7 Common metaverse scams and 6 easy ways that you can avoid them

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Even though the metaverse is a brand-new idea, cryptocurrency and blockchains have been around long enough for us to be familiar with many of the problems associated with them.

However, it appears that scammers have discovered this technology to be very helpful in money laundering, identity theft, and conducting different scams.

Some sites don’t demand user identity verification, letting scammers experiment with new techniques without putting their own money at risk. This gives them the freedom to scam companies and clients without worrying about negative consequences.

With blockchain-based transaction crime reaching a record $7.8 billion in 2021 and hacks looming, it is clear that many metaverses are prone to scams.

How do metaverse scams work

Businesses and people using cryptocurrencies run a wide range of risks due to the metaverse and the larger crypto-related ecosystem.

In the metaverse world, for example, various schemes and strategies have already been applied or are about to be implemented, and experts think that new ways specific to these platforms will be developed.

1. Rug pulls

The most well-known opportunistic bad actors that come with new technology may be a digital token that was modeled after the Netflix series Squid Game and advertised as a play-to-earn metaverse game. It was quickly discovered that $SQUID was a total hoax, and the developers made off with all of the money.

2. Scam projects

The unregulated nature of NFTs and crypto allows for the appearance of scam projects on prominent markets as well as problems with intellectual property and copyright. For instance, Vice has already reported stories from the latter half of 2021, including the developer of an NFT project who vanished with $2.7 million.

3. Fake Reviews

Fake reviews can cause serious reputational harm, particularly on new platforms that rely on user transparency to prosper, keep their token price stable, and develop a devoted following. Negative reviews posted by automated users can easily lead to a drop in token value and a loss of revenue.

4. Multi-accounting

Fraudsters may attempt to create many accounts on a specific metaverse site in order to misappropriate promotions or launder money obtained unlawfully. One possible scenario involves a fraudster purchasing an NFT with filthy money from another account they also control with the intention of withdrawing once the NFT is sold to an honest user.

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5. Irreversible transactions

Due to the open-record information on the blockchain, cryptocurrencies are renowned for their transparency. A transaction, however, may be nearly impossible to undo once it has been completed. When compared to offline transactions, this goes against some consumer expectations.

6. Data breaches

Email data leaks are a major issue worldwide. Metaverse platforms must make sure that user data is protected as technology becomes more widely available or risk losing user confidence.

7. Virtual World Fraud

Remember that long before cryptography was created, the problems being discussed were present in online games like The Sims, World of Warcraft, and Second Life. There is also a case to be made for the need for improved preparation on the part of gaming enterprises in this region.

How To Avoid Scams In The Metaverse

It will never be simple, so expect difficulties. Fraud prevention is a never-ending struggle, and con artists will undoubtedly see platforms as being full of fresh chances to find flaws, experiment with new techniques, and ultimately defraud companies and individuals.

Platforms can take various measures prior to launch to strengthen security and keep out fraudsters so they don’t get a chance to test the new territory. Let’s look at a few.

1. Minimize silos

Fraudsters don’t just stumble into schemes; they are deliberate criminals who research sectors, test alternative business models to discover which strategies succeed, and frequently even share knowledge with others.

Information frequently gets trapped in silos, which is a problem for risk/fraud managers who require a holistic view of the company’s information to identify links between dangerous customers. Large information gaps that can have an impact on income, security, and the effectiveness of decision-making can result from a lack of communication and transparency between teams.

Using machine learning may support the organization of data and automate simpler decisions, in addition to testing various solutions that can assist in generating a complete 360-degree perspective of the business.

Before applying new rules, businesses can research previous data and make suggestions using machine learning and a test environment.

Using machine learning may support the organization of data and automate simpler decisions, in addition to testing various solutions that can assist in generating a complete 360-degree perspective of the business.

An operation must be open and give full access to its risk team or the business it is outsourcing its anti-fraud operations to in order to assure total protection.

2. Multi-layered defenses

Machine learning is just one component of an advanced product stack for risk management that will assist metaverse platforms to safeguard their users and business.

There should also be additional solutions that support the machine learning method on top of this. Onboarding, logging in, and transacting users are frequently automatically accepted or rejected based on an overall risk assessment provided by suppliers.

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Blackbox AI will be the method of choice for various platforms because it handles the majority of choices without requiring human involvement. Whitebox AI, however, may be more helpful for early-stage launches to reduce the rate of customer insult.

This is so that humans reading the results can pick and select the portions of the analysis that are most pertinent to the current scenario because Whitebox ML offers complete transparency in the reasoning behind why a decision or a score has been achieved.

3. Browser and device fingerprinting

In other words, being able to recognize someone’s device settings can assist you to identify emulators, virtual machines, and bots.

Unseen gadgets should be another warning sign of potential danger, though it’s important to keep in mind that some metaverses will be accessible on a variety of devices, which might again lead to a high customer resentment rate if you rely solely on this.

Knowing the customer’s devices, location, and setup can be a really easy approach to discovering misalignments and potential threats as more hardware, including VR headsets, PCs, and mobile phones are being used.

4. Digital footprint analysis

When a user signs up, seeing their digital footprint is really useful. Because the majority of true users will have some sort of online imprints, such as social media activity, web platform activity, or instant messaging accounts, organizations can validate accounts with simply an email or phone number.

5. IP scanning

Knowing an honest user’s IP address and then noticing a striking disparity should immediately raise an alert.

6. Two-Factor Authentication (2FA)

If there are inconsistencies, certain services can enforce the necessity for two-factor authentication, which increases friction but in some cases offers consumers better protection.

For metaverse/web 3.0 businesses, there is a lot of excitement, a lot of money, and a lot of potential to become dominating players, make a lot of money, and fundamentally alter how we interact with one another.

it’s crucial that platforms pay equal attention to new features and risk management procedures. If not, the general public will rapidly lose interest and therefore, trust.

But in the beginning, it’s crucial that these platforms pay equal attention to new features and risk management procedures. If not, the general public will rapidly lose interest and therefore, trust.

These businesses should be able to better grasp the common dangers associated with emerging technologies that accept alternative payment methods by drawing from the experiences of sectors that have had rapid growth in recent years, such as esports, igaming, and crypto.

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