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Gate.io Blog NFTs，A New Window of Opportunity for Digital Scammers，Learn How to Avoid NFT Scams

NFTs，A New Window of Opportunity for Digital Scammers，Learn How to Avoid NFT Scams

01 March 12:08

NFT is a booming market that sells millions of dollars of digital content. Unfortunately, there is also a growing controversy associated with the industry. Malicious actors are taking advantage of NFTs to launch online scams, with three notable artists already falling victim to their scheme.

Cryptocurrency enthusiasts are likely familiar with NFTs, which are non-fungible tokens. An NFT acts as a digital certification that signifies ownership of the original version of a viral video, meme, art or multimedia content. More recently, NFTs have been sold for profit and royalties.

Keep in mind that in order to join the NFT market, artworks must be "minted" or placed on the blockchain. Unfortunately, users who mint an object do not need to be identified as the owner of the artwork. Anyone can create art online, and as a result, scams have become commonplace.

The popularity of NFTs, or non-fungible symbols, has increased in recent years, with NFT artworks currently selling for millions. Yet when an industry reaches such a large size, it's only natural that fraudsters will try to get the best of unknowing buyers.

So what are the most typical NFT scams, and how can you avoid them? Let's find out.

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Fake NFT stores

Often, scammers very closely replicate favorite NFT areas, such as OpenSea, to create fake NFT stores. These websites can look almost identical to the originals and can also fool even an experienced NFT buyer into investing large sums of money in a phony piece of art that is worth absolutely nothing.

So how do you avoid falling for this kind of scam?

First of all, it is essential to research the NFT you are interested in. On many scam sites, NFTs that are usually worth thousands of dollars are sold at a fraction of their value.

For example, the NFT known as ApeGang #4510 is currently valued at 10 ETH, or about $39,428.10, on the official OpenSea website. Nevertheless, on a fraudulent site, you can see it valued for a part of 1 ETH.

If you are not sure of the real value of this NFT, you may be led to believe that you are getting a good deal, when in fact you will be spending a few hundred dollars on a fake piece of art.

Also, keep in mind that fake NFT stores will certainly retain unverified customers. In the main stores, the biggest sellers will have a blue confirmation check mark next to their username, just like those you would see on Instagram or Twitter.

So, if you're thinking about getting a more expensive NFT, check that the seller is verified first. In addition to that, you can check the unique properties of the NFT you are interested in. Fake NFTs will not have any type of residential properties listed, unlike real NFTs.

Lastly, make sure to examine the contractual address of the NFT you have chosen. This will certainly let you know where it was minted. A fake NFT store may display an inaccurate minting address, while a legitimate store will show precisely where it was produced. So be sure to examine the official developer site of the NFT you are interested in, to see if the contract addresses match.

Identity theft on social networks

Scammers often copy accounts, creating fake pages that look very similar to the originals.

On these fake accounts, scammers can convince users of their legitimacy, and thus sell them fake NFT art. This is essentially another way to pass off fake art for profit.

These fake social media accounts can also host fake gifts, which can pose a huge risk to users who are unaware. We'll get to that a little later.

In order to avoid these fake accounts, it is first important to check for a verification checkmark next to the username. However, not all legitimate NFT social media pages have this checkmark, so its absence is not always a red flag.

You should also do a quick Google search of the NFT creator's social media pages to see if there are other accounts under a similar name with many more followers, as this could be the legitimate page. You can also check the other accounts of this specific NFT creator to see if they are linked to other social media.

In addition to fake NFT business accounts, you may also come across fake NFT artist accounts. Scammers pose as established NFT artists and try to sell users fake versions of well-known NFT works at significantly lower prices.

As mentioned in the first scam on this list, if the price seems too good to be true, it probably is. So beware of extreme discounts on NFTs that should cost much more.

Customer service impersonation

Scammers can often forge legitimate NFT customer service pages to leak sensitive information from unwitting NFT owners.

This is quite common on Discord. If you happen to connect to one of these fake customer service servers instead of the official one, the scammers may ask you for sensitive information in order to "fix" any problem you may have.

If you're concerned about this, first think about how you're accessing these Discord servers. Instead of just Googling a particular server or searching for it on Discord, try accessing it via the NFT creator's official website or social media first. You should also check the number of subscribers of the server if you can't access it this way, as it's unlikely that a fake server has thousands of subscribers.

Scams By Investestors

Eventually, after the scammers convinced the victims with their fake identity and fake online store, they would proceed to steal the money. Some of these scammers may contact the victims to "fix" the problems encountered with the faulty NFT product. Others will offer discounts or deals on the special NFT. During this process, they may ask for sensitive information and payment fees.

If the interactions become suspicious, try to contact the artist or the official website on the social media page. Never give out personal information or other sensitive data unless the other party is proven legitimate.

The confidential programmer of an emerging NFT job called "Evolved Apes" walked away with $2.7 million, or 798 ether, after investors poured large amounts of money directly into the task.

People who were also told they had won Evolved Apes NFT artworks in a contest via the work's social media also never got the prizes they were promised. In the end, it was a substantial advertising and marketing scheme to raise money for a potential rug raffle.

While most people choose to obtain NFTs rather than invest in future tasks, it is essential to keep in mind this type of scam when investing in anything in the crypto world. Ponzi schemes as well as rug pulls are virtually unheard of in the industry, and also it is worthwhile to learn about the investment threats on your own.

So, before you decide to buy anything, be it a certain crypto-currency, NFT or similar, do your research on the company or developer and also make sure that you are not diving into something without any reliability. This could end up saving you a lot of money.

Gift Fraud

Earlier we referred to it when we talked about NFT scams on social networks. Fake NFT accounts on social networks and Discord servers can host fake contests and thus make users think they have won big.

In this scam, a fake NFT account sends a message to users, usually on Twitter or Discord, announcing that they have won an NFT. This fake NFT account then gives the user a link to a fake NFT website, which asks them to connect their cryptocurrency wallet and enter their passphrase.

Essentially, if a scammer gets a hold of this passphrase, that's it. That phrase, or password, will give him immediate access to your wallet, where he can empty your funds and leave you with nothing. And since you can never change your passphrase, you won't even have a chance to change it before the scammer logs in.

It may be a little obvious, but don't click on random links sent to social networks. Also, check the account that sent you the message to see if it's legitimate.

And if you really, really want to click on the link, check to see if the URL matches the official NFT company website. If it looks unusual, avoid it, because you're probably about to click on a phishing site.

THE NFT MARKET IS FILLED WITH SCAMMERS, BUT IT' S POSSIBLE TO AVOID THEM

It's a little scary to think about how many different scams you can fall victim to these days. Cybercriminals are getting more and more innovative and are coming up with new ways to scam people every single day.

But if you stay alert and you are aware of the existing scams and how to recognize them, you will definitely be safe when you dive into the amazing world of NFTs.

Author: Gate.io Researcher: Aziz. H
* This article represents only the views of the researcher and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.