On Saturday, 19th February 2022, an NFT scam done through a Phishing attack on the world’s largest NFT exchange, Opensea, resulted in the loss of over 250 NFTs worth about $2 million. This kind of news gets investors apprehensive. NFT scams are a menace to look out for constantly to avoid falling victim.
Scams are ubiquitous on the internet, with different scams used to target its various sectors. Evidently—with the sales of NFTs skyrocketing in the past couple of years, NFT scams targeted specifically towards them were only a matter of when not if.
Are NFTs a scam? No! However, NFT scams form a significant part of blockchain scams that have bedeviled the blockchain.
How do NFT scams work?
NFT scams occur through different formats, targeting and exploiting the rare loopholes on the blockchain. Some target security lapses from users, some focus on target high-value NFTs while some create bogus NFTs, pump and dump worthless arts, etc. The list is extensive.
Common NFT scams (and how to avoid them)
NFT scams, like many other scams on the internet, prey on the naivety of blockchain users. While some scammers are a tad smart, some exploit opportunities. Nevertheless, they are preventable, and it starts with the right information.
Phishing scams and suspicious pop-ups / Fake NFT websites
NFT scams that occur through email supposedly from reliable sources but are cloned or similarly worded email addresses. They mostly contain harmful links or false information. The email may imitate NFT marketplaces or collections with suspicious links.
They are avoidable by verifying the sender’s email addresses, carefully reading the content of the mail, and avoiding clicking on links. NFT marketplaces or collections most likely won’t send emails with links out of the blue unless the user took an action that would warrant such.
Catfishing and fake personas / Social media impersonation
This type of NFT scam involves impersonating someone of high authority in the field. The perpetrator tries to influence others into taking actions beneficial to them.
Avoid this by verifying every profile; chances are, the hints are there. Also, check the person’s history on the platform. While the blue tick is an authenticity stamp, not all legitimate profiles have them. So, verifying an identity goes beyond the blue tick to their history, interaction, and community.
Pump-and-dump scams are a popular type of blockchain scam involving pumping the value of a token or NFT or a collection with false transactions. The aim is for the proprietor of the pump to sell once the value increases exponentially, leaving others in the lurch.
There is a reason why the first rule of blockchain investment is the famous “Do your own research, (DYOR). Do not take this lightly—research extensively before investing in any token or NFT. There are many ways to do this, using different metrics available on the internet.
Fake bidding accounts join the bidding process during secondary NFT sales and swap out their currency for a less valuable one, keeping the same number. Scammers do this with the hope that the seller won’t notice.
This scam preys on lack of attention to detail, always crosscheck the currency of the bidder after every bid to be sure. You can also set a fixed-price sale to avoid this scam if the chances are high.
Counterfeit or plagiarized NFTs
Scammers create knock-offs of popular or high-value NFTs to sell to unsuspecting collectors. It’s pretty easy to fall to the appeal of a freshly minted NFT due to FOMO. However, new doesn’t mean original or certify potential.
Always check the seller’s profile for a verification tick, and link to the community on Twitter and Discord.
Untrustworthy storage sites
Storage sites provide facilities for storing minted NFTs, hence their importance to the NFT space. On the contrary, fake storage sites will make your NFTs disappear faster than other scams.
Research the history behind the storage site, the creators, and the user’s to be sure. Always check the URL, domain name and extension, and other things that verify a site’s credibility.
Fake NFT offers
This NFT scam often occurs through phishing links sent to emails or pop-ups. Clicking on the link will take the person to a fake NFT offer page. Because these scammers put so much effort into them, the signs are not always clear, so NFT collectors may fall prey easily.
Avoid clicking on any suspicious links anywhere on the internet.
NFT giveaways/airdrop scams
Scammers do fake giveaways or airdrops to access a participant’s wallet, and they clear the content after.
If you must participate in giveaways, create a new wallet dedicated solely to them, verify the socials of the proprietors or abstain totally.
Customer support impersonation
Twitter and Discord are the two most important social media platforms for NFTs. Scammers are aware of this, and they use the opportunity to pose as customer support channels to collectors who have questions on there. They use this opportunity to gain access to vital information by asking questions that could trigger the release of such.
The best way to connect on social media with any NFT creator or collection is through their official website or verified accounts on NFT marketplaces.
Fake NFT projects (rug pull scams)
With millions of NFTs existing on the blockchain, many have little or non-existent resale value. They offer no actual utility, just arts and nothing else. They may not necessarily be fake but poorly planned and lazily thought-out projects with no investment value.
Thankfully, blockchain explorer helps filter these projects using rug pull detection tools.
How to avoid NFT scams
- Never click on suspicious links or attachments
- Create strong passwords
- Enable two-factor authentication
- Verify NFT seller accounts
- Never share your seed/recovery phrase