Non-fungible tokens (NFTs) are a one-of-a-kind digital asset belonging exclusively to the owner and existing on a blockchain, meaning a digital ledger. You could think of one as a unique and collectible piece of artwork — just stored on the web.
This new cryptographic asset successfully caught the attention of web enthusiasts worldwide after reaching a market value of over $40 billion. However, as NFT popularity rose, so did public interest in “NFT scams,” with Google searches hitting an unprecedented all-time high in the first week of January 2022.
As is with procuring any pricey collectible, you should make yourself aware of the tricks and schemes used to deceive people. Use this all-in-one guide to educate yourself on almost everything there is to know about NFT scams, from what NFT scams are to how they work. You can also use the NFT tips provided as your golden compass when recognizing and avoiding NFT fraud.
What are NFTs?
NFTs, as noted, are one-of-a-kind digital assets belonging exclusively to the owner. “Non-fungible” essentially refers to their uniqueness and protection against being replaced or replicated by something else. They can exist on the Ethereum (ETH) blockchain, which is why you can only use ETH cryptocurrency to purchase or sell an NFT.
How do NFT scams work?
NFT scams work by either stealing your cryptocurrency wallet login credentials or tricking you into believing you successfully purchased or sold a legitimate NFT. Many cybercriminals are attracted to the monetary value attached to these digital assets, which is why they adapt their typical hacking methods, such as social engineering and phishing, to break into crypto user accounts and steal NFTs.
10 popular NFT scams
By no surprise, as NFTs continue to get more popular in the eyes of the public, so do the scams associated with them. Here are 10 NFT scams to know — and avoid.
1. Fake NFT websites
Skilled NFT scammers can replicate popular NFT websites and marketplaces to trick users into compromising their account information. Because of the level of detail they apply, it can be difficult for even experienced NFT owners to tell the difference between a legitimate page and a counterfeit. Social engineering scams like this could result in a person spending thousands on counterfeit digital artwork — making it useless on the NFT market.
How to avoid this NFT scam: Always verify the URL of the NFT marketplace website you are using before attempting to login or make purchases.
2. Fake NFT offers
NFT scammers often pose as legitimate trading platforms and send fake offers to NFT owners via email. The goal of these phishing emails is to get you to follow the embedded link that takes you to a fake NFT marketplace. You’ll potentially become a victim once you type in your login credentials and/or recovery phrase to try and access your account. Scammers can then use keylogging or other types of spyware to record your information and steal your NFTs on their own.
How to avoid this NFT scam: Verify the sender address of any email received from an NFT trading platform.
3. NFT giveaways / airdrop scams
A question posed by many crypto users is: “Are NFT giveaways legit?” The quick answer is potentially, but not likely. Scammers often pose as legitimate NFT trading platforms on social media to promote NFT giveaway campaigns — also known as airdrop scams. The scammers will usually promise a free NFT if you spread their message and sign up on their website. The catch is that once they have you link your cryptocurrency wallet credentials to receive your prize, they record what you type and can steal your library of NFTs once they gain access to your account.
How to avoid this NFT scam: Check the account’s social media page for verification and/or ensure the link sent to you matches the NFT company’s URL.
4. Social media impersonation
Social media impersonation is another NFT scam used to trick NFT owners. Using the same level of detail as they would for a fake NFT webpage, cybercriminals create an online profile to convince people of their credibility and sell them fake NFT artworks.
How to avoid this NFT scam: Use the blue verification tick next to the seller’s profile to verify their identity.
5. Customer support impersonation
Hackers will use the questions that NFT owners have against them by attempting to impersonate customer service pages on communication apps like Discord or Telegram. NFT scammers create fake servers for people to connect to and ask for personal information before “resolving” their problems, giving them uninterrupted access into your cryptocurrency wallet.
How to avoid this NFT scam: Access a specific Discord or Telegram server via the NFT creator’s official webpage or social media account.
6. Fake NFT projects (rug pull scams)
Scammers often use new NFT projects to lure people into purchasing fake NFTs — or rug pull scams. This is when a hacker creates a seemingly legitimate NFT that turns out not to be resellable, effectively taking away its future value. The NFT owner then realizes they paid an extreme amount of money for an asset that won’t appreciate as they believed it would.
How to avoid this NFT scam: Look into blockchain explorers and rug pull detection tools designed to help spot these kinds of scams.
7. Counterfeit or plagiarized NFTs
It’s important to remember that minting a digital file doesn’t make it a fresh new piece of intellectual property or give you ownership of it — two essential NFT characteristics. This simply turns a digital file into something that you can store on blockchain.
Scammers use minting to trick people into believing they are buying a unique NFT. Once they have their plagiarized NFT copied from someone else’s work, they create an account on a trading platform and auction it off to the highest bidder. Unfortunately, the asset you purchase may become valueless once others realize it’s a counterfeit.
How to avoid this NFT scam: Use the blue verification tick next to the seller’s Discord or social media profile to confirm the seller's credibility.
8. Bidding scams
Bidding scams typically take place once you try reselling your NFT. Once an interested buyer puts in their highest bid, they may switch out the cryptocurrency you think you’re using for one of lesser value. So, instead of receiving 10 ETH (about $25,000), you could receive $15 USD.
How to avoid this NFT scam: Cross-check the currency used during the transaction and never accept bids lower than you initially intended.
9. Investor scams
Investor scams are common with NFTs because of people's ability to remain anonymous when dealing with cryptocurrency. Scammers often use this to their benefit and create projects that seem to be worth an investment, then disappear with the funds they collected from interested people without a trace. This happened recently when an NFT developer “Evil Ape” collected almost $3 million in investments — never to be heard of again.
How to avoid this NFT scam: Find verifiable contact information for the NFT creator you want to purchase from before transferring money.
10. Pump and dump schemes
Inspired by a form of securities fraud, experienced NFT scammers use “pump and dump” schemes to artificially drive up the price of an NFT. They do this by making several bids within a short time span to make it appear as though the NFT is popular. Once it gains attention and the selling price reaches a number they are comfortable
with, they’ll cash out and sell to the highest bidder.
How to avoid this NFT scam: Review the transaction history of the desired NFT. Several transactions centered around one date could indicate a pump and dump scheme.
How common are NFT scams?
This past year has seen enough NFT scams to be worth putting them on your radar. Knowing the true
risk these cyberthreats pose can help you protect your precious tokens and protect yourself against scams.
- Frosties, 2022: Frosties NFT collection fell victim to a rug pull scam, resulting in them losing around $1.3 million when trying to purchase 8,888 NFTs.
- Todd Kramer.eth, 2021: An NFT collector going to Todd Kramer.eth reported that $2.2 million worth of Bored Ape NFTs disappeared as the result of an NFT phishing email.
- Fractal, 2021: NFT scammers created and promoted a fake Fractal NFT giveaway that resulted in users losing over $150,000 in cryptocurrency.
Even though NFT scams may become more relevant as time goes on, there are many NFT tips you can incorporate that will help protect you and your NFTs.
How to avoid NFT scams
Take advantage of these NFT tips to help put a stop to online hackers and their NFT scams.
Never click on suspicious links or attachments
Never click on links or attachments related to your NFTs if you are unsure of who the sender is. Hackers commonly use phishing emails to get people to compromise the MetaMask wallet credentials.
Create strong passwords
You should only create unique strong passwords for your cryptocurrency wallet and other NFT accounts. This can help protect you from the NFT scams criminals use to steal digital assets from more vulnerable owners.
Enable two-factor authentication
Activating two-factor authentication on all of your NFT accounts can also help ensure scammers can’t get their digital hands on your valuables. The use of biometrics like fingerprint scanning and facial recognition helps makes it nearly impossible to replicate your identity.
Always crosscheck the NFTs price
Before making an NFT purchase, cross-check the price on an official trading platform like OpenSea, Axie Marketplace, or Mintable. If the price appears much lower than what’s listed on the legitimate trading site, it’s probably a scam.
Verify NFT seller accounts
When interested in purchasing an NFT, always verify the NFT seller’s account to ensure they are real. You can look on their social media or Discord profile for the blue check mark verifying their identity.
Never share your seed/recovery phrase
Just like your regular passwords, you should never share your seed or recovery phrase with anyone. This could compromise your NFTs and any other kind of cryptocurrency stored in your wallet.
Now that you understand the ins and outs of the trending NFT scams on the internet, this can help you safely purchase and trade while knowing the signs of potential NFT fraud. In a world of emerging cybersecurity threats, there’s no better feeling than knowing how to help protect yourself and the things you care most about.