With the growing crypto industry and larger user base, scams are all around the corner in the industry. As non-fungible tokens are one of the most popular assets to purchase on the crypto market, scams in the NFT market are rigorously increasing. People are defrauded with fake NFTs and pulled into various scams.
Fraudsters perform various tactics to defraud people and lure more people to their scam; in most cases, they lure people and trap them in the NFT scams, which involve art. NFT has been part of the internet since 2014, but in the last few years it has gained massive popularity, and with a larger user base, it has attracted a huge number of scammers.
As a huge number of people are getting trapped in this scam, you have to be careful enough to watch out for these fake NFTs online, as the market is saturated with fake art. It is tough to get originals and believe that you are the only owner of the art.
In this article, we will try to cover all the basic NFT scams on Instagram or any other social media platform and how to avoid them in the future. We will further discuss how to report such scams and get your invested funds back.
What is NFT?
Non-fungible tokens, or NFT, are nothing but digital assets that can be owned by anyone who has their existence on the blockchain. These assets are not interchangeable, as the word “fungible” itself means “interchangeable.” As one can continue to trade bitcoin while maintaining the same value of the currency, whereas you cannot trade NFTs by maintaining the same value, which makes them non-fungible.
The trading of NFTs is done exactly as people trade physical art with fiat currency. The NFTs some people buy can cost millions for them, but they can be worthless for others. You can buy NFTs with cryptocurrency, cash, or even swap them with other NFTs if both parties agree. NFTs have gained massive popularity over the years, and people like celebrities, billionaires, and influencers are investing in them. With such a huge audience, they have also attracted many fraudsters.
What are NFT scams? Is NFT a scam?
Scams occur all over the industry, where people are enticed into scams by multiple tactics. They fool people by applying multiple methods and making the victims believe in them. The rise of NFT scams started with the popularity of NFTs. However, not all NFTs are frauds; the market is flooded with fake NFTs, making it difficult to tell which are genuine. The NFT scams may, however, be exposed in certain circumstances.
But there are many cases where the scammer steals the login credentials and gains access to the victim’s account to take all the funds. It can be very difficult to recover stolen money from a con artist. Examining various scams and countermeasures will help us understand them better.
Types of NFT scams to watch out for
Giveaway scams are one way to entice more people and make them fall for the scam. Fraudsters lure people by offering bitcoins or NFTs, which can hold good value in the future. In these scams, the con artists make people register their personal details on their phony website. As they offer free NFTs, when the user tries to avail of the NFT, they ask for their crypto wallet and later hack into it and steal all the funds.
The best way to avoid such scams is to never enroll in such giveaways and try to stay away from them. A small amount of greed can cause you to fall for the scam. The more you are drawn towards these giveaways, the more they catch your attention.
NFT phishing scams follow the same patterns that fraudsters follow in other scams. Fraudsters will email or heavily advertise their schemes, claiming that you can win free NFTs if you enroll in their program.
Phishing scams sometimes include emails that say you have been given NFTs from some company and will attach a link to a phony website where you have to register. Once they have access to your personal details, they will try to hack into your account or sell all the information.
Catfishing scams and impersonating scams are more popular on social media now-a-days. On social media platforms, the fraudsters build a legit profile where they lure people; they intentionally use attractive people’s images to gain attention and contact with more people.
They make people buy fake NFTs by advertising on their fake profiles. They redirect people to a phony website where they need to register to avail themselves of free NFTs. Most of the time, fraudsters make these fake profiles of famous influencers and celebrities.
Fake NFT scam
Currently, the NFT market is full of fake NFTs, so you have a high chance of encountering more fake NFTs and buying those in place of real ones. Fraudsters manipulate and forge digital arts or designs and try to sell them for a cheaper price, and they advertise more on social media and other platforms to gain more attention.
The best way to avoid the fake NFT scam is to do thorough research about the NFT you are going for and check whether you are purchasing it from the proper market and from a verified seller.
NFT bidding scams
NFT bidding scams are quite twisted, as when people resell their NFTs and list them for bidding, they mostly expect a higher return, but after a successful bid, the bidder changes the cryptocurrency option, i.e., changing the asking bid of bitcoin to dollar, without consulting the seller, and the seller in turn gets nothing but peanuts.
How do I avoid these NFT scams?
If you want to safely buy genuine NFTs and avoid possible scams in your journey, the steps mentioned below can help you tackle such frauds.
- Research the NFT and get information on the seller.
- Always use reputable NFT exchange markets.
- Before buying NFTs, cross-check the prices.
- Never click on suspicious links.
- Monitor the bids properly.
- Make sure your private keys are safe.
- View the transaction history of the NFT.
How to report NFT scams?
If you fall victim to a NFT scam, you can contact a local regulatory body or law enforcement to help you with your matter. Below is a list of sources where you can report scams.
- The U.S. Securities and Exchange Commission (SEC)
- The Commodity Futures Trading Commission (CFTC)
- The Internet Crime Complaint Center (IC3)
Most of the NFT scams are considered unethical and fraud, but sometimes they are illegal. If the scam is on a large scale, like a hard rug pull, it is considered illegal.
It's up to the buyer; NFTs are sort of a collectible item for someone, and some consider them assets. On the other hand, they can cost millions of dollars, but they can be worthless to someone who is not interested in them.
The crypto markets do accept that 80% of the NFTs in the marketplace are scams or frauds.
Concluding the article, the NFT scams seem unstoppable, but being aware of such scams can help us not fall for them in the future. You have to be vigilant when you are looking to buy any NFTs because of the saturated fake NFT market. On the other hand, reporting any suspicious activity in the NFT market can be the best way to avoid NFT scams. For further assistance contact Financial Options Recovery.