFTs have thus far targeted those who mint, or create, the digital assets. But if NFTs gain acceptance, those markets will probably also need to shoulder some accountability.
Most people would never consider one of the most current scams scammers are using to steal entire wallets full of NFTs, which is also why it has been so successful. The way this scam operates first seems very innocent; you log onto OpenSea and see a new NFT has been sent to your wallet.
NFTs have become extremely popular (23% of millennials in the U.S. collect them), making it simple and quick for criminal individuals to cause havoc by adding malware to an NFT.
Yes is the short response. In the same manner that cryptocurrency assets are taken from online wallets and exchanges, your assets can be hacked on an NFT. According to The Verge, an NFT, or “non-fungible token,” can theoretically hold anything digital, such as images, animated GIFs, music, or video game goods.
According to a study made public on Tuesday by Web3 security firm Immunefi, about 150 Bored Ape Yacht Club non-fungible tokens had been stolen since the blue-chip collection started in June 2021. The 143 NFTs, which have a combined value of $13,582,962, were taken from their owners using a variety of tricks and hacks.
Conclusion
NFTs are a new and exciting technology, but they have also been the target of scammers. There are a variety of different NFT scams that you should be aware of, and the best way to avoid them is to be vigilant and do your research.
If something sounds too good to be true, it probably is. So, be sure to use a reputable NFT marketplace and keep your NFTs in a secure wallet. By following these tips, you can help to ensure that you don’t become the victim of an NFT scam.
Additional NFT resources:
Disclaimer
In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.
About The Author
Damir is the team leader, product manager, and editor at Metaverse Post, covering topics such as AI/ML, AGI, LLMs, Metaverse, and Web3-related fields. His articles attract a massive audience of over a million users every month. He appears to be an expert with 10 years of experience in SEO and digital marketing. Damir has been mentioned in Mashable, Wired, Cointelegraph, The New Yorker, Inside.com, Entrepreneur, BeInCrypto, and other publications. He travels between the UAE, Turkey, Russia, and the CIS as a digital nomad. Damir earned a bachelor's degree in physics, which he believes has given him the critical thinking skills needed to be successful in the ever-changing landscape of the internet.
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Damir is the team leader, product manager, and editor at Metaverse Post, covering topics such as AI/ML, AGI, LLMs, Metaverse, and Web3-related fields. His articles attract a massive audience of over a million users every month. He appears to be an expert with 10 years of experience in SEO and digital marketing. Damir has been mentioned in Mashable, Wired, Cointelegraph, The New Yorker, Inside.com, Entrepreneur, BeInCrypto, and other publications. He travels between the UAE, Turkey, Russia, and the CIS as a digital nomad. Damir earned a bachelor's degree in physics, which he believes has given him the critical thinking skills needed to be successful in the ever-changing landscape of the internet.
