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When you hear the phrase, ‘snake oil salesman’, you probably imagine a top-hatted charlatan, selling mysterious apothecary bottles across the American West. (Or maybe you think of these GOOP-approved healing stickers).
So why is snake oil such a bad thing? Well, it isn’t. Or at least it wasn’t. In the mid 1800’s, thousands of Chinese immigrants were hired to construct the Transcontinental Railroad. They brought with them medicines from their homeland, including snake oil made from Chinese water snakes. The oil was rich in Omega-3 fatty acids, and Americans marveled at its healing effects on soreness and inflammation.
So how did snake oil become synonymous with fraud? And what modern-day “snake oils” are you falling for? Let’s find out.
The Rattlesnake King
In the 1890’s, with the rise of patent medicines, a cowboy named Clark “The Rattlesnake King” Stanley began promoting a new kind of snake oil with healing powers. He claimed his oils were made from rattlesnakes, and could treat everything from frostbite to toothaches to baldness. Clark Stanley made no mention of Chinese origins, and even went so far as to credit Hopi medicine men for the secret recipe.
The Stanley Snake Oil empire came crashing down when investigators seized a shipment in 1917, and found that the oils contained no trace of snake oil at all. Instead, they were made from beef fat, red pepper, and turpentine. And thus, the derogatory term “snake oil salesman” was born.
What become of The Rattlesnake King? He was fined $20 for his fraudulent claims. That’s about $440 today.
The Wild West of Cryptocurrency
They may not wear tailcoats and pantaloons, but “snake oil salesmen” come in many forms today. Sure, there’s the unproven claims of CBD supplements, or the Tinder Swindler financial crimes. In the Wild West of cryptocurrency, there’s also the $14 billion in fraudulent transactions that occurred in 2021 — phishing, hacking, and pump and dump schemes.
“New scams take advantage of crypto investors’ lack of tech expertise and desire to earn outsize returns. Some of the biggest fortunes in the cryptocurrency world were made by those who bought into then unknown digital tokens in their infancy. Scammers take advantage of this appetite for newly minted cryptocurrencies.” - Money.com
Investing in the next big thing is exhilarating, and sometimes lucrative too. Whether it’s snake oil or cryptocurrency, remember that where there is money and hype, there are scammers too.
Think twice before giving your money or personal information to claims of ‘guaranteed returns’, ‘big payouts’, ‘easy money’, or ‘cryptocurrency giveaways’. And definitely don’t pay your cyber-lovers in Bitcoin.
Before you shoot for the moon, consider investing your monthly savings in tax-advantaged accounts, filling your 401(k) and reaping the tax benefits of IRAs. Set yourself up for financial freedom first, before you go looking for more “exciting” investment opportunities. Remember, compounding interest is your best friend.
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