The explosive growth of NFTs presents a plethora of opportunities for investors as well as, regrettably, con artists.
NFTs, or non-fungible tokens, have been extremely popular over the past few years, with NFT artwork now fetching millions of dollars. However, when a sector grows to this size, it’s only natural for con artists to prey on unsuspecting customers.
What are the most typical NFT scams, and how can you avoid falling victim to them? Find out now.
Table of Contents
1. Bidding Scams in NFT Collection
Common NFT frauds include bid-rigging, which is done mostly on the secondary market to drive up prices. Bidders switch their preferred currency to a low-value currency when NFTs are listed for selling.
The altering of the coin turns out to be the NFT collection’s biggest grievance because a change in the worth of the currency could result in losses for investors.
Without a doubt, bid scams are simple to avoid as well as to recognize. For that, you must constantly check the mentioned currency and avoid accepting bids that are below your limits.
2. Social Media Impersonation
The official Larva Labs Twitter page is depicted in the image above. However, con artists frequently duplicate well-known NFT accounts to produce false pages that seem just like genuine ones. Scammers can sell fake NFT artwork to people on these bogus accounts by convincing them of their genuineness. In essence, it’s just another way for them to profit by passing off bogus artwork as real.
These fraudulent social media profiles may even run fake contests, putting unaware people at serious risk. That will be covered a little later.
Firstly, it’s crucial to look for a verification checkmark next to the username in order to avoid these phony accounts. The absence of this tick isn’t always a dead giveaway, either, as not all legitimate NFT social media profiles have it. Instagram is plagued with NFT frauds as well, so be on the lookout for shady messages and profiles.
Additionally, you should perform a fast Google search for the NFT creator’s social media profiles to see if there are any accounts with the same name but significantly more followers. This page may turn out to be the real one. To determine if they relate to other social media, you may also look at the other accounts of that particular NFT creator.
You might encounter fraudulent NFT artist accounts in addition to fake NFT corporation accounts. Scammers will pose as well-known NFT artists and attempt to trick people into purchasing fake replicas of well-known NFT artworks at much-reduced costs.
If the price looks too good to be true, it probably is, as was said in the first scam on this list. So beware of NFTs that are being sold at drastically reduced prices when they ought to be much higher.
3. Customer Support Impersonation
Scammers frequently use fake customer care pages for legitimate NFTs to obtain private information from unaware NFT owners.
On Discord, where many NFT project communities are housed, this is rather typical. Scammers may ask you for private information, such as your private key or seed phrase, in order to “repair” whatever issue you may be experiencing if you connect to one of these phony customer service servers rather than the real one.
If this is a concern for you, think about how you typically access NFT Discord servers. Try finding a server via the NFT creator’s official website or social media first rather than just searching for it on Google or Discord.
If you are unable to access the server in this manner, you should also look at the number of followers the server has, as it is improbable that a false server would have thousands of followers. On the other hand, you’re more likely to run into NFT frauds right away if you join a real-looking but phony NFT Discord server.
4. Fake NFT Stores
Scammers frequently construct fake NFT stores by copying well-known NFT markets like OpenSea. Even an experienced NFT buyer can be duped by these websites, which often seem almost identical to the originals, into shelling out a lot of money for a bogus piece of art that has no real value.
How can you prevent falling for this skilled type of scam?
First and foremost, it’s crucial to investigate the NFT you’re interested in. NFTs that typically sell for hundreds of thousands of dollars may often be listed for a fraction of that amount on scam websites. For instance, Ape #4935, an NFT from the collection of the Bored Ape Yacht Club, is currently available on Opensea for $124,188. However, a fraudster will offer a duplicate of this NFT for a much lesser price, luring buyers looking to acquire an Ape NFT without spending a fortune.
If you are unaware of an NFT’s true value, you risk thinking you are getting a great deal when you are actually spending several hundred dollars on a false piece of art.
Additionally, be aware that fraudulent NFT stores will welcome unauthorized purchasers. Larger vendors will get a blue verification checkmark next to their usernames on official marketplaces, similar to what you’d see on Instagram or Twitter.
Therefore, if you’re considering purchasing a more expensive NFT, be sure the seller is reputable first. Additionally, you can look for the particular characteristics of the NFT you’re interested in. Real NFTs will have properties displayed, whereas fake NFTs won’t.
Last but not least, be sure to look up the contract address of your preferred NFT. This will reveal the location of the mint. A phony NFT store can display the wrong minting address, whereas a real one would display the right minting location. Therefore, make sure to verify whether the contract addresses correspond to the official website of the NFT’s creators.
5. Giveaway Scams
When talking about NFT scams on social media earlier, we made a passing reference to this. Users can be duped into thinking they’ve won largely by participating in phony NFT giveaways hosted by fake NFT social media accounts and Discord servers. NFT fraud can also be found on Twitter.
In this specific fraud, individuals would receive messages from a phony NFT account, typically on Twitter or Discord, informing them that they have won an NFT. The user will then receive a link from this false NFT account to a fake NFT website, where they will be prompted to connect their cryptocurrency wallet and enter their seed phrase or private key.
In essence, if a scammer manages to obtain this phrase or key, it’s game over because it will grant them instant access to your wallet, where they can siphon off your money and leave you with nothing.
Therefore, even if it may seem apparent, avoid clicking on any random links that are shared with you on social media. Additionally, confirm the legitimacy of the account that sent you the message.
Check to see if the URL corresponds to the one for the official website of the NFT company if you really, really want to click on the link. Avoid clicking on it if it seems strange because you’re likely about to visit a phishing website.
6. Investor Scams
After investors invested a ton of cash into the developing NFT project “Evolved Apes,” the project’s unknown developer jumped ship with $2.7 million, or 798 Ether.
People who claimed to have won Evolved Apes NFT artworks in a contest held on the project’s social media platforms never got their promised rewards. In the end, everything was really a massive marketing ploy to gather money for potential rug-pull fraud.
It’s crucial to keep this kind of scam in mind while investing in anything in the crypto industry, even though the majority of individuals opt to purchase NFTs rather than directly funding emerging projects. It’s important to educate yourself on the risks of investing because ponzi scams and rug-pulls are not unheard of in the sector.
Therefore, do your homework on the firm or developer before you decide to invest in anything, whether it be a specific crypto coin, NFT, or something similar, to ensure that you are not rushing into something with no reputation. You might wind yourself saving a significant sum of money.
The number and variety of modern scams that you can fall for are somewhat frightening. Every other week, cybercriminals come up with new schemes to deceive people as they get more and more creative. But if you remain cautious and knowledgeable about the various scams that exist and how to spot them, you’ll undoubtedly keep yourself safe when exploring the fascinating world of NFTs.