10 most common NFT scams & how to avoid them

The world is a tricky place to be in, especially if you do not have experience with scams. Finding a way through the maze can be tricky, with loopholes at every corner. NFT scams are no different from the usual frauds that occur online and in person.
To keep yourself safe, you need to be aware of the things that can go wrong if you are not highly vigilant. One of the best ways to stay safe is to know about the types of scams and how to avoid them.

To help you in this regard, we have created this guide with all the essentials you would need. This guide includes;

What are crypto-NFT scams?

NFT scamming is a fraudulent activity where scammers create fake or counterfeit NFTs, often using the names of famous artists or celebrities, and sell them as legitimate. They can take various forms, from Ponzi schemes, phishing, fake websites, impersonation, smart contract exploit, token swapping, and investment scams. These scams can result in significant financial losses for unsuspecting buyers, so it’s important to be aware of the potential for scams and exercise caution when buying NFTs.

Some well-known NFT scams

In recent years, there have been several well-known NFT scams that have taken place:

1. The “CryptoPunks” scam: In 2021, a hacker stole $14 million worth of the popular CryptoPunks NFTs from the Ethereum-based marketplace OpenSea. The hacker exploited a vulnerability in the marketplace’s code to gain access to the NFTs, which were then sold on other marketplaces.
2.  The “Art Blocks” scam: In 2020, a company called Art Blocks promised to revolutionize the NFT market by creating a new blockchain for NFTs. However, the company turned out to be a scam, and the founders made off with the funds raised from investors.
3.  The “Rarible” scam: In 2021, a group of hackers exploited a vulnerability in the Rarible marketplace to steal over $2 million worth of NFTs. The hackers could gain access to the marketplace’s smart contract and transfer the NFTs to their own wallets.
4.  In the year 2022, scammers phished OpenSea – one of the most popular NFT platforms. The links to fraudulent websites sent by scammers via OpenSea phishing allowed them to get away with $1.7 million.

These are just a few examples of the NFT scams that have occurred in recent years, but new ones are appearing as the NFT market continues to grow. It’s important to be aware of the potential for scams and to exercise caution when buying NFTs, especially from unknown or unverified sellers.

Bored Ape Scam

The “Bored Ape” NFT scam refers to a specific type of scam involving counterfeit Bored Ape NFTs. Bored Ape is a popular NFT collection featuring cartoon images of apes created by an artist named “WHYSOSERIOUS”.

Scammers have been known to create fake Bored Ape NFTs and sell them on various online marketplaces as legitimate. These counterfeit NFTs can be difficult to distinguish from the real ones, and unsuspecting buyers may end up paying a high price for a worthless NFT.

To protect yourself from this scam, it’s important to research and only purchase Bored Ape NFTs from reputable and verified sellers. You can also check the smart contract of the NFT, which should match the one on the official website, and also check the token ID on the blockchain to make sure it matches the one on the official website.

It’s also important to be vigilant when browsing online marketplaces and to be wary of any offers that seem too good to be true. If you suspect an NFT to be fake, you can contact the creator of the official support team and ask them to verify the authenticity of the NFT.

10 most common types of NFT scams

1. Ponzi schemes: Scammers create fake NFTs and promise high returns to investors, but in reality, they are using new investors’ money to pay off earlier investors.
2.  Fake NFTs: Scammers create counterfeit NFTs and sell them as legitimate, often using the names of famous artists or celebrities to entice buyers.
3.  Phishing: Scammers create fake websites or social media accounts that mimic legitimate NFT marketplaces or artists and then use these to steal personal information or money from unsuspecting buyers.
4.  Pump-and-dump schemes: Scammers buy up many cheap NFTs, artificially inflate their value by promoting them heavily, and then sell them at a profit before the bubble bursts.
5.  Exit Scams: Scammers create a marketplace or project and attract investors with the promise of high returns, then disappear with the funds raised.
6.  Impersonation scams: Scammers impersonate legitimate artists or marketplaces and use their reputation to trick people into buying fake or low-quality NFTs.
7.  Smart contract exploit scams: Scammers find vulnerabilities in smart contract code and exploit them to steal NFTs or funds.
8.  Ransomware Scam: Scammers use malware to encrypt the victim’s files and demand a ransom in the form of NFTs or cryptocurrency.
9.  Token Swapping: Scammers create a fake website or social media account that looks like a legitimate token swap platform and trick victims into sending their NFTs to the wrong address.
10.  Investment Scams: Scammers promise high returns for investing in NFT projects or marketplaces that turn out to be non-existent or fraudulent.

It’s important to be aware of these types of scams and exercise caution when buying NFTs, especially if the deal seems too good to be true or the seller is unknown. To reduce the risk of falling for a scam, it’s a good idea to research the NFT, the creator, and the marketplace before making a purchase.

How to avoid NFT scams?

Here are some ways to avoid NFT scams:

1. Do your research: Research the NFT, the creator, and the marketplace before making a purchase. Look for reviews and check for any red flags.
2.  Use a reputable marketplace: Use a reputable and established marketplace that has a good track record of protecting its users from scams.
3.  Verify the authenticity: Verify the authenticity of the NFT by checking the smart contract and the token ID on the blockchain.
4.  Be wary of unrealistic offers: Be wary of offers that seem too good to be true, such as NFTs being sold at a much lower price than their value.
5.  Check the artist’s social media: Check the artist’s social media accounts and look for any recent posts about their NFTs to ensure it’s not an impersonation scam.
6.  Use escrow services: Use an escrow service to hold the funds until the NFT is verified as authentic.
7.  Use two-factor authentication: Use two-factor authentication on your wallet and any other accounts associated with buying or selling NFTs.
8.  Keep your software and security measures updated: Keep your software and security measures updated to protect yourself from malware and phishing attacks.

FAQs

Q. How do I know my NFT is authentic?

Ans. Here are some ways to verify the authenticity of an NFT:

1. Check the smart contract: Verify the smart contract of the NFT by looking at the smart contract address on the blockchain and comparing it to the smart contract address listed on the official website or marketplace.
2.  Check the token ID: Check the token ID of the NFT by looking at the NFT’s metadata on the blockchain and comparing it to the token ID listed on the official website or marketplace.
3.  Check the digital signature: Check the digital signature of the NFT, such as an SHA-256 hash, to verify the authenticity of the digital asset that the NFT represents.
4.  Check the anti-counterfeiting measures: Check for any anti-counterfeiting measures, such as a watermark, QR code, or hologram on the digital asset the NFT represents.
5.  Check the certificate of authenticity: Check if the NFT is registered with a certificate of authenticity and verify it on the official website or marketplace.
6.  Check the creator’s social media: Check the creator’s social media accounts and look for any recent posts about their NFTs to ensure it’s not an impersonation scam.
7.  Check with the official support team: If you suspect an NFT to be fake, you can contact the creator or the

Q. Are NFT giveaways authentic?

Ans. NFT giveaways can be authentic, but they can also be a scam. It’s important to be cautious when participating in NFT giveaways and to research to verify the authenticity of the giveaway and the NFTs being offered.

Here are some things to look out for when participating in NFT giveaways:

1. Check the source: Look for the official website or social media accounts of the creator or organization running the giveaway. Be wary of giveaways only advertised through third-party websites or social media accounts.
2.  Check the terms and conditions: Review the terms and conditions of the giveaway carefully to ensure that it is legitimate.
3.  Check the smart contract: Verify the smart contract of the NFT by looking at the smart contract address on the blockchain and comparing it to the smart contract address listed on the official website or marketplace.
4.  Look for red flags: Be wary of giveaways that require you to pay money or provide personal information to participate.
5.  Be aware of the odds: Be aware of the odds of winning the giveaway; if it’s too good to be true, it’s likely to be a scam.

It’s important to remember that no matter how legitimate a giveaway may appear, there is always a risk of fraud. By taking the time to do your research and being cautious, you can minimize your risk of falling victim to a scam.

Q. How can I report an NFT scam?

Ans. If you suspect an NFT scam, there are a few steps you can take to report it:

1. Contact the marketplace: If you purchased the NFT on a marketplace, reach out to their customer support team and report the scam. They will assist you in verifying the authenticity of the NFT and may help you recover your funds if the NFT is found to be fake.
2.  Report it to the authorities: If you believe you have been a scam victim, you should report it to your local authorities, such as the police or the Federal Bureau of Investigation (FBI) in the US.
3.  Contact the project team: If the NFT is related to a specific project or platform, contact their customer support team and report the scam. They may assist you in verifying the authenticity of the NFT and may help you recover your funds if the NFT is found to be fake.
4.  Contact the blockchain network: If the NFT is on a specific blockchain network, contact their customer support team and report the scam.
5.  Post a warning on social media: Share your experience on social media platforms and forums, to warn other people about the scam and the scammer.

It’s important to remember that reporting a scam may not guarantee that you will get your money back, but it will help prevent others from falling victim to the same scam. It also helps the authorities to track down and put an end to the scammer’s activities.

Q. How do hackers steal NFTs?

Ans. There are several ways that hackers can steal NFTs:

1. Exploiting smart contract vulnerabilities: Hackers can exploit vulnerabilities in the smart contract code that controls the NFTs, allowing them to transfer ownership of the NFTs to their own wallets.
2.  Phishing: Hackers can create fake websites or social media accounts that mimic legitimate NFT marketplaces or artists and then use these to steal personal information or money from unsuspecting buyers.
3.  Malware: Hackers can use malware to infect a user’s computer and gain access to their private keys, allowing them to transfer NFTs to their own wallets.
4.  Social engineering: Hackers can use tactics such as impersonating legitimate artists or marketplaces to trick people into sending them their NFTs.
5.  Exploiting exchange vulnerabilities: Hackers can exploit vulnerabilities in the code of a centralized exchange, allowing them to steal NFTs stored on the exchange.
6.  Token Swapping: Scammers create a fake website or social media account that looks like a legitimate token swap platform and trick victims into sending their NFTs to the wrong address.

To protect yourself from these attacks, it’s important to keep your software and security measures updated, to be cautious when clicking on links or giving out personal information, and to buy NFTs from reputable and verified sellers. It’s also important to store your private keys securely and to use multi-factor authentication on your accounts.

Q. Why is there a random NFT in my wallet?

Ans. There could be a few reasons why there is a random NFT in your wallet:

1. You may have unknowingly participated in an NFT airdrop or giveaway and received the NFT as a reward.
2.  Someone may have sent you the NFT as a gift or as part of a transaction.
3.  Your wallet or private key may have been compromised, and someone may have transferred the NFT to your wallet without your knowledge.
4.  You may have accidentally acquired the NFT while participating in a scam or phishing attempt.

It’s important to verify the authenticity of the NFT and the source of the NFT. You can check the smart contract of the NFT by looking at the smart contract address on the blockchain and comparing it to the smart contract address listed on the official website or marketplace. You can also check the token ID of the NFT by looking at the NFT’s metadata on the blockchain and comparing it to the token ID listed on the official website or marketplace.

It’s also a good idea to contact the customer support of the marketplace or the project team if the NFT is related to a specific project or platform; they may be able to assist you in verifying the authenticity of the NFT and may be able to help you recover your funds if the NFT is found to be fake.

Suppose you suspect that your wallet or private key has been compromised. In that case, it’s important to take immediate action to secure your assets and to contact the customer support of your wallet provider for further assistance.

To Conclude,

Well, now that you know all the possibilities associated with NFT scams, it is time to buckle up. Remember, staying safe is 10 times better than being sorry. Also, check our guide for top marketplaces to buy NFTs, Safe Crypto-ing!