Rennick’s red flags: How to avoid NFT scams

by | May 2, 2022 | Entertainment

By Alleah Boisvert

For someone just learning about NFTs (non-fungible tokens), it may be exciting to invest in one right away. NFTs can bring opportunities to collectors, but they have also opened a whole new can of worms in the world of scammers. James Rennick, an NFT enthusiast and marketing instructor at NAIT, has some advice on how to avoid NFT scams.

“The first major piece of advice, no matter what, don’t spend money you don’t have on this. It should be about having fun,” said Rennick. “It shouldn’t be a financial thing.”

NFTs may seem like a quick way to make money, but folks involved in the NFT community see them as collectibles that come with other perks.

“Generally, non-fungible tokens have utility attached to them. So, you’ll get something when you buy it. What do you get? Is it access to communities, access to parties, access to exclusive interviews, access to future airdrops? What are they promising? So, what’s the utility of the token? If there’s no real plan for what they’re going to do with it, that’s a huge red flag,” said Rennick.

Students who are interested in NFTs should research the communities involved in each project before purchasing. Checking out their social media accounts can help set apart which projects are legitimate. 

“Another [tip] is checking out the communities online. Discord is a big one. If you go look at a Discord, how much activity is happening there? […] A real community should be generated around the NFT,” said Rennick.

Lately, scammers have been hacking Instagram accounts to promote NFT projects. These scams can be tricky to recognize at first since they utilize Instagram’s Stories feature to generate views. They tempt users by promising money to anyone who messages the account. Rennick reinforces the number one rule of the Internet to avoid account hacks.

“Keep your passwords very unique. So many people make mistakes with passwords. Your password should have nothing to do with your life,” said Rennick. 

Because NFT scammers are becoming more prevalent on apps such as Instagram, students who see suspicious behaviour from friends should be cautious. Crypto scammers have even been going so far as to message any accounts who have viewed the story.

“Is this normal behaviour for this person? If somebody never ever mentioned NFTs before and then suddenly they’re posting in their stories, huge red flag.” said Rennick.

“When you see it, let that person know as fast as possible. Do it off platform, that’s one key thing. Report [the account] to Instagram right away,” said Rennick. “One thing to know is that Facebook also owns Instagram. A lot of the time, if they also had a Facebook account and a Facebook Business Manager, they should be connected. If they were running a Facebook account, you could talk to them on the Facebook side and see.”

Although scammers are taking advantage of the cryptocurrency trend, NFTs might be useful in the future for companies trying to prevent their customers from being scammed.

“I see NFTs moving forward in a very substantial way, and not just with collectibles. Stuff like tickets. If you can implement an NFT system that is completely on the public blockchain, it’s going to be way harder for scalpers that come in and buy a whole ton of tickets using bots. I see huge applications for the ticket industry,” said Rennick.

As polarizing as they are, NFTs don’t seem to be going anywhere anytime soon, so learning about what they are and how they are used could prove to be very useful in the future.

COVER PHOTO from Bored Ape Yacht Club, a collection of NFTs that also provide access to a digital community.

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