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Before asking this question, I should say some words. Because this question seems similar to another question I asked, I worry someone may mark this as a duplicate without understanding - In fact, they were different.

Disclaimer: This is only an educational case. I am neither the scammer, the victim, nor someone scheming to scam.

Let's say, Tom was scammed by a "bitcoin mining website", the website owner, say, Bob, was a scammer.

Suppose that Bob and Tom are all in the US, and are all under the jurisdiction of the US.

Below is how this thing happened:

One day, Tom opened Bob's website while surfing Google. The website said:

"we have a software, which mines bitcoin at a very fast speed - because it uses new technology to mine bitcoin."

"It is more than 1000 times faster than traditional mining."

Tom was allured by the "potential wealth", so he downloaded the software, and went through the setup, and installed that alleged "New Technology Bitcoin Miner".

The software was made by Bob, too. During the setup, there was a window of "terms of use", written by Bob. At the very end of the "terms of use", Bob wrote down this:

Our bitcoin mining service has been already suspended in xx/xx/2019, due to legal and financial reasons. You can still use this software, but it will only work as a simulation, therefore, it will not produce real bitcoin.

Agreement to this term of use means that any payment you make in the software is regarded as payment for the simulation.

However, Tom was too hurry, so he didn't read the tedious "terms of use". He straight clicked "Agree" and installed the software, a/k/a "New Technology Bitcoin Miner".

Then, the software began asking for payment. It said to Tom: If you want to mine bitcoin, you should pay $999 for our service first.

So, Tom paid $999 and started "mining bitcoin" in this alleged "New Technology Bitcoin Miner". The software simulated the mining process. At last, Tom got no bitcoin into his wallet.

(And, in fact, the alleged "New Technology Bitcoin Miner" didn't do real mining at all.)

Tom felt he was defrauded, so he was about to report the website owner, Bob.

My questions:

  • From the perspective of US law, is Bob doing this regarded a fraud?

  • Is this a criminal case, or a civil case?

  • What evidence can Tom provide to support the lawsuit?

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gudako
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A contract can’t legalise illegality

Let’s assume that absent the “simulation” disclosure in the ToS, this would be fraud.

The question then becomes, does making the disclosure make it not fraud?

Fraud requires dishonesty and deception. These are measured by what a reasonable person would determine from the overall conduct so a small piece of truth in amongst a web of half-truths and outright lies is still dishonest and deceptive.

  • From the perspective of US law, is Bob doing this regarded a scam?

No, but only because “scam” isn’t a legal term - it’s slang for fraud and this is fraud

  • Is this a criminal case, or a civil case?

Both

  • What evidence can Tom provide to support the lawsuit?

Whatever he has. However, in practice, these types of fraudsters are rarely ever caught and it’s even more rare for the victim to recover their money. They are usually off-shore in countries with either poor rule of law or which will not extradite their nationals.

Dale M
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is Bob doing this regarded a scam?

No. Tom has no viable claims and therefore he has no case in civil court (nor is there a criminal case).

Being "at the very end of the 'terms of use'" likely renders Tom unable to justify his unawareness of the disclaimer. That would defeat his claim of breach of contract. When he entered the contract, he knew or should have known about the disclaimer. The disclaimer is an update that renders pay-to-mine directions obsolete, and the disclaimer was presented to Tom first.

Being in a hurry is unlikely to justify Tom's unawareness of the disclaimer unless the circumstances are tantamount to hardship or coercion.

Likewise, Tom will have a hard time proving reasonable reliance, one of the prima facie elements of fraud. It is widely known that nowadays much of "traditional mining" involves technology with which an average computer cannot compete (think of ASIC and specialized hardware).

Moreover, comparisons about the pace of "traditional mining" are meaningless because it is also widely known that the difficulty of bitcoin mining is adjusted periodically (and dynamically) for the purpose of maintaning a somewhat steady rate of speed with which new bitcoins are created.

Thus, Tom's basis for purchasing the software is too naive (that is, for the average aspiring miner of bitcoins) to meet the criterion of reasonable reliance on Bob's advertisement.

Iñaki Viggers
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    There was no reason to downvote this. Inaki was 100% correct here. – Putvi Nov 22 '19 at 23:00
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    The website itself said "we have a software, which mines bitcoin" and not "we have a software, that simulates mining bitcoins." You can't defeat a fraud claim just by burying a disclaimer in the terms. No reasonable person would pay $999 for a simulation of bitcoin mining. The only way anyone would pay that much is if they wanted to actually mine bitcoin. Also, "It is widely known that nowadays much of 'traditional mining' involves technology with which an average computer cannot compete" - But a claim was made of "new technology". – D M Nov 23 '19 at 19:02
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    @DM The contract was formed when Tom accepted the terms of use during installation of the software, not anytime prior to that. Tom could have declined the terms of use and abort the installation, in which case he would be entitled to reimbursement. And the allegations of "new technology" brings us back to the element of unreasonable reliance: It is unreasonable for a person to ignore what he knows --or should know-- about the state of the art every time he sees or hears the cliché "new technology". – Iñaki Viggers Nov 23 '19 at 19:51
  • despite that no reasonable one would pay 999 for a simulation, since Tom has agreed the terms, he agreed “he would pay that value to by the simulation” , even though it seems absurd - is that right? – gudako Nov 26 '19 at 04:23
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    This seems like an adhesion contract, and courts in the US have been willing to declare such contracts unenforceable because of "unfair surprise", that is "The party who drafts the contract includes terms in the contract knowing that those terms are not in line with the other party’s expectations and that the other party will not notice that the terms have been inserted.". This clause at the end of the terms of use seems to fall squarely in this category. – Charles E. Grant Nov 26 '19 at 04:56
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    @CharlesE.Grant There is no "unfair surprise" in the adhesion contract as described by the OP. The disclaimer is not located in between clauses, but "at the very end of the terms of use", where users formalize their acceptance of TOU by clicking on an explicit checkbox and/or a button to that effect. Therefore, a customer's allegation that he did not notice the disclaimer would generally fail in court. – Iñaki Viggers Nov 26 '19 at 10:20
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    @AkutaHinako The more explicit a customer's acceptance of terms of use, the likelier it is for that acceptance to outweigh a criterion of conventional price tag in a purchase. Or if that is not the sense of your comment, could you clarify? – Iñaki Viggers Nov 26 '19 at 10:21
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    @IñakiViggers - It's right the sense of my comment. Something I doubt is just the false advertisement. "we have a software, which mines bitcoin at a very fast speed - because it uses new technology to mine bitcoin.", "We are x1000 faster than traditional miners". It seems the advertisement is contradictory to the term of use, which says it is just a simulation. Since it is just simulation, no "new mining tech" is involved, and the "x1000 speed" is meaningless as well. And well, btw thanks to ur answer and comments, I was not the one who downvoted you :) – gudako Nov 26 '19 at 11:12
  • @IñakiViggers - I asked my lawyer, but when I asked the point "If I am Tom, and I've already accepted the terms of use, what can I say to accuse Bob?", he told me "you just gonna say <Without accepting I couldn't install the software>". Well, I don't think it's a good reason at all. - I can decline the TOU and straight stop the installation, close the website. – gudako Nov 26 '19 at 11:18
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    @IñakiViggers - I was also told if I was Tom, I could also straight report that Bob was making a false AD in his website, which does not match the content in TOU. ----- Because it was simulation, therefore it's no mining, therefore no "new mining tech" is involved, and the "x1000 speed" is meaningless, so they are all false AD, and the false AD is gonna defraud others to pay. – gudako Nov 26 '19 at 11:20
  • @IñakiViggers ------ And well, being "at the very end of the terms of use" it really does not match any of the examples in "unfair surprise". – gudako Nov 26 '19 at 11:32
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    @AkutaHinako You are right. The lawyer's response would fail in court because it reinforces the notion that Tom wanted to install the software "now matter what" (that is, to the point that Tom accepted the TOU which now control the relation between him and Bob w.r.t. the software). The contradiction between the false advertisement and the TOU is superseded by Tom's explicit acceptance of the latter. Thus, Tom --or anyone-- may report Bob for false advertising, but that does not override the TOU Tom accepted. Therefore, reporting Bob or his software will not result in reimbursement. – Iñaki Viggers Nov 26 '19 at 11:39
  • @IñakiViggers --- do you mean Bob is still illegal in the false AD? Or you mean, the false AD is not gonna indicate a fraud? – gudako Nov 26 '19 at 11:44
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    @AkutaHinako I mean that the false ad does not suffice to prove fraud. That is because Tom's acceptance of the TOU forfeits his ability to prove reasonable reliance, one of the prima facie elements of fraud. The legality of the ad is debatable and depends on the exact terms thereof. For instance, Bob could advance a plausible argument in the sense that "new technology" refers to the algorithm(s) used for simulation of mining. Let us continue this discussion in chat. – Iñaki Viggers Nov 26 '19 at 11:51
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    @IñakiViggers Thx! I think I am about to understand - well, fairly professional! – gudako Nov 26 '19 at 11:57