Scams in the metaverse: How to protect yourself?

The possibilities of the metaverse come with their attractions. But they will also have significant implications for cybersecurity and fraud. In the next 5 years, we will inevitably move to the metaverse. Thus, companies will have to focus on security and regulatory issues. They must ensure that end users are protected from metaverse scams.

Coined by science fiction author Neal Stephenson over 30 years ago, the ‘metaverse’ is 2022’s biggest buzzword. It’s a pivot to a ‘cyberworld’ where we’ll use a “digital identity” to work and interact socially. The metaverse has managed to attract big brands like Epic Games, Microsoft, and Apple. Most notably, Facebook was renamed Meta and invested $10 billion in the project.

However, new technologies are often associated with high levels of risk. And the metaverse is no exception. Fraudsters have already begun to exploit this new online universe. We explain some of the metaverse scams that can be encountered.

Examples of metaverse frauds and scams

Any organization offering crypto-based services, and individuals venturing into the metaverse and the broader adjacent crypto ecosystem, are face various risks. Many of the problems discussed below have existed before crypto even existed, in virtual worlds such as The Sims, World of Warcraft and Second Life.

Account takeovers (ATO)

Account takeover is a form of online identity theft. A cybercriminal illegally obtains unauthorized access to an account belonging to someone else. We can cite traditional methods such as fishing to access accounts containing currencies or NFTs.

Irreversible operations

The crypto is known for its transparency, due to the blockchain’s open record information. However, once a transaction is made, it is almost impossible to reverse it.

Metaverse and multi-account scams

Fraudsters may seek to create multiple accounts on a certain metaverse platform for launder illegally acquired money or seek to abuse promotions.

Metaverse scams and fake reviews

Fake reviews massively damage brand reputation. For example, a targeted attack by fake reviews via bots can easily scare off consumers and lead to drop in price of a token.

Influencer and Affiliate Fraud

A renowned example of crypto influencer fraud saw the accounts of celebrities such as Elon Musk and Jeff Bezos hacked as part of a bitcoin scam. A similar thing could take place in the metaverse.

e-commerce fraud

e-commerce fraud

Managing assets online, even in digital format, gives way to typical scenarios seen in the e-commerce industry. To cite only the chargebacksrefunds and other settlement disputes.

Fraudulent projects

The unregulated nature of NFTs and cryptography can foster scam schemes in major markets. They can also generate copyright and intellectual property issues.

Market volatility

Users often trade tokens without actually engaging with the platform itself to earn money. The rug draws and the honeypot scam are something to be wary of.

Carpet pulls or rug pulls

New technology brings opportunistic bad actors, perhaps the most famous being a digital token inspired by the Netflix series Squid Game which was introduced as a metaverse play-to-earn game. SQUID digital currency turned out to be a complete scam. It lost all its value almost instantly, the developers fleeing with all the funds.

Metaverse scams and data breaches

Data Violations

Email data breaches are a global problem. As technology becomes more and more accessible, metaverse platforms must ensure the protection of their users’ data so as not to not lose consumer confidence.

Cisco Talos Intelligence Group: The metaverse is already creating new opportunities for cybercriminals

A new type of cyberattack relies on smart contracts that run automatically when certain conditions are met. In theory, smart contracts guarantee that a buyer will receive a digital asset like an NFT once they submit payment. But scammers set up malicious smart contracts that don’t do what they say they do.

“We see malicious smart contracts where they require you to approve a transaction. But in fact you are running a function that gives a third party access to all tokens and cryptocurrency in your wallet “, said Jaeson Schultz, technical manager of Talosone of the largest commercial threat intelligence teams in the world.

“It’s very easy for people to fall into the trap. In fact, few will take the time to read the smart contract, even if it is published”.

Talos researchers also saw cybercriminals impersonate trusted brands. Then they get people to spend money. For example, an Ethereum user claimed domain names like wellsfargo.eth. This could open the door to scams where they impersonate these brands to scam people. And because the blockchain architecture is decentralized without a single admin, there is no no recourse to return these domains to their rightful owners.

What solutions to stop metaverse fraud and scam?

Fraud prevention is a constant battle. Indeed, fraudsters will always try new methods to scam companies and people. But there are some things platforms can do to block scammers before they have a chance to test the new frontier.

Browser and device fingerprinting

identify device configuration

To be able identify the device configuration from someone can spot emulators, virtual machines and bots. Invisible devices should be another indicator of potential risk. With more hardware in use, including VR headsets, computers, and cellphones, knowing the devices, client location and configuration can be a very simple way to spot misalignments and potential risks.

Digital fingerprint analysis

Seeing a user’s digital fingerprint is especially useful when users register. By simply using an email or phone number, businesses can check the validity of accounts. In fact, most honest users will have some form of online footprint, whether it’s social media presence or web platform activity.

IP analysis

Find out the IP address of an honest user, then identify an incompatibility should immediately trigger an alarm signal.

Double authentication (2FA)

use double authentication

Some services may require two-factor authentication requirements in case of mismatch. This adds friction but better protects users in certain situations.

Facial biometrics

Metaverse creators should offer users the ability to link offline identities to their metaverse by leveraging modern identity verification technologies. This will ensure that people will have the opportunity to confirm to the metaworld that they are who they say they are. The facial biometrics is an effective solution to this problem. In fact, the technology can verify a person during registration and improve ongoing authentication.

Simultaneously, the liveness detection is also essential. Once a person’s selfie is paired with a photo on their registered ID or biometrics, the liveliness checks to see if they’re actually there, and not just someone with a screenshot.

The power of AI to spot fraudsters has been proven. New research shows that computers are much better than humans at identifying whether a face is real or a parody. With Research SuperCluster (RSC)an Artificial Intelligence supercomputer, allegedly up to 20 times faster than existing supercomputers, Meta has enough power to support hyperscale biometric technology during the registration process.

They should also channel that power into technologies that will enable them to moderate content at scale and to authenticate users throughout their passage through the metaverse.

The multi-layered defense

an artificial intelligence supercomputer can support biometric technology

The best way to prevent fraud and scam in the metaverse is to stay ahead with a multi-layered defense. Business leaders must be aware of ever-changing regulations and new attacks to provide adequate protection.

Thanks to innovative technologies such as that machine learning and artificial intelligence, the wealth of data available to enterprises can help identify and stop threat actors through device fingerprinting, two-factor authentication, and fast, seamless scanning of user fingerprints. Leaders must remain diligent in focusing on risk management. The transition to the new online world can only be smooth if you stay alert to the risks.

About smart contracts

read smart contracts carefully before signing them

Jaeson Schultz, mentioned earlier, recommends people or companies doing business in the metaverse avoid sharing information about the assets they ownwhich could make it a target for scammers.

“Buyers must also read smart contracts carefully before signing them “, he added. Ideally, people carrying out transactions should transfer the exact amount of cryptocurrency to a separate wallet rather than connecting their primary wallet.

In short

There is a lot of hype and opportunity on the metaverse. And metaverse companies can make a lot of money and completely change the way we socialize.

But in their early days, it is vital for these platforms to sfocus as much on their risk management practices as on new features. On the contrary, the general public will quickly lose confidence and therefore all interest in the metaverse.

Use of industry experiences which have grown enormously in recent years, such as eSports, iGaming and cryptography, should help these companies to understand the typical risks associated with new technologies that accept alternative payment methods.

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Scams in the metaverse: How to protect yourself?

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