Nonfungible token (NFT) marketplaces should commit to combat fraudulent NFTs, but brands are far more responsible for protecting NFT investors, according to one industry executive.
Brands that issue NFTs should be taking the first step to protecting themselves and potential investors from fraud, BrandShield CEO Yoav Keren said in an interview with Cointelegraph on Oct. 12.
According to Keren, it’s more straightforward for a brand to recognize NFTs that were not released by the company itself rather than marketplaces like OpenSea or Rarible. NFT marketplaces usually have fewer insights into which brands are creating NFTs when they are launching and other details, the CEO noted.
Although marketplaces should not be negligent of the reality of NFT fraud, it’s still a must for brands to keep their audience publicly and transparently updated about any NFT offerings, Keren hinted, stating:
“Brands should understand the legal implications of misuse of their image, and should take action to protect their customers across all platforms, websites and marketplaces.”
The CEO went on to say that counterfeits and copyright infringements have emerged as the two most common forms of NFT fraud so far.
Counterfeit NFT fraud implies unauthorized replicas that are sold despite the existence and sale of an original NFT drop by its creator or authorized party. Copyright and trademark infringements refer to fraudsters hijacking a brand’s likeness or image to create and sell NFTs without prior authorization.
Both types of NFT fraud occur across some of the largest NFT marketplaces, including OpenSea, Rarible and Nifty Gateway, Keren noted.
“We conducted a scan on OpenSea and found 41,500 suspicious NFT listings using unauthorized likenesses or images associated with prominent celebrities who’ve promoted NFTs or cryptocurrency,” Keren said. In these cases, fraudsters utilized copyright or trademark infringements to defraud consumers, he added.
One of the ways to eliminate NFT fraud is for platforms to encourage more reporting of…