The metaverse is innovative and appealing, but it still has potential risks we see in our everyday lives.
Cryptocurrencies and blockchains have been around long enough that we are familiar with many of the issues surrounding them, even though the metaverse is a brand new concept.
Metaverse may have plans to go beyond blockchain, but it appears to be this technology that fraudsters have found extremely useful to use to launder money, steal identities, and run different scams.
However, fraudsters can test out new methods and, to some extent, enjoy risk-free attempts to defraud both companies and users due to a lack of KYC measures on certain platforms and minimal regulatory measures.
A record $7.8 billion in blockchain-based transaction crime was committed in 2021, with the constant threat of hacks, so there is no doubt that the many metaverses are vulnerable to scams.
Ways Metaverse Scams Work
Cryptocurrency-based businesses and individuals can face a wide range of risks in the metaverse and the wider crypto-adjacent ecosystem.
For instance, there are already several schemes and techniques used or soon to be implemented within the metaverse-adjacent sectors, and experts believe that new methods unique to these platforms will also emerge.
To launder money or take advantage of promotional offers, fraudsters may set up multiple accounts on a particular metaverse platform. NFTs can be purchased using dirty money from another account controlled by the fraudster to withdraw once they are sold to an honest user.
Fake reviews can seriously harm a brand’s reputation, especially on new platforms that depend on openness to their users to succeed, maintain a stable token price, and build a loyal following. Bad reviews posted by bots can easily drive customers away and lower the value of the tokens.
Virtual World Fraud
It is imperative to remember that some of the issues that are being looked at have existed in virtual worlds like The Sims, World of Warcraft, and Second Life long before the advent of crypto. In other words, there is a case to be made that gaming companies operating in this area should be better prepared.
The most famous example of a digital token inspired by the Netflix series Squid Game and pitched as a play-to-earn metaverse game is probably the one associated with an opportunistic bad actor. As it turned out, the developers of $SQUID were nothing more than con artists, and the coin’s value plummeted almost immediately.
As long as NFTs and crypto remain unregulated, they will continue to be a breeding ground for fraudulent projects, as well as issues with copyright and intellectual property. Vice, for example, has already covered an NFT project developer who went missing with $2.7 million in late 2021.
Email data breaches are, of course, a global data issue. Metaverse platforms must ensure that their users’ data is protected or risk losing the trust of their customers.
The blockchain’s open-record information has made crypto touted for its transparency. A transaction, on the other hand, is nearly impossible to undo once it has been completed. When compared to traditional brick-and-mortar stores, this may disappoint some customers.
How To Avoid Scam In The Metaverse
Fighting fraud is an ongoing battle, and fraudsters will continue to devise new ways to exploit platforms’ vulnerabilities, try out new techniques, and ultimately con businesses and individuals out of their money.
Before the launch of a new platform, several things can be done to strengthen defenses and block out fraudsters.
Metaverse platforms’ business and users will be protected by a comprehensive risk management product stack, which includes machine learning as one component.
The machine learning algorithm should be supplemented by additional solutions. An overall risk score can be used to determine whether or not a user can be onboarded, logged in, or transacted upon.
The majority of decisions will be handled by BlackBox AI, which does not require any human input. Whitebox AI, on the other hand, can be more useful in the early stages of a product’s lifecycle to reduce customer dissatisfaction.
A key reason for this is the fact that when using Whitebox ML, humans can pick and choose which parts of the analysis are most relevant to the particular situation at hand.
Digital Footprint Analysis
It is helpful to see a user’s digital footprint when they are signing up. Companies can verify the legitimacy of accounts with just an email or a phone number because the majority of honest users will have some form of online footprint, be it social media presence, web platform activity, or IM accounts
When there are a mismatch in the two-factor authentication (2FA) requirements, some services can enforce them, which increases friction but also protects users better in certain situations.
Criminals who commit scams aren’t just winging it; they’re planning and strategizing to see what works and what doesn’t, and they often share their findings with others.
Risk/fraud managers have a nightmare because they need a complete view of the company’s information to identify connections between customers who may be at risk of fraud or theft.
Communication and transparency between teams can lead to huge knowledge gaps that can affect revenue, security, and decision-making.
A 360-degree view of the business should not only include testing various solutions but should also include using machine learning to help organize data and automate easier decisions.
Browser And Device Fingerprinting
It is possible to detect emulators, virtual machines, and bots if you know how they are configured.
Although it is noteworthy that some metaverses will be available on multiple devices, which can again lead to customer insult rates if you solely rely on this, hidden devices should be another indicator of potential risk.
Virtual reality headsets, PCs, and mobile phones are becoming increasingly commonplace in the workplace. Knowing a customer’s device set-up and location can be a simple way to identify misalignments and potential risks.
While new features are important in the early days of these platforms, risk management is just as important. To avoid this, you must earn the trust of the general public and keep them interested.
New technologies that accept alternative payment methods, like esports, gaming, and the cryptocurrency industry have grown tremendously in recent years, and these companies can learn from their successes and failures.