Common NFT Scams and How to Avoid Them

Fraud is undoubtedly a problem as ancient as time itself. But while previously, to pull off a scam, you had to somehow show your face, the advent of the internet has made it much easier to conduct scams anonymously. The relative ease of execution, the high likelihood of impunity, and the potential for profit have fueled the emergence of a huge number of online scammers. And the world of NFTs is not their least target.

How can you protect yourself and spot a scammer? Let's look at their most common tactics.

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Rug pull

In short, a rug pull is the sudden closure of a project without returning funds to investors. This ploy most often falls prey to newcomers who haven't yet learned to recognize the red flags in the crypto industry. Scammers first lure people into their project, which, by the way, may not even exist. They convince people of the project's future success, collect the money, and then disappear. Catching such scammers after the scam is complete is difficult because they disappear completely, but catching them in the early stages is quite possible.

How to calculate rug pull:

• The authors of the project are secretive and do not provide any additional information about themselves;
• documents,websiteThe project's advertising is full of grammatical errors and incorrect/outdated information. Ragpools are often made "on the fly," with developers interested in making a quick buck rather than creating quality work. However, it's precisely the authors' lack of attention to detail that can help protect against unscrupulous practices.
• A large number of subscribers and low engagement on social media is a likely sign of subscriber fraud;
• Program code that is not accessible for review. Publicly available code allows anyone to check it for fraud. If the code is hidden from prying eyes, it likely means the developers have something to hide.

Phishing

An old, even traditional, form of fraud is manipulation aimed at stealing users' personal information: passwords, logins, bank account details, and so on. When it comes to NFTs, scammers are most interested in the user's crypto wallet seed phrase. This is a random phrase used in case the private key is lost.

One of the ways to trick personal data isairdrop- Giveaways of free NFTs on social media. They're usually offered in exchange for reposting or sharing among friends. They then ask for your crypto wallet details to send a "thank you," but instead, having gained access to your account, they use the opportunity to steal your funds or NFTs.

To avoid falling for this scam, never share your private information or click on suspicious links sent to you by email or on social media.

Selling counterfeit NFT collections

Without investing any time or effort, scammers can simply steal or copy other people's works and try to sell them. To carry out this scam, scammers can create a new social media profile to convince users to buy the fake. Obviously, fake NFTs have no value, so buying such a work can be a huge waste of money.

Before purchasing, carefully check the seller's account and the NFT itself. Look for a blue check mark next to the product—this indicates the work's authenticity.

To sum it up

To protect yourself from being scammed when buying NFTs:

• Keep your personal information to yourself. Don't share your crypto wallet details, passwords, or other data with others—they should remain private. There's no situation where you need to send personal information to another person to receive an NFT.
• Thoroughly vet the NFT seller. Check their social media, marketplace account, community activity, and other listings. Search for reviews online. Check the collection's verification.
• Avoid suspicious links received via email or social media;
• Check the NFT transaction history. Don't trust those that are limited to one or two days.

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