Identity Verification Services – Countermeasures for Deterring NFTs Scams

Non-Fungible Tokens (NFTs) are virtual collectibles turning the digital currency market at a 180-degree angle. They are increasing hope and profit-generating opportunities for global investors. However, fraudsters are also making their way to manipulate the NFT market by exploiting dealers. Ponzi, bidding, and payment scams are simultaneously increasing, exposing collectors to severe repercussions. Consumers lost more than $1.7 million in February 2022 due to Opensea phishing attacks.

Criminals use various identity theft techniques to outsmart virtual currency service providers. Considering a spike in fraud risks, NFTs dealers require efficient ID verification solutions. The AI-powered IDV checks are capable of detecting sophisticated illicit actions, ultimately paving the way for risk-free trading. This article discusses how digital ID check services place cautions against prevalent NFTs scams. 

Evolution and Development of the Web3 Non-Fungible Tokens (NFTs)

Web3 refers to the blockchain-based online decentralized ecosystem. Metaverse, Artificial Intelligence (AI), and distributed ledgers are some of the prominent examples of this technology. As NFTs have several blockchain characteristics, they are easier to integrate with Web3. 

Kevin McCoy and Anil Dash in 2014, created the first virtual asset, “Quantum”. Since then, there has been no stopping the adoption of NFTs. Collectors can trade them for music purchases, buy tickets, make in-game payments, and enter the Metaverse. They can also keep IRL reserves such as jewelry, property, cars, and other valuable assets. NFTs are easier to trade as they come with unique blockchain-based patterns, which aid in seamless ID verification and involve less risk of synthetic identity fraud. 

NFTs are digital collectibles that can be in the form of pictures, videos, art pieces, or property. They can be converted into AI due to distinct configurations. Considering all this development, 2021 was marked as “The Year of NFTs”. Beeple’s historical sales, Facebook’s rebranding into Meta, and keyword searching associated with virtual assets led to the growth of digital currency by up to 1785%. 

Despite this tremendous growth, NFTs are becoming a prominent target of fraudsters. Breach of digital identity verification by using counterfeit profiles is helping them expose this marketplace to unforeseen repercussions.

Identity Verification Services – Detecting and Deterring Rampant NFT Scams

Fraudsters only need illegitimate access to customers’ assets irrespective of the wealth scale or broken wallets. Being well aware of the NFTs’ market prices and worth, criminals see this digital currency as their secure way to launder high sums of money. They curate counterfeit identities to bypass authentication of IDs, manipulate customers, exploit asset security, and reap illicit financial benefits. 

Customers perceiving NFTs to be immediate cash-grabbing opportunities are more prone to criminal threats. This marketplace is a wide and wild terrain which further increases the breach in identity verification mechanisms. Further details regarding NFTs scams are in the next section:

Rugpull Scams

Rugpull scams refer to the fraud tactic where criminals attract buyers and vanish before completion of the project, leaving investors with worthless assets. This scheme is an easy gain of funds as the general public is less aware of threats involved in NFTs trading. Insufficient digital ID check measures further increase vulnerability of legitimate customers because they can not differentiate between imposters and actual collectors. 

To restrict illicit activities and open doors for secure NFTs exchange, marketplaces require efficient validation of identity mechanisms. These AI-powered ID verification solutions place necessary cautions for imposters while enabling buyers to pitch right traders. 

Phishing Attempts

Phishing attempts are another rampant and cunning NFTs fraud. The code of practice involves fraudsters using malicious links for redirecting customers to bogus websites. With attractive offers and profit-promising schemes, they convince them to enter personal information such as digital wallet details. 

The increase in phishing attempts is forcing NFTs marketplaces to implement efficient digital ID checks. Furthermore, enacting robust identity verification services during customer onboarding can prevent illicit activities.

Bogus NFTs Bidding Events 

Craft lovers collect NFTs to showcase their attraction to the art industry. The major ways to do so are either through direct purchases or bidding through auctions. To organize bogus events, criminals create counterfeit identities for bypassing ID verification checks. Later they pose as legitimate art piece owners and use free image download websites to mint on the open sea.

Criminals also impersonate potential buyers and offer hefty amounts to purchase high-value crafts. At the time of transferring payments, they send less money and flee with NFTs while leaving actual owners with a loss of millions. However, with efficient online global ID verification services in place, marketplaces can restrict illicit purchases.

In a Nutshell

While NFTs scams are on the rise, marketplaces need to integrate robust identity verification mechanisms. With automated customer onboarding, ongoing monitoring, and liveness detection, AI-powered IDV solutions ensure customer security, protecting their ownerships from external criminal threats. Establishing digital identity verification for finance and other sectors further leaves less room for fraudsters by employing facial authentication and real-time presence analysis. Hence, identity verification services lay the baseline for secure NFT trading.