How to avoid falling into NFT traps: the most common scams and how to protect yourself

NFTs, or non-fungible tokens, are one of the most popular and revolutionary trends in the crypto world. These are unique and unrepeatable digital assets, which can represent everything from works of art, collectibles, video games, music, to anything you can think of. NFTs are sold and bought on specialized platforms, such as OpenSea, Foundation, Rarible, among others, and can reach astronomical prices. For example, artist Beeple sold an NFT collection for $69 million, and Twitter creator Jack Dorsey auctioned off his first tweet for $2.9 million.
However, like everything that shines, NFTs also have their dark side. And, being a new, poorly regulated and very attractive market, NFTs are the perfect target for cybercriminals, who take advantage of the ignorance, greed and curiosity of users to deceive and steal from them. Thus, scams related to NFTs have multiplied, which can range from counterfeiting, phishing, identity theft, to Ponzi schemes, pump and dump and rug pull.

How can we avoid falling into these traps and protect our valuable NFTs? Below, we explain the most common scams and how to prevent them.

Counterfeit or plagiarized NFTs

One of the simplest and most common scams is to copy or plagiarize the work of an original artist or creator and publish the fake version on an NFT marketplace. Buyers who do not realize this may purchase a fake NFT that has no value or authenticity. Additionally, scammers can damage the reputation and income of legitimate artists, who see their work stolen and sold without their consent.

To avoid this scam, it is important to verify the identity and history of the seller, as well as the origin and quality of the NFT. To do this, you can consult the seller's profile on the platform, their social networks, their website, their comments and ratings, and their sales history. You can also use reverse image search tools, such as Google Images or TinEye, to check if the NFT is original or a copy.

Ponzi Schemes/Rug Pull Scam

Another very common scam is to create NFT projects or platforms that promise great benefits or rewards to investors or users, but are actually Ponzi schemes or rug pull scams. A Ponzi scheme is one in which the first participants receive profits from new participants' money, but which collapses when there are not enough new participants. A rug pull is one in which the creators of the project or platform disappear with the users' money or NFTs, leaving them with nothing.

To avoid this scam, it is important to thoroughly research the project or platform before investing or participating, and not get carried away by promises of easy and quick profitability. The credibility and transparency of the developers, the source code, the smart contract, the whitepaper, the community, social networks, audits, associations, and any other relevant information must be checked. You should also diversify your risk and not invest more than you are willing to lose.

Phishing scams

Phishing scams are those in which cybercriminals impersonate legitimate NFT platforms, projects, artists, collectors or users, and send fake messages, emails or links to victims, in order to obtain their personal data, your access credentials, your private keys or your money. These messages, emails or links may contain offers, raffles, gifts, auctions, sales, purchases, or any other excuse to attract the attention and trust of victims.

To avoid this scam, it is important not to click on any suspicious links or attachments, and always verify the source and address of the message or email. You should also use a secure and trusted digital wallet, and never reveal or share the private key with anyone. Additionally, two-factor authentication should be enabled and strong, unique passwords should be used for each platform or service.

Imitators of artists or creators

Another very common scam is creating fake profiles on social networks or NFT platforms, which imitate famous or recognized artists or creators, and who offer their works or services at low prices or with advantageous conditions. Buyers who fall for this scam may receive fake, poor-quality, or non-existent NFTs, or lose their money or personal data.

To avoid this scam, it is important to verify the identity and authenticity of the artist or creator, and not trust offers that are too good to be true. You should check the username, profile photo, number of followers, comments, posts, and any other indication that may reveal impersonation. You should also check the profile of the artist or creator on the NFT platform, and make sure that it matches that of the social network.

Pump & Dump Scam

The pump and dump scam is one in which scammers artificially inflate the price and demand for an NFT, through mass purchasing, false advertising, manipulation of social networks, or the creation of fake groups or communities. They then sell the NFT at a high price to unsuspecting buyers, who are left with an overvalued and illiquid NFT.

To avoid this scam, it is important not to be influenced by hype or fomo, and do your own and objective research on the NFT, the project, the artist, the market, and the competition. You should analyze the sales history, volume, supply, demand, and intrinsic value of the NFT, and not rely solely on price or the opinion of others. You should also be careful with groups or communities that promote the purchase or sale of NFTs without foundations or with hidden interests.

Auction scam

Auction scam is where scammers create or participate in fake or manipulated NFT auctions, in order to deceive buyers or sellers. For example, they can create a fake or low-quality NFT, and bid themselves or with accomplices to increase the price and attract other buyers. Or they may bid on a legitimate NFT, and then not pay or cancel the transaction, harming the seller and other bidders.

To avoid this scam, it is important to check the reputation and track record of the seller and bidders, and not get carried away by emotion or competition. You should check the quality and authenticity of the NFT, and not bid more than you are willing to pay. You should also be aware of the conditions and terms of the auction, and any additional commissions or fees.

Fake profiles and identity theft of artists or collectors

This scam is similar to that of impersonators of artists or creators, but in this case, the scammers pose as famous or recognized artists or collectors, and contact users directly, through direct messages, emails, or phone calls. Scammers may offer to buy or sell NFTs, request collaborations, invitations, donations, or any other type of interaction, in order to obtain money, personal data, or NFTs from victims.

To avoid this scam, it is important to verify the identity and authenticity of the artist or collector, and not respond to or agree to any suspicious or unsolicited requests. You should check the username, profile photo, number of followers, comments, posts, and any other indication that may reveal impersonation. You should also check the profile of the artist or collector on the NFT platform, and make sure it matches that of the social network.

NFTs are an innovative and fun way to collect and create digital assets, but they also come with risks and challenges. Therefore, it is important to be informed, educated and alert, and not be fooled by the scams that abound in this market. Before buying or selling an NFT, one should do extensive research, verify the source, quality and authenticity of the NFT, and use a secure and trusted digital wallet. Thus, you can enjoy NFTs without falling into the traps of cybercriminals.