Let’s talk about NFTs and other Scams

Okay, I know that there are going to be some bros out there whose knickers are going to be seriously in a twist with my classification here of NFTs in the same heading as scams. They’ll say I just don’t get crypto or the wonders of 3.0. So allow me to qualify my statement by giving my credentials for speaking on this subject, and why NFT and Scam are currently synonymous.

Firstly, I’ve been on the internet for a looooong time. Longer than many of the crypto-bros and their chad cheerleaders have been alive. That in itself is not a qualification – just because someone is old doesn’t mean that they know what they’re talking about. I’ve watched the rise of bitcoin, and crypto in general. I’ve seen the pump and dump tactics in meme coins that is nothing more than the electronic version of the boiler room stocks and shares scams of yesteryear. I have been conned a sum total of zero times, and avoided being scammed innumerable times. That’s where my qualifications lie – from the experience of of surviving the scams and the actions of the parasites that prey on the vanity, hubris, and greed of many people.

Are NFTs a scam? At the base level no. You can legitimately create, buy, and sell NFTs, but many people do not actually understand what NFTs are so let’s start there.

NFT stands for Non Fungible Token. A lot of people know that. However, a lot of people don’t understand what that actually means. Luckily it means exactly what those words mean. What it doesn’t mean is that an image that you buy is the NFT, the NFT is the transaction record. Think of a receipt for something you buy in a shop. The receipt has the price paid, the date, time, and what it was for. That receipt is your token that proves you bought the thing. In the NFT world, the non fungible token is not the image you bought, it’s the receipt.

How does that make sense? The most famous NFT “drop” and the one that most people are aware of is the “Bored Ape” series that sold for eye watering sums of money…..and then resold for very modest sums. If that sounds a bit like money laundering, or the old pump and dump, then you’re not far wrong, but that’s for a whole other conversation. The point here is that once one of those “Bored Apes” was bought you were only purchasing the token that said you had bought it. You didn’t buy the image per se. You didn’t even purchase the URL where it resided so if the content at that URL changed you had no control over it. Even worse, anyone could “own” your NFT. There is nothing stopping anyone from downloading any image on the internet, and if they then reuse “your” image, if it was AI generated then you zero chance of claiming ownership because AI generated images are not covered by copyright, like this one here:

The good news is that you’d still have that Non Fungible Token (NFT) that you can then sell on at a massive loss.

That’s all well and good, but I’m not interested in NFTs so where’s the scam?

It’s important to differentiate between the “legitimate” NFT marketplace and the scams that us artists are continually defending against. You can create a crypto wallet easily and then create images for sale as NFTs – this is called minting through platforms such as Opensea. If that’s what you want to do then go for it, and good luck – the landscape there is completely saturated with AI slop.

So tell me about the scam!

Okay:

A fellow artist messaged me on TikTok asking if I’d been approached about selling artwork as NFTs for stupid amounts of money. I warned my contact that it was a scam. He’d already messaged a few other people and the consensus was that it was a scam so I explained to him how it works.

Before I explain to you how it works it’s interesting to note the prevalence of this scam. Similar to the “Nigerian Prince” scams in the earlier days of the internet, I find it interesting/concerning that what appears to be the majority of people know and identify these scams but there’s also enough people falling for it to continue to make them worthwhile for the lowlife parasites to continue trying.

How it works:

You get a message or comment on your social media account gushing about how amazing your work is and they’d like to buy it as an NFT. You can at this point easily discern if it’s a scam by stating that your work is available on an NFT site such as Opensea (I only refer to Opensea as it’s a legitimate NFT site, I don’t have any links to it). They’ll either then go silent and you’ll never hear from them again, or they’ll say something along the lines of “I prefer to use a site that I have a good relationship with”, and that’s where the scam starts.

Earlier on I said that to create NFTs you have to mint them. That’s just a fancy term for uploading them to the site hosting them. The official explanation for minting is that it creates unique entries on “The Blockchain” which is true, your NFT is the record of that entry – the uploading of the image is not. However, the scam works by the “buyer” sending you to a site to “mint” your artworks in order for them to buy them. They’ll tell you that once the images are minted they’ll be able to buy them for whatever ludicrous price they’ve quoted you.

You just have to go to the site and mint them….. And this is where you get scammed. There will be a fee to mint your work. You’ll pay that fee and your buyer is suddenly gone and no, you can’t get a refund because the site (which will more than likely be owned and operated by the scammers) will claim to know nothing about it, and you’ve successfully minted an NFT so they’ve fulfilled their contract, and you my friend, have been scammed. Chances are you won’t be able to transfer your NFT out to another legitimate service without paying other fees either. Double scammed. It’ll all be in the terms and conditions.

My advice? If you’re interested in NFTs then create NFTs. Do it through an established route and stay within that ecosystem for payment and communication because not doing so brings us to all the other ways you’ll be scammed online as an artist:

All other scams all start out the same way: heaps of vague praise from someone who says they’ve spent ages looking at your work, but cannot name one piece or what specifically they like about them. Some of the scammers are bit more sophisticated and will send you screenshots of the pieces they are “interested in” to appear genuine.

Next one or both of the following will be true: they’re in a hurry (imminent house warming/marriage/birthday), or they are overseas (possibly military) and need the art shipped elsewhere. You may also be asked if you’ll take a commission for a portrait of some random relative (sister’s nephew seems to popular right now), or pet. Again, they’ll be offering you a huge some of money compared to what you normally charge, or what your work is actually worth (vanity, hubris and greed remember).

This scam has a couple of different ways to work out and in some cases you might even have a tiny touch of the money as it appears in an online account such as PayPal. However, the scam exploits the system and is designed in such a way that you’ll be out of pocket. It works to either get what you’re selling for nothing, or to get money from your account.

The first is the easiest to explain. The transaction will be rushed. Rush rush rush, everything needed yesterday in order to put you off balance. Yes they’ve sent the money, here’s the screenshots of the payment to you. It’s got all your details there – CONFIRMED but it’s an international transfer so it’ll take a couple of days for it to show but it’s there and they need the stuff and you send it…… but no money comes through and your stuff is gone forever and you’re out of pocket for shipping too. And the address you sent it to will be some post office box, or shared office and you’ll be kicking yourself.

The second way is sneakier and despite it being an exploit of payment systems you’ve got no recourse because of the way it operates. Similar to the first one, everything will be in a rush. Even the payment, which will show up in your payment app. But it’ll be for a substantial amount more than the agreed price. Good news! The “buyer” has seen their mistake and they know it’s on their end but for the inconvenience, and how great you’ve been at fulfilling their order – you know, because you’ve sent them the stuff because the payment showed – they only want half of the overpayment back.

Sounds like a great deal, you’ll be quids in. So you create a payment to the “buyer’s” account for the overspend amount. Then after a couple of days the original amount they deposited is reversed which leaves you down by however much you sent them in lieu of the overspend plus whatever goods you’ve sent them. Unfortunately charge backs are common, and although you can do the same for the amount you sent them, your goods are still going where they shouldn’t and you’ve lost out again.

So how to combat this:

1 – Don’t be rushed. Do your due diligence. An art buying crisis on their end is not your emergency.
2 – Keep all your communications regarding the transaction within the transaction app – whether that’s a website or a selling app. Going outside the official comms of the platform usually invalidates any seller protection you may have – which is why many scammer are keen to email you about the purchase.
3 – Only use the selling platform you are comfortable with. Scammers will try to get you go elsewhere. If you’ve learnt nothing else from self-defence on the internet remember this: No Second Location.
4 – If something sounds too good to be true. It is.

You can’t con an honest person.

Thanks for reading. This has been written by David Nicol of DavidNicolArt.com and is covered by Copyright (unlike anything AI generated) and I ferociously enforce my rights so don’t go reproducing this without my permission.