Tourist Scams in Iceland

Shops near the main tourist strip sell mass-produced "Icelandic" wool sweaters and puffin merchandise that are actually made in China. They are priced the same as genuine hand-knitted items but are far lower quality.

How to avoid: Buy genuine Icelandic wool sweaters only from shops with the Ístex or Handknit label. Ask sales staff directly if an item is machine-made or imported. Markets and government-certified craft stores are safer bets.

Tour operators in Reykjavik advertise northern lights excursions with vague language suggesting sightings are likely or "highly probable," then provide no meaningful refund or rebooking when auroras are not visible — which is the case on the majority of tour nights due to cloud cover, solar activity, or light pollution. Some operators collect payment for premium "guaranteed" packages that, in the fine print, only guarantee a second tour attempt rather than a refund. Prices for these tours range from ISK 8,000 to over ISK 20,000 per person.

How to avoid: Only book with operators who offer a genuine free rebooking policy if no aurora is sighted, and read the refund terms carefully before paying. Check aurora forecasts yourself at en.vedur.is (Icelandic Met Office) before departing. Avoid operators that claim sightings are "guaranteed" on a specific night — no one can guarantee aurora activity.

Fraudulent websites and social media accounts impersonating legitimate Reykjavik photography tour operators take deposits for exclusive Northern Lights trips that never depart, or operate vehicles with no qualified guide. These scams spike in autumn and winter when demand for Aurora tours dramatically outstrips supply and travellers book months in advance.

How to avoid: Book Aurora tours only through operators listed on the official Visit Reykjavik website or with verified TripAdvisor listings showing hundreds of reviews. Pay with a credit card so you can dispute charges if the operator fails to deliver.

Shops and vendors advertise prices in euros to attract tourists, then when it is time to pay, insist they only accept Icelandic krona and apply an invented exchange rate that adds 10–20% to the actual cost. Airport exchange booths also charge steep fees.

How to avoid: Pay by card wherever possible to get the real exchange rate. If you need cash, use a bank ATM rather than airport exchange counters. Look up the current ISK rate before you arrive so you can spot bad deals.

Since deregulation of the taxi industry, some unlicensed operators charge tourists outrageously inflated fares from Keflavik Airport into Reykjavik. A ride that should cost a reasonable amount ends up being 2–3x the fair price.

How to avoid: Take the Flybus airport shuttle instead — it is affordable, reliable, and drops you at your hotel. If you must take a taxi, use only Hreyfill or BSR Taxi and confirm the meter is running before departure.

Some Reykjavik car rental operators, particularly smaller companies operating near Keflavik airport and on the Reykjanes Peninsula, charge customers for pre-existing vehicle damage they claim occurred during the rental. Gravel damage, windscreen chips, and undercarriage scrapes are common claims, and Iceland's lava roads make it difficult to prove whether damage was pre-existing.

How to avoid: Document the entire vehicle with video before driving away, including undercarriage if possible. Choose rental companies with clear gravel protection policies and always pay with a credit card to enable chargebacks if disputes arise.

Tourist restaurants in central Reykjavik (especially around Hallgrímskirkja and Laugavegur) display menus with prices in the window, but once seated, servers present a different menu or claim prices have changed. Fish and seafood dishes are particularly prone to this, with final bills double or triple the advertised amount. Staff become evasive when questioned about price differences.

How to avoid: Take a photo of the menu with prices displayed outside before entering. Request the specific menu shown in the window when ordering. Ask the server to confirm the exact price for each dish before ordering. Review the bill immediately and question any discrepancies.

Scammers approach tourists in car parks or at popular viewpoints offering paid guided tours of natural attractions. In Iceland, almost all natural sites are free to visit and have no need for a guide.

How to avoid: Do not pay for unsolicited tours at natural attractions — they are almost never legitimate. Use the official tourist information centre in Reykjavik to book tours through reputable licensed operators.