What are NFT Scams and How Do You Avoid Them?
Launching an NFT or crypto project comes with its complexities. Not only do you need to properly create and market it, but you also have to deal with scammers.
NFTs may be gaining ground with celebrities and influencers, but with that comes scammers. They go where the money is, and right now, that’s in NFTs.
If you’re not sure what an NFT is actually worth, you could think that you’re getting a great deal. In reality, you’re simply spending a decent amount of money on fake artwork that’s virtually worthless, not to mention the impact to the artist.
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Some of the top NFT scams include:
- Fake NFT stores
- Social Media Crypto Impersonators
- Fake NFT customer support
- Fake NFT investors
- Fake NFT giveaways
Let’s talk about each of these top NFT scams and how you can avoid them.
Fake NFT Stores
An elaborate but common scam is to replicate an NFT marketplace, such as OpenSea, and create NFT stores. These sites look legitimate, often identical to the real versions, and can trick even the most seasoned of NFT buyers.
How Can You Spot a Fake NFT Store?
This scam is particularly challenging because of its detail. If veteran NFT collectors can fall for it, what happens to someone new?
Fortunately, you can protect yourself with research. Be sure to thoroughly research the NFT you’re interested in and find out its price. On a scam site, an NFT that would usually sell for hundreds of thousands of dollars will be priced at a fraction of that cost – just like a lot of scams or knockoffs.
For example, some knockoff sites steal photos of the real deal and mark it down significantly. This is the first clue that you’re dealing with a fake or scam product. With NFTs, an example would be ApeGang #4510, which is priced at 10 ETH on OpenSea. On a scam site, this would likely be priced around a fraction of 1 ETH.
If you’re not sure what an NFT is actually worth, you could think that you’re getting a great deal. In reality, you’re simply spending a decent amount of money on fake artwork that’s virtually worthless, not to mention the impact to the artist.
Fake NFT stores often host unverified sellers. With a larger marketplace, sellers will have a blue verification check near their usernames, much like Twitter or Instagram. If you don’t see that check, it’s cause for concern.
Another method is to check the properties of the NFT you’re looking to buy. Fake NFTs won’t have properties listed, but real NFTs will.
Finally, check the contract address of your selected NFT to see where it was minted. A fake NFT will likely show an incorrect minting address, but a legitimate one will provide the information that you can cross-check with the official site of the NFT’s creator.
What Do I Do if a Fake NFT Store is “Selling” My Artwork?
If you find a fake NFT store pretending to sell your artwork, alert your community and would-be purchasers immediately and have them shutdown on OpenSea, Instagram, Twitter, Facebook, etc.
Social Media Crypto Impersonators Scams
86 thousand times people have stolen my art and listed them on @opensea and they even had the gall to make a collection like a giant middle finger to my IP rights. Wtf?#nft #arttheft #opensea #infringement #nftcommunity pic.twitter.com/LY5Jxb2N2r
— Aja Trier (@AjaArt) January 5, 2022
Like the fake NFT stores, some scammers will create fake social media profiles that look like real accounts (and sometimes, even hack the real ones).
Then, they can convince prospective buyers of the legitimacy of the NFT, making it easier to sell their fakes.
How Do You Identify a Social Media Impersonator Crypto Scam?
One way to vet these accounts is by looking for the verification check near the username. It’s important to remember that not all legitimate NFT social pages will have this check, however, so its absence doesn’t automatically mean it’s a scam.
You can also verify an account by searching for the NFT creator’s social media pages on Google. If you see accounts with similar names and many more followers, it’s likely that you’re looking at the legitimate page. Creators may have links to their official pages as well, which you can cross-reference with the questionable ones.
Fake social profiles aren’t limited to companies–you can come across fake NFT artist accounts as well.
Similarly, they impersonate NFT artists and try to pass off fake versions of their NFT artwork at much lower prices.
Fake NFT Customer Support Scams
In another impersonation scam, some scammers will use NFT customer service pages to get sensitive information from NFT owners. This is a common scam on Discord.
How Does a Fake NFT Customer Support Scam Work?
If you connect with a fake customer service server instead of the official server, scammers will ask for information to correct your problem.
This works much like scam calls for bank accounts or utilities.
One of the best ways to protect yourself from this scam is by accessing the server through the NFT creator’s official website or social media pages. Check the followers – if the number is substantial, you’re likely dealing with the real creator. Scam accounts don’t usually have thousands or hundreds of thousands of followers.
Community management often requires a team that is alert and active 24/7, especially around launch days or public sales when activity is at an all time high.
At Crowdcreate, we’ve published a number of helpful guides on NFT & Crypto community management that you can follow.
Fake NFT Investors
Emerging NFT projects are ripe for scams. A developer will seek investors and a community, get funding, then jump ship. This happened with Evolved Apes, a project that gained $2.7 million in funding.
The scammers also hosted a giveaway on the social pages and attracted winners, but those winners never received any prizes. It was just another scheme to raise funds.
How Do You Identify a NFT Investor Scam?
Most people are buying NFTs instead of investing in emerging projects, but this scam is important to keep in mind. A Ponzi scheme like this one may only target a small percentage of investors, but it’s worth knowing before you ever choose to invest in a future project or give money to a giveaway.
If you’re looking for investors for your NFT, it’s best to work with an NFT VC agency like Crowdcreate to ensure that the funding you raise for your project is legitimate.
NFT Giveaway Scams?
Touched upon in the last entry, giveaway scams come from fake NFT social accounts and Discord servers, which makes them appear more legitimate.
How Does an NFT Giveaway Scam Work?
With this scam, a fake NFT account will message users and tell them they’ve won an NFT. The account then provides a link to a fake NFT website and a link to connect their crypto wallet and provide their seed phrase.
Once this happens, all bets are off. This phrase gives the scammer immediate access to your wallet and your funds will be drained. You can’t ever change your seed phrase, so it’s not an option to simply change it before a scammer signs in.
Don’t click on links that are sent to you on social media if you don’t know the sender.
You should also check the account to make sure it’s legitimate. If you do have reason to click the link, verify that the URL matches with the NFT company’s official website.
If it’s different, or something feels off, better to be safe and avoid clicking on it.
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Crowdcreate is a leading crypto, NFT, web3, and metaverse marketing agency that’s helped some of the top projects in crypto create buzz, grow a digital community, and connect with influencers & investors.
How Do You Avoid NFT Wallet Scams?
A new NFT wallet draining exploit is taking shape that uses a mixture of social engineering and takes advantages of the "degen meta"
— Montana Wong (@Montana_Wong) July 7, 2022
Let's break it down
NFT Scams
We’ve given you specific ways to protect yourself from the most common NFT scams, but here are some general tips to keep yourself safe when dealing with NFTs.
Protect Your Wallet Seed Phrase
The seed phrase, also known as the secret phrase, mnemonic phrase, mnemonic seed, mnemonic seed phrase, seed key, or recovery phrase, holds all the power to your crypto wallet and assets. You need to protect your secret phrase the way you protect your social security number and PIN.
If someone gets your seed phrase, they can transfer all of your assets into a wallet before you even realize what happened. The only time you should need to use your seed phrase is when you import your wallet, which is only required if you removed an app from your phone or an extension from your browser. If a site asks for your secret phrase, it’s likely a scam.
Avoid Shady NFT Marketplace Sites
NFT scammers don’t operate much differently than other types of scams. They prey on human nature. We may misspell something that leads us to the wrong site, or make similar minor errors. In the world of NFTs, these can make you a victim.
Always double-check your URL to ensure that the address you’re visiting is accurate. Never enter your seed phrase, especially on a website, and proceed with caution. If something seems off or too good to be true, it’s probably not.
Conduct Thorough NFT Research
Doing your own research is good practice in many areas of life, but it’s a practical necessity when dealing with NFTs. You want to make sure everything you have stays safe, not just the money for the NFT purchase, but your currency and the rest of your digital assets.
As mentioned, investor scams are rampant in the NFT world. Scammers build hype around a brand, and once they have funding, they pull out and leave investors and consumers with nothing.
It’s important to verify that the creators of the project are communicative and transparent. If you can’t find information about the person or team behind a project, that’s a red flag.
Conducting your own research is important not only for investor scams, but most other scams in NFTs.
Stick with NFT Influencers & Collectors You Trust
Do your best to only deal in transactions with people you know or trust.
Engaging in transactions with an untrustworthy person can backfire. For example, you could send someone a digital asset with the promise of payment on delivery, but the person could keep the asset and never pay you.
Engaging in transactions with an untrustworthy person can backfire. For example, you could send someone a digital asset with the promise of payment on delivery, but the person could keep the asset and never pay you.
It may seem simple, but people fall for these types of scams all the time.
If you’re unaware of this practice, it can be easy to let your guard down and simply trust – this is what the scammer is counting on.
If you want to buy or sell an NFT, it’s best to stick to a marketplace like OpenSea. With this setup, you can keep the sale private and specify only one address that’s allowed to purchase it. This keeps you safe by putting the marketplace in the position of keeping the pricing, fees, and transaction transparent.
How Common Are NFT Scams?
When you’re new to the world of NFTs, the possibility of getting scammed can be really scary. You may not hear about them, but NFT scams occur daily, even multiple times per day, on multiple platforms.
Discord, social media pages, and marketplaces are riddled with scammers just waiting for an opportunity to find an unsuspecting victim. The best way to protect yourself is by educating yourself on the types of NFT scams and how you can avoid them.
Secondly, keep your digital assets and wallet safe.
If you’re scammed on an NFT, that’s only one transaction–giving someone access to your wallet inadvertently opens you up to having everything you’ve invested in wiped out in an instant.
Protect Yourself from NFT Scams
The single best thing you can do to avoid scams is simply knowing what they are.
Many people fall victim to scammers because they don’t know the scam exists. You should always do your research, listen to your gut, and avoid any transactions that seem too good to be true. If something seems off, remove yourself from the situation.
Here’s a quick and handy guide to help you identify an NFT scam:
NFT Scams
Hire an NFT Community Management Agency to Help with Scams
The opportunities of NFTs are endless, and as more buyers and money flock into the industry, so do the scammers that want to take advantage of the lack of security in the space.
At Crowdcreate, we’ve been managing communities and seeing scams since 2017. Our NFT agency can manage your community to prevent these on-going threats and scams that can break your project and lose trust with your community. Contact our team today to see how we can help.
