NFTs are digital assets that refer to their uniqueness and irreplaceable values. So many people love to buy and sell NFTs using other cryptocurrencies. Today the market of NFT has reached over $40 billion, and it is likely to grow even more in the future.
However, as the demand for these digital assets is growing rapidly, many scammers are taking advantage of this and performing fraudulent activities. Due to the rose in NFT popularity and public interest in NFTs, the rate of scams has also increased.
That is why, to help you out, we have compiled this guide to explain what kinds of NFT scams exist and how to avoid such scams. It will help you to protect yourself from NFT scams. Read on to know everything about the same.
How do NFTs scams work?
An NFT scam usually works when the scammers steal the NFT from your crypto wallet by deceiving you. Those unaware of such scams end up selling their NFTs to websites and creators involved in such frauds. Many NFTs scams have been taking place over the past few years.
They attach a monetary value to your NFTs and then use them to hack your wallets using phishing emails or other ways. In this way, the hacker breaks your crypto account and access to your NFT wallet, from where they steal your NFTs quite easily.
Are NFT scams common?
If you observe the records of last year, then you will be shocked to see how investors have witnessed so much loss due to NFT scams. That is why it is essential to learn about cybercriminals’ risks, and it will help you protect your NFT tokens and yourself from fraudulent activities. However, let’s review some of the past year’s statistics to give you a brief idea.
- Frosties’ NFT investors lose $1.3 million when trying to buy 8,888 NFTs.
- An NFT collector Todd Karmer suffered a $2.2 million loss because of the phishing mail they received in 2021.
- Another story of Fractal, who has witnessed a loss of $150k in cryptocurrency through the fake NFT giveaway held in 2021.
These statistics show you that NFT scams are pretty common, and that is why you need to take precautionary measures to ensure that you can protect yourself and your NFTs from frauds and NFT scams.
Top 10 NFTs scam that you can encounter
No doubt, NFTs are becoming quite popular, and there is no surprise in it. But as the popularity of NFTs increases, you can encounter some common risks. That is why; here is the list of those common NFT scams you can witness. If something like this happens to you, you should avoid it.
1. Fake NFT websites
Today, you will find several NFT websites that are fake. Even people have received threatening messages from these websites about their NFTs and cryptocurrency. Professional scammers often replicate the NFT websites that are popular and the marketplaces. After which, they trick the users, and the user ends up compromising their account details and other credentials.
And these scammers know how to trick the NFT owner; they use the highest level of the tool, which makes it difficult for a user to figure out whether the website is original or counterfeit. Due to this, so many NFT owners have to end up losing millions because of these scams.
That is why to ensure that you do not fall for the NFT scams, always verify the URL of the NFT marketplace before you log in to the website or share any information.
2. Fake NFT offers
Often NFT scammers pose the legitimate trading platforms and send the users emails related to fake offers of their NFTs. The main motive of sending these emails is to make the user click on the link in the mail, which ultimately leads you to fake NFTs, leading you to become the victim of scams.
Once you enter your credentials and access the account, scammers can use the keylogging or other spyware to record all your information and use it later to steal the NFTs. That is why, to avoid such scams, verify the sender address of the NFT trading platform emails you have received.
3. NFT giveaways
NFT giveaways are the most legitimate way to fool NFT users and scam them. Several scammers pose as an NFT trading platform and promote the NFT giveaway campaign on social media. These scammers provide alluring offers and gifts that grab the attraction of people. They often spread the message, which makes NFT users sign up on their websites.
When you log on to the site, your credentials are hacked by scammers. NFTs can be easily accessed, and the information can be stolen. Thus to avoid such scams, verify the social media page and ensure that the NFT URL matches the link sent to you.
4. Social media impersonations
Social media impersonations are one of the ways by which the NFT scammers trick the users. They use a high level of detail as the original NFT marketplace. This cybercriminal convinces the NFT user to sell NFTs on these social media about their originality and credibility.
Due to this, there are thousands of people who have become a victim of NFT scams. However, to avoid such kinds of scams, make sure that you check the blue tick on the seller profile, and it will identify the seller’s identity and help you avoid being a part of the fraud and NFT scams.
5. Customer support impersonations
Most of the time, NFT users have several questions running in their minds, and they post them on the seller’s profile. From which the scammers carry out the question and use them to convince you about their websites. For example, they will provide you with evitable answers and solve your queries.
You will start trusting them and share your information, wallet credentials, and passwords. This way, they can easily access your NFTs and scam your profile. However, to avoid such scams, you must go to the telegram server with the NFT creator webpage or social media account, which will tell whether the website is genuine.
6. Fake NFT projects
As an NFT user, you might know the importance of NFT projects and how they can make you earn enough money. Due to this, lots of user tries to purchase NFT projects. This is being taken advantage of by scammers. They are launching fake projects, and users unintentionally buy that projects, becoming a victim of fraud.
When the NFT doesn’t offer them the results they were expecting, they realize that they have paid a hefty amount for a project that is not even worthy. Thus, to avoid such cases, look at the blockchain explorer and rug the detection tools that will highlight the accuracy of the project.
7. Counterfeit or plagiarized NFTs
It is essential to learn that minting an NFT will not offer you the owner or make it a new piece; they turn your digital file into something that can be stored on the blockchain. The scammer uses the minting to trick NFT users who often believe in buying unique NFTs. Once they get the plagiarized NFTs of someone, they create the account on the trading platform and ask for high bids.
In some instances, the assets are not worthy, but because of fraud, you pay to double its cost. However, to avoid such kinds of scams, make sure that you do check the blue tick verification on the social media profile or seller, and it will tell you about the genuine credibility of the seller.
8. Bidding scams
Bidding scams often take place when you are trying to sell NFTs. When the interested buyer outs the highest bid, the scammers switch out the cryptocurrency, and in this way, you will think the entire time that you are using less value.
In that way, instead of getting a high amount of 10 ETH, you receive 15 USD. Thus, to avoid such scams, you must go through the sites and figure out the currency used during the transaction. You should never accept bids that are low than usual.
9. Investor scams
Investor scams are pretty common in NFTs. This is because; people often remain anonymous when they deal with cryptocurrency. Scammers often use this to their advantage. They create a project that seems worthy and disappear when the funds are collected.
In such a way, the scammer can earn millions from the investments a buyer makes. However, to avoid such scams, it is better to sell your NFTs or purchase NFTs from a verifiable user.
10. Pump and dump schemes
Several experienced NFT scammers use pump and dump schemes to drive up the prices of NFTs. Although these prices are fake, the NFT users often fall for them and lose their NFTs and other credentials.
That is why; make sure you do not fall for such schemes. And to avoid such scams, go through the history of NFTs. If there are plenty of transactions with the same date, then it indicates pump and dump schemes.
How to avoid NFT scams?
As the demand for NFTs is going rapidly, the chances of scams are evitable. Today, everyone knows the importance of NFTs and their popularity over the past few decades. These digital assets can be used in different ways, such as by purchasing online from platforms that accept NFTs, which also means that you risk NFT scams.
Here are some ways to consider reducing the risk of fraud or eliminating it in that situation. So have a look so that you can protect yourself from NFTs scams.
- Never click on any links that sound suspicious
If you receive a link or attachments, including your NFTs, don’t open them until you are sure who the senders are. Often the hackers send phishing emails to the NFT user. In such a situation, if you open the mail and click on the link provided, your entire Metamask wallet or other wallet information will be leaked to the hacker.
In that way, they can misuse your NFTs, and this causes you a significant loss. That is why; it is advised not to click on any of the links offered by the unknown sender. It will protect you from NFT scams, and your credentials will remain safe within you.
- Create a strong password
When you add your wallet to the NFT marketplace, then make sure you create a password for your NFT accounts and wallets. This way, it will become quite difficult for a hacker to crack your password and access your information on the NFT wallet.
These passwords protect you from NFTs scams and cyber criminals who can steal digital assets from the most vulnerable owners. So if you do not want to be on that list, ensure you protect your account with strong passwords.
- Go for two-factor authentication.
If you activate two-factor authentications on your NFTs accounts and wallets, it will become impossible for a scammer to keep hands on your digital assets. They protect your account and make it invisible to hackers.
Besides, the fingerprint scanners and facial reorganization make it quite difficult for the hacker to replicate your identity. No matter how professional the hacker is, there are still no chances that they can access your account after two-factor authentication.
- Always cross-check the NFT’s price.
Before you purchase the NFTs, it is essential to cross-check the price of NFTs. You can do it with the help of NFT official marketplace like OpenSea, Axie marketplace, or mintable. In this way, it will become quite easy for you to figure that the prices you are paying for NFTs are worthy and real.
Besides, if the prices appear on this marketplace are much lower than reflected on the list of trading sites, then for sure, it is a scam. Don’t go for it; ultimately, you will lose your NFTs and credentials.
- Verify the NFT seller account
If you want to purchase NFTs, you will have plenty of seller options. But some of them can be fake as well. That is why verifying the NFT seller account is essential, ensuring that the NFT seller is real.
Besides, most of the NFT creators and sellers have accounts on social media platforms, so you can visit their profiles to figure out their real identity and whether they have a blue tick on their social media profiles or not. If yes, you can purchase from the seller without any hesitation. On the other side, if the seller is not verified, look for the seller who has a blue tick instead of going for someone who is not verified.
- Never share your recovery phase or seed
Just like your other credentials and passwords, ensure you do not share your seed or recovery phase with anyone, no matter how close they are. You may lose your NFTs and other cryptos stored in the wallet. If you don’t want to take the risk, then regularly update your account with a new password.
Also read In-demand Skills in the NFT Space with High Income Potential
The final verdict!!
Obviously, as the NFT trend continues, so do the scams that go along with them. That is why you need to learn what kind of scams or frauds you can encounter as an NFT user and what you should do to purchase and trade on NFTs safely. In this world of cheating, you should stay alert and use some tips and tricks that will help you protect your digital assets and all your credentials. And to help you out, this guide is a must.