How To Avoid NFT Scams

Unfortunately, once any type of technology gains popularity, it falls into the hands of opportunistic scammers. NFTs are no exception, and in the space of a year they have gone from an unknown concept to a pet area for increasingly savvy scammers.

Common NFT scams

Now that NFTs are starting to play a key role in the dissemination of art, art collectors have become a prime target for NFT scammers hoping to sell real or fake artwork. Here are some of the most common tactics used in NFT scams:

Imposters posing as artists or NFT stores

The scammer pretends to be a famous artist or NFT store, produces digital copies of famous works of the real artist, and then sells them to unsuspecting collectors in the NFT marketplace.

By the time the artist realises he or she has been impersonated, the scammer might have made thousands. Recent high profile cases include two collectors paying 300,000 USD and 1 million USD respectively for fake copies of Banksy’s art.

Another iteration of this scam involves scammers setting up fake NFT stores imitating known NFT brands and selling fake artworks. Collectors then part with their crypto thinking they are dealing with a reputable seller.

Art collectors have become a prime target for NFT scammers

Fake giveaways or airdrops

Scammers bait victims with offers of free, in-demand NFT tokens. Unsuspecting victims give out confidential details and wallet credentials which hackers then use to gain access to their accounts. 

Phishing or fake sites

Scammers create phishing sites that look very similar to legitimate NFT sites. Next, they disseminate links to the fake sites in hopes of tricking victims into sharing confidential details and wallet credentials, such as upon registration or sign-in. They then proceed to hack into the victims’ accounts and steal their crypto.

Fake technical support

Scammers impersonate technical support staff from NFT marketplaces and trick victims into giving out their wallet credentials, which they then use to empty their crypto wallets. This trick can be used in conjunction with one of the other scams on this list, such as phishing.

Pump and dump

Scammers generate hype about a new NFT project to get hordes of people interesting in buying them. Prices spike due to the surge in interest. When that happens, the scammers quickly sell all of their holdings, pocket the cash and leave the victims holding on to worthless assets.

NFT bidding scams

When a collector tries to sell an NFT on the secondary marketplace, scammers posing as bidders surreptitiously change the preferred cryptocurrency to one that is worth less. Sellers who fail to double check the cryptocurrency end up accepting bids that are much lower that what is acceptable to them.

Watch out for scammers imitating technical support staff from NFT marketplaces

How to protect yourself from scams

Scammers’ methods are becoming increasingly sophisticated, so you should always be prepared for the unexpected. Here are some best practices to follow in order to protect yourself from scams:

Never share any confidential information

You should never, under any circumstances, share your wallet credentials with anyone, no matter whom they say they are. Legitimate staff members, even those from your wallet provider, crypto exchange provider or NFT marketplace, will never ask you for your wallet credentials.

Double-check any URLs you receive and do not click them

To avoid phishing sites, always cross-check any links with official websites, and use sites like ScamAdviser and Trend Micro Check to spot fake NFT sites.

Never click on links sent to you via email, SMS, Discord, Telegram or any other channel. If you wish to investigate a particular link, google it instead to see if you can find more information, and search for the purported source’s social media accounts.

Verify the identify of any projects, brands, sellers or entities you encounter

Identify theft is rife in the world of NFT scams, so never trust any projects, brands, sellers or other entities without first verifying their identity. Check official websites and cross-check any links and web domains.

If you are thinking of investing in an NFT project, scrutinise its history and wallet record. You should also visit the project’s social media accounts and other channels and, if possible, get in touch with other investors before parting with your crypto.

Don’t be fooled by things like graphics and branding, as they can be easy ripped off other sources by scammers.

Never send payment without validating the blockchain address

Double-check before buying and selling

Before making an auction sale or purchase, take a good, hard look at the currency to ensure it has not been changed. When selling NFTs on the secondary market, scrutinise each bid before accepting, and do not accept anything that is lower than your bottom line.

Only use official customer service channels listed on the NFT marketplace’s official website

If you need technical support from your NFT marketplace, get in touch with customer service using the contact instructions provided on the marketplace’s official website.

Beware of freebies and other offers

If it sounds too good to be true, it probably is. Never rush to enter giveaways without verifying identities and doing research. When in doubt, ignore such offers. After all, it’s better to miss out on a freebie than to risk your entire crypto account.

Never send payment without validating the blockchain address

Use a blockchain explorer like Blockchain.info to verify any addresses before you send payment to a third party, especially when it comes to new projects you are thinking of investing in.

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