9 Worst Tourist Traps in Iceland

9 Worst Tourist Traps in Iceland

Verified Expert

Iceland is a fantastic place to explore, but has some tourist traps to avoid.

Learn about the tourist traps and scams that you should avoid when you visit. Iceland is one of the friendliest and safest countries in the world, but, like any popular tourist destination, there will always be a small number of swindlers and charlatans who are quick to take advantage of unsuspecting visitors. Read on to ensure you don't fall for any of them during your visit.

Sadly, quite a number of establishments in Iceland sell goods and services that are either counterfeit or more expensive than normal.

To avoid falling victim to plots and schemes that are solely geared towards gullible travelers, take note of our list of the 9 Worst Iceland Tourist Traps before setting out on your holiday.

Use this Iceland travel guide to help you avoid the most notorious Iceland tourist traps. It includes information on everything from getting a fair price for a taxi in Iceland to avoiding counterfeit goods.

9. 'Icelandic' Sweaters From China

The lopapeyser is an authentic Icelandic gift - if properly made.Photo by Jorunn

The "Lopapeysa," or Icelandic woolen sweater, is perhaps the most traditional Icelandic piece of clothing. They originated in the early 20th century when imported threads transposed traditional Icelandic attire, and the population had to come up with new ways of utilizing an unexpected abundance of native sheep wool.

Today, the Lopapeysa has become a traditional Icelandic garment that is fundamental to the unofficial national costume and is sought out by travelers and locals alike.

But sadly, not all of the "Icelandic" woolen sweaters are authentic. In more recent times, a spotlight was shown on an ongoing Lopapeysa fiasco.

This started when the Icelandic Minister of Industry and Commerce, Ragnheidur Elin Arnadottir, presented an "original Icelandic" Lopapeysa to Chicago Mayor Rahm Emanuel. 66° North designed the Lopapeysa in question and sold it for around 260 USD in numerous shops in Reykjavik.

But the problem was that this particular sweater turned out to be machine-made in China. This has since been found to be the case for many of the woolen sweaters sold for obscene amounts of money in Iceland.

To ensure that you get your hands on an authentic Icelandic knit-quality Lopapeysa, you would do well to buy from an accredited association or trusted vendor. For example, the Handknitting Association of Iceland or Thorvaldsens Bazar at the corner of Austurstraeti and Veltusund in central Reykjavik.

8. Bottled Water

Iceland's glacier water is crystal clear and very clean.

The best drink in Iceland is free of charge.

Iceland is blessed with an abundant fresh water supply. The quality of the water that runs from every tap is quite exceptional, and you can ask for a free glass of water anywhere you go (even in a restaurant).

Despite selling water in Iceland being comparable to selling sand in the Sahara, overpriced bottled water is on offer almost everywhere in Iceland. This is a blatant tourist trap; your money would be better spent on a reusable water bottle that you can refill wherever you go.

There seem to be no limits to how far some people are willing to go in order to push their products. Previously, the owner of Hotel Adam in central Reykjavik went as far as warning his guests not to drink the tap water in their rooms. He instead instructed his guests to buy bottles of water branded with the hotel's label for about 3 USD each.

An investigation into the incident revealed that the hotel's tap water was perfectly clean and safe to drink. Even worse, it also revealed that the water in the bottles sold there actually came from the hotel faucets!

To avoid falling for a water swindle in Iceland, simply bring your own bottle. You're safe to fill it up from any faucet and drink free clean water for the duration of your holiday.

7. Car Rental Theft Protection

Car rentals in Iceland are popular, and car theft is very rare.

Renting a car in Iceland is relatively expensive.

With car rentals offering numerous extra insurances (including ash and sand insurance, windshield insurance, and gravel road insurance), the total cost of renting a car can quickly reach huge amounts if you're not careful. 

Some, if not most, of these extra insurances are quite reasonable.

A car rental company offering ash and sand protection would have been lampooned a few years back. However, after the cataclysmic eruption of Eyjafjallajokull in 2010, where a large portion of the Icelandic car rental fleet was severely damaged due to heavy ash and sandstorms, ash and sand protection became standard procedure.

In fact, ash and sandstorms can virtually peel the entire coating off a car almost anywhere in Iceland. You're safest to avoid this only when traveling in the Westfjords, where neither sand nor ash storms are known to occur.

One insurance you can definitely do without, however, is theft protection. Robbery is most assuredly not a problem that most locals ever encounter. Motor vehicle theft in Iceland occurs extremely infrequently. Locals are even known to leave the engine running to keep their cars warm in winter while shopping or running small errands!

In fact, the odds of your car being stolen in Iceland are about the same as being hit by lightning -- and there are no thunderstorms in Iceland.

6. Icelandic Money

Icelandic krona is the currency of Iceland.Photo from Wikimedia, Creative Commons, by Thorsten Schmidt. No edits made.

The Icelandic krona (ISK) is the currency of Iceland.

After the economic collapse of 2008, the value of the krona dropped to staggering depths. To save the country from bankruptcy, the central bank tried to stabilize it by pegging it against the Euro. Soon after, however, the krona continued to plunge in value as investors feverishly converted their Icelandic assets into foreign currencies.

In a countermeasure, the Icelandic government issued strict capital controls, which are in effect to this very day. Because the value of the krona is virtually unilaterally determined by the Icelandic Central Bank, the domestic exchange rate is not the same as the off-shore exchange rate.

Since the capital controls restrict the extent to which investors holding krona-denominated assets abroad can get a hard-currency return, banks outside of Iceland generally do not carry the Icelandic krona. Therefore, you'll have to be very careful not to carry large amounts of currency with you abroad.

There's a bank at Keflavik Airport where you can exchange your currency. However, the branch in question uses an exchange rate that is less favorable than the one used in other Icelandic banks. Of course, this is a standard tourist trap in almost every country - hardly unique to Iceland.

To avoid being stuck with large amounts of Kronas abroad, remember to change your money before going to the airport at the end of your holiday.

5. Airport Taxis

There is no Uber in Iceland and taxis are expensivePhoto by Peter Kasprzyk

Taxi prices in Iceland are quite high. Unfortunately, there's no Uber in Iceland, not even in the capital city of Reykjavik. There's no Lyft in Iceland, either. Public transportation and taxis are your best options. With flag fall starting at around 5.75 USD, a short drive from the Central Bus Station to downtown Reykjavik will cost around 17.50 USD.

Taxis in Iceland come in all different makes and models and are identified by the internationally recognized yellow roof sign. Regardless of the vehicle type, they all use official taximeters. Usually, there will be rows of taxis outside bus centers, on Bankastraeti in downtown Reykjavik, outside the larger hotels, and near bars and nightclubs.

However, one row of taxis you should avoid like the plague is the one that waits for passengers outside the Arrival Terminal in Keflavik Airport. The fare for the one-hour drive from Keflavik Airport to central Reykjavik costs around 115-140 USD, but taking the Flybus to the Central Bus Station only costs about 25 USD.

On the plus side, taxi drivers in Iceland are generally honest. Unlike some other countries, there is no need to tip on top of the expensive fare.

Once in Reykjavik, however, visitors can walk, bike, or hop a bus anywhere they need to go. Bicycle rentals are common, and a "bus passport" is available during the summer months, making it easy to get around town no matter how many things are on your to-do list.

4. The 10-11 Shops

Reykjavik has plenty of shops and supermarkets with reasonably priced groceries.

The most expensive grocery store in Iceland is 10-11.

This all-encompassing franchise, whose hospital-green neon lights will haunt you from arrival to departure from Keflavik Airport, specializes in peddling overpriced junk food and a limited selection of grocery items to unsuspecting travelers.

But as if being by far the most expensive convenience store in Iceland somehow wasn't enough, the three 10-11 stores in central Reykjavik have actually been found to slyly alter their electronic price tags. They have allegedly silently increased their prices by an average of 8% in the evening and on weekends. As such, this is one Iceland tourist trap that even unsuspecting locals can fall victim to.

The stores in question are found on Austurstraeti, Laugavegur, and Baronsstigur streets. Unless you are in desperate need of becoming a victim of a voluntary robbery, you should avoid 10-11 shops at all costs.

In general, shopping at 10-11 will probably add at least 50% to your grocery bill from the low price stores like Netto, Bonus, and Kronan.

3. The Bars in Austurstraeti

Downtown Reykjavik is an expensive place to drink.

Characterized by a ridiculous volume of frenetic activity and interior design schemes, the bars of Austurstraeti stand as a testament to how culturally starved the human being becomes when profit is its only goal.

Firstly, there's Fram, an 'English' pub, thoroughly flooded with Victorian memorabilia that can only have been randomly herded from eBay. There's also the 'American' bar that's just short of a fenced-in mechanical bull.

The extortionists in Austurstraeti will blatantly charge you around 11 USD for a pint without flinching while overwhelming you with folk cover music that is somewhere on the spectrum between painful and unbearable. 

Bestowing a bar with authentic character and atmosphere takes time, effort, and dedication. But when your motive is greed, and your recipe is exploitation, you are bound to conjure up a tasteless watering hole that looks like a theme park, sounds like a karaoke party, and smells like a McDonald's.

Should you ever be unfortunate enough to find yourself stuck in one of Austurstraeti's abandoned movie sets, make sure you drink enough to make memories you won't remember.

2. Near Beer

Icelandic beers are expensive but delicious.Photo by Konstantin Stroginov 

Due to the fact that alcohol consumption was prohibited in Iceland for the greater part of the 20th century, the Icelandic drinking culture is still in its infancy. To this day, Icelanders maintain a strange and premature relationship with alcohol, and alcoholic beverages are exclusively sold in state-run stores called Vinbudin (The Wine Store).

Supermarket shelves, however, are stocked with various brands of relatively cheap "near-beer," a product that aims to replicate the taste of beer while totally eliminating its intoxicating effects.

Since many travelers don't know this, it's relatively common to see foreign visitors victoriously pushing full shopping carts stuffed with the watered-down near-beer through Icelandic supermarket aisles - oblivious to the true nature of their loot.

While not exactly an Iceland tourist trap, this is definitely one mistake that tourists make frequently enough that it warrants mention. On the plus side, although near-beer might keep the party from taking off with a bang, the upside is that it will never keep you from getting out of bed the following morning.

1. Puffin Shops

Puffins are a symbol of Iceland, but avoid shops that use it for marketing - they are often tourist traps.

Easily topping our list of terrible tourist traps in Iceland are the so-called "puffin shops."

Sadly, these souvenir boutiques, which are exclusively tailored to travelers, have in recent years become one of the capital's most distinguishing features. They now overshadow and drive out small local businesses, workshops, galleries, music venues, and café's that once were the hallmark of central Reykjavik.

Although the puffin shops supposedly sell "authentic" Icelandic souvenirs and memorabilia, in reality, most of the so-called "Iceland" branded products found in these shops are mass-produced junk from China. This is also a common theme for everything from the plastic Viking helmets to the over-priced puffin-branded accessories.

While there are countless puffin shops in central Reykjavik, they all depend on the same handful of wholesalers and suppliers. It's this monopoly that undermines any competitive environment, meaning that while the puffin shops may be numerous, they all sell essentially the same crap.

Sadly, the puffin shops make billions upon billions each year and will continue to grow in size and number so long as visitors coming to Iceland remain oblivious to the ploy. Please do not help perpetuate this tourist trap.

Should you be looking for authentic Icelandic memorabilia, we recommend buying from the Handknitting Association of Iceland, shopping in the gift shop in the National Museum, or visiting the Kolaportid flea market, which is located downtown by the Reykjavik harbor and is open Saturdays and Sundays from 11 a.m. to 5 p.m.

We hope this guide to the top 9 worst tourist traps in Iceland steers you away from some unfair experiences and helps to improve your trip. We'd love to hear from your own experiences of tourist traps in Iceland in the comments below!