Table of Contents – Click any heading to be taken to that section
Introduction
NFTs or non-fungible tokens are digital assets that verify ownership and authenticity of unique items like digital art, music, videos and other collectibles. They use blockchain technology to create provable scarcity, ownership and proof of ownership. Their popularity has been on the rise as they provide a new way for creators to monetize their digital content and offer a completely new mechanism for collectors to store and display their assets.
It’s heartbreaking to hear stories of artists falling victim to NFT scams. I was gutted today after reading 67 screenshots of an artists conversation with an NFT scammer who wanted to buy his artwork as NFTs on a specific NFT trading website she recommended. No doubt, her Facebook account was a fake account and the website NFT trading platform was fake, too. I provide additional details further on in the article.
It’s crucial to be aware of the possibility of NFT scams and to take the necessary precautions to protect your personal information and your digital assets. The importance of staying vigilant and educated in this arena cannot be overstated as one fraudulent mistake can be devastating, causing financial and emotional damage and may even tarnish the reputation of an artist. By being aware and cautious, creators can avoid pitfalls and better share and profit from their work.
How the Scam Works
There are different types of NFT scams such as phishing websites, fake sales, bidding bots and fake NFT trading platforms, where scammers use various tactics to trick individuals into depositing cryptocurrency or giving away their personal details. We will delve into these various NFT scams to help you avoid being defrauded.
Phishing Websites
Phishing websites are another prevalent type of NFT scam where fraudsters create fake NFT trading platforms designed to look like legitimate ones. They then send out phishing emails or messages to unsuspecting artists, collectors, or traders, urging them to visit the fake website and enter sensitive information such as their cryptocurrency wallet address, credit card details or login credentials. The victims are then directed to a fake login or payment page that is set up to look genuine, where their information is collected and used for fraudulent purposes, such as identity theft. Phishing websites often look identical to real trading platforms, so it’s important to always ensure that you are on the official website and not clicking suspicious links or responding to unsolicited messages. Always confirm the credibility of the website and the sender before sharing any sensitive information.
Fake Sales
Fake sales are another type of NFT scam whereby fraudsters create copies of genuine digital art and then offer them at a much lower price to lure unsuspecting buyers. They accomplish this by manipulating the metadata associated with the digital art and then reselling it. For example, they may copy an NFT from a legitimate marketplace, change the metadata, and put the fake NFT up for sale at a much lower price on a different platform. When buyers purchase these fake NFTs, they are left with a worthless file that is not recognized by the original NFT holders, ultimately resulting in a significant financial loss. The best way to avoid falling for this type of scam is to always verify the authenticity of the NFT before making a purchase. It is imperative to verify the NFT ID codes and metadata and ensure that they match with the relevant marketplace or original owner.
Bidding Bots
Bidding bots are a common type of NFT scam where fraudsters use automated software to place fake bids on a piece of digital art, artificially driving up its price. They do this in order to trick genuine buyers into believing that the digital asset is highly sought after. Once the unsuspecting buyer places a legitimate bid, the scammer withdraws their fake bids, leaving the buyer with an overpriced digital art piece. This type of scam can be particularly convincing as it gives the appearance of a competitive and active market. It’s important for buyers and artists alike to do their due diligence when purchasing or selling digital assets, avoiding any red flags or anomalous behaviours like rapidly escalating bids or unsolicited recommendations.
How scammers will pose as legitimate NFT traders or collectors
Another NFT scam that artists must be wary of is the NFT trader or collector scam, where scammers pose as legitimate traders or collectors who want to buy an artist’s artwork as NFTs. These scammers will lure the artists to fake NFT trading platforms, claiming that it is the best platform for trading digital assets like NFTs. Once the artist deposits their Ethereum or other cryptocurrency into the platform as payment, the scammers disappear with the deposit and the artist is left empty-handed. Sometimes, the scammers may even ask for an additional deposit to promote the artwork on the fake website. It’s important for artists to be cautious of such scams and to research the NFT trading platforms they use, checking for any warning signs like a lack of transaction history or poor user reviews. When in doubt, it’s always better to err on the side of caution and choose a verified and reputable NFT trading platform.
An Artist’s Experience with NFT traders or collectors
I was contacted by an artist who wanted to use our platform to warn other artists of a popular NFT scam whereby a fake person social media account contacted them either on a comment or via messenger. In this case, they were contacted via messenger.
It starts with the optimistic and hopeful promise that this art collector is interested in buying one or more of the artists artworks. In this case, the NFT art collector wanted to buy three pieces for $7,000. The artist, unaware and not savvy about NFT buying and selling was enticed to pursue the conversation in hopes of securing the sale.
Once hooked, the NFT art collector advised him that she buys her NFTs from a specific NFT trading website platform. She said, “All you need to do is create your NFT account and then fund your NFT account with a gas fee which will enable you to mint and upload your artworks as NFT.” Artists who have not delved into the NFT marketplace, haven’t a clue what any of this means and end up asking questions that gives the fraudster the opportunity to lead them deeper into the scam. This situation with this artist resulted in him creating an account on the fake NFT trading website platform, funding his account there with $300 in Ethereum cryptocurrency, and then still not being able to make his NFT artwork available without depositing an additional $1,000 in Ethereum for marketing approval by the website trading platform.
Naturally, by this time, he became suspicious and solicited the NFT art collector to help him fund the $1,000 out of the $7,000 she was going to pay for the NFT artworks. Of course, she did not want to do that and the tone and intensity of the messenger conversation becomes desperate for the artist being conned. Trying to contact customer support on the NFT trading website platform never received any reply and when he tried to withdraw his $300 deposit from his wallet on that website, he discovered he was unable to. The NFT scammer was $300 richer and could very easily have been $1,300 richer.
It can happen to anyone
NFT scams can happen to anyone, including experienced artists, collectors, and traders. Scammers are becoming increasingly sophisticated in their methods and are able to deceive even the most cautious individuals. They employ a range of tactics to gain the trust of individuals, such as imitating legitimate artists or crypto traders and manufacturing fake NFT trading platforms that look very real and authentic. They can also be very persuasive and convincing, making it hard for victims to recognize that they are being defrauded. Moreover, with the increasing popularity of NFTs, more people are entering into the space without taking the time to research the potential risks, which makes them more vulnerable to these types of scams.
Signs to Look out for
Red flags to watch out for with comment and messenger invitations
There are several red flags that you should watch out for when receiving NFT offers through comment and messenger invitations. Firstly, be wary of unsolicited messages from people you don’t know or aren’t familiar with, particularly if they are requesting that you sell your artwork as NFTs on their recommended NFT trading platform. Another red flag is when they offer quick and easy transactions and promise huge profits in a short amount of time. Additionally, never give out personal information or cryptocurrency without verifying the legitimacy of the individual and platform. Always research the platform in question, check their transaction history and look for any warning signs such as poor user reviews or no history. Be cautious of unrealistic returns and guaranteed profits as things that sound too good to be true often are. Ultimately, it’s important to trust your instincts and keep a keen eye out for any signs that an NFT offer may be fraudulent.
Victims may not recognize these signs at first
Unfortunately, victims may not recognize the warning signs when approached via comment or messenger invitations, making them more vulnerable to fraud. Scammers are becoming increasingly sophisticated in their methods and can use a wide range of approaches to gain the victim’s trust and access to their digital assets. Victims could be duped into depositing their cryptocurrency or simply sharing personal information that scammers can use for identity theft or other malicious purposes. Bottom line is really that old saying being true…if it sounds too good to be true, it probably is.
Tips to ensure that people are safe while engaging with NFT offers online
Here are some tips to ensure that people are safe while engaging with NFT offers online:
- Perform a background check: Do thorough research on the individual and the NFT trading platform involved. Look for reviews and ratings on the platform, look up social media profiles, read up on recent news articles, etc.
- Verify all requests: Double-check every request you receive to ensure that it’s genuine before taking any action. Avoid clicking on suspicious links or giving out personal information.
- Be cautious of unsolicited offers: Beware of unsolicited offers that seem too good to be true, especially when they are offering quick and easy transactions or promising huge profits.
- Use reputable NFT trading platforms: Only trade NFTs on reputable and legitimate NFT trading platforms. These platforms have a track record of providing secure and reliable services.
- Avoid making impulsive decisions: Don’t make rash decisions or act on impulse. Take time to think carefully before committing funds or agreeing to transactions.
- Use two-factor authentication: Enable two-factor authentication whenever possible as an extra security measure.
By taking these precautions, individuals can ensure that they are engaging safely with NFT offers online and minimize the risk of falling victim to fraudulent activities.
What to Do if Scammed
Despite taking every precaution, it’s possible to become a victim of an NFT scam. For those who have fallen prey to these fraudulent schemes, the experience can be traumatic, causing both financial and emotional distress. While it is imperative to remain vigilant and avoid making impulsive decisions, it’s equally essential to know what to do if you have become a victim of an NFT scam. In this section, we discuss what to do if you’ve fallen victim to an NFT scam, detailing the steps you need to take to minimize the damage and recover lost funds or assets.
Steps to take if falling victim to an NFT scam
If you have fallen victim to an NFT scam, it’s essential to take quick action to minimize the damage and recover any lost funds or assets. Here are some steps to take:
- Stop any further transactions: If you suspect that you’ve fallen victim to an NFT scam, immediately stop any further transactions and report the incident to the relevant parties.
- Gather evidence: Collect as much evidence as possible to substantiate your claims. Keep a record of the scammer’s username, the NFT trading platform involved, any emails or messages received, and transaction records.
- Report the scam: Report the incident to the relevant authorities and platforms involved. For example, you can report NFT scams to platforms like OpenSea or SuperRare. Submit a report with all the available evidence.
- Contact your bank or cryptocurrency provider: If funds have been deposited into the scammer’s account, contact your bank or cryptocurrency provider to see if you can recover the funds. Sometimes victims can get their assets back depending on the situation.
- Seek legal help: Consider seeking legal help if you’ve experienced significant financial loss due to an NFT scam. A lawyer can provide guidance and help you take legal action if necessary.
- Educate others: Finally, educate others about your experience with NFT scams to help prevent them from falling victim to similar schemes.
Falling victim to an NFT scam can be distressing and a significantly traumatic experience. However, taking the above steps can help mitigate the damage and take steps towards recovery.
Reputable NFT Trading Platforms
I confess, I’m not one to get caught up in buying and selling NFTs myself. However, I am connected to many high profile artists who have not only gotten involved with selling their artwork as NFTs but they’re doing very well in that market space. Given the risks involved with fake NFT trading websites, I recommend you do some research first before committing to a trading website. The one I’m most familiar with is Opensea.
Here are some reputable NFT trading websites:
- SuperRare – https://superrare.com/
- OpenSea – https://opensea.io/
- Nifty Gateway – https://niftygateway.com/
- Rarible – https://rarible.com/
- Foundation – https://foundation.app/
- Async Art – https://async.art/
- KnownOrigin – https://knownorigin.io/
- MakersPlace – https://makersplace.com/
It’s always essential to do your research before using any NFT trading platform and verify the authenticity of the platform.
Conclusion
The various types of NFT scams can cause significant financial and emotional damage to individuals, artists, and collectors. It is imperative to be aware and stay vigilant against scammers who are becoming increasingly sophisticated in their methods. Some critical warning signs to watch out for include unsolicited messages and offers, phishing websites, fake sales, and the use of bidding bots. By taking necessary precautions, such as doing extensive research, verifying the authenticity of offers, avoiding impulsive decisions, using reputable NFT trading platforms, and enabling two-factor authentication, individuals can protect themselves and their digital assets against fraudsters. Additionally, it’s crucial to know what to do if you fall prey to an NFT scam, including gathering evidence, reporting the incident, contacting relevant authorities and seeking legal assistance if required. Ultimately, awareness and vigilance are key in safeguarding oneself against the malicious intentions of scammers.
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