Cybercriminals are leveraging NFT scams to victimize unsuspecting users and brands. Here’s how to keep your business safe from this online threat, which can seriously damage your brand reputation and revenue.
NFTs: New Opportunities Bring Fresh Risks
Non-fungible tokens, better known by their acronym (NFTs), are unique digital assets. They can include many forms of media but typically encompass digital art, such as drawings, photographs, GIFs, or videos. People who buy NFTs gain “ownership” of the work, and may resell their asset in the future.
NFT marketplaces provide fresh opportunities for brands to connect with their fans and increase revenues, but this new space comes with a multitude of hidden risks. NFT scams are rampant, and you may find yourself scrambling to figure out the best course of action when a cybercriminal decides to debut your brand as an NFT - without your knowledge or consent.
Common NFT Scams That Threaten Your Business
There are a number of popular NFT scams that can pose a danger to your brand.
1. Copyright and Ownership
NFTs claiming to officially represent your brand will often feature the unauthorized use of your business’ intellectual property. IP and trademark infringements are ripe in the space, and scammers rarely face consequences for profiting off the illegal use of your branding and images.
2. Counterfeits Of Your Brand’s NFTs
Savvy scammers may simply create their own counterfeits of the legitimate NFTs offered by your brand. Not only does this scenario see you losing out on sales, it may lead to confusion with your customers, who could be tricked into paying for a non-genuine NFT they believe is linked to your business.
3. Phishing Attacks
Often under the guise of giveaways, cybercriminals may convince users to fork over their digital wallet login information in order to transfer the “free gift.” Unsuspecting users may end up providing scammers with access to their crypto accounts. The scammers can then simply clean it out and transfer the funds to their own accounts. Scammers may also use access to users’ accounts to steal valuable NFTs and immediately resell them.
“It’s very easy for these hackers to go and open an account there and immediately trade or sell whatever they’ve stolen,” says Eli Shapira, a former tech executive, who claims that OpenSea and other NFT platforms don’t have sufficient strategies in place to combat fraud and theft. “All of these guys need to step up security.”
4. Rug Pull Scams
These advanced scams see cybercriminals enlist the help of celebrities, influencers, and social media accounts to generate hype around the upcoming minting of an NFT, offering users a limited-time opportunity to buy in. The scammers then disappear with the money they raised, without providing anything of value in return.
5. Bidding Scams
Often taking place in secondary markets where users attempt to re-sell their NFTs, bidding scams see cybercriminals offer up bids that appear, at first glance, to match what sellers want. However, these cybercriminals will subtly change the currency in which the bid is offered, which dramatically changes the actual amount paid for the NFT.
6. Impersonation Scams
Clever cybercriminals will pose as customer support representatives reaching out from a user’s digital wallet service, or as the representatives of a brand offering a unique opportunity to obtain a rare NFT. Similarly to phishing scams, these cybercriminals build up a sense of trust with their victims and trick them into revealing their login data and other sensitive financial info.
The Dangers Of Anonymity
The intense hype and buzz surrounding these AI apps and solutions means that less tech-savvy businesses have become aware of the promise of these tools. People who may not be experienced in managing technology or recognize red flags may jump into using AI tools, without understanding the risks involved in doing so.
Because of the lack of options available regarding these highly-sought after tools, which are often unavailable due to high demand, organizations may end up searching for alternative tools. This could lead them to fraudulent sites or apps, which are created by cybercriminals to trick users into believing they’re accessing a legitimate solution. Unsuspecting users may then deliver critical details about their businesses or personally identifying information directly to these bad actors.
How Brands Can Combat The Risks Of AI Tools
The anonymous nature of NFTs, in which the individual identities of players involved in the market are hidden, provides numerous opportunities for scammers. Cybercriminals may pretend to be acting on behalf of the brand, and users don’t have a way to confirm that.
Cybercriminals have repeatedly leveraged verified and unverified accounts to impersonate representatives of the popular NFT project Bored Ape Yacht Club. Losses of NFTs held by users, who believed they were speaking with actual creators behind Bored Ape, are estimated to total millions of dollars.
Frauds and forgeries are also far less likely to result in consequences for cybercriminals, due to the anonymity of the space. “It is much easier to make forgeries in the blockchain space than in the traditional art world. It’s as simple as right-click, save", says Tina Rivers Ryan, a digital art expert. “It’s also harder to fight forgers. How do you sue the anonymous holder of a crypto wallet? In which jurisdiction?”
The Disastrous Impact Of NFT Scams On Brands
An NFT scam involving your business can trigger devastating consequences. You may suffer financial losses, thanks to customers and investors alike being wary of financially supporting your brand.
You may also suffer from a serious negative impact on your reputation that affects future business, and additional financial penalties stemming from the theft of your intellectual property and other brand assets.
While it may be unfair, customers who fall prey to an NFT scam associated with your business will likely lose trust in your brand. They also may suffer from serious financial losses caused by the scam, which will affect their future buying power.
How To Level Up Your Brand Protection To Include NFTs
For a robust defense against NFT scams, consider taking the following steps and making these moves a critical part of your overall brand protection program.
1. Monitor ‘Official’ NFT Stores
Familiarize yourself with the most popular NFT marketplaces, and regularly monitor and scan them for any unauthorized purporting to be official offerings from your brand. By staying up-to-date on the latest NFTs available in major online stores, you can quickly identify counterfeits.
2. Build Relationships With NFT Platforms
It’s crucial that you establish close working partnerships with NFT platforms and marketplaces. Learn about their takedown procedures and their measures for preventing counterfeit NFTs, or collaborate with a partner who already maintains these relationships with NFT sellers.
3. Prioritize Proactive Detection
Quickly identifying fraudulent NFTs and initiating swift takedowns can make the difference between minimal inconvenience to your brand and serious financial losses and irreparable damage to your reputation.
4. Leverage Enforcement By IP Experts
Your NFT brand protection strategy must be a constant and consistent effort. Even if you’ve successfully taken down a counterfeit, the job is far from over. You need IP experts with decades of experience to ensure that any NFT scams involving your brand are met with tough, vigorous enforcement.
Next Steps For Protecting Your Business From NFT Scams
To keep your brand safe from the threat of NFT scams, contact BrandShield today. We understand exactly how NFT scams work, and we’ll craft a powerful protection strategy to fit your business’ unique needs. We offer brands round-the-clock, 24/7 monitoring, analyzing, prioritizing, detection, and takedowns for fraudulent NFTs, in an all-in-one, intuitive platform. For more on how BrandShield can help secure your business from online threats, get in touch with us.
