united-states criminal-law contract-law terms-of-service fraud
An (undetermined) fraud in the terms of use
<p>Before asking this question, I should say some words. Because this question seems similar to another <a href="https://law.stackexchange.com/questions/46603/mistakenly-agreed-with-a-scammer-s-term-of-use">question</a> I asked, I worry someone may mark this as a duplicate without understanding - In fact, they were different.</p>
<hr />
<p>Disclaimer: This is only an educational case. I am neither the scammer, the victim, nor someone scheming to scam.</p>
<hr />
<p>Let's say, Tom was scammed by a &quot;bitcoin mining website&quot;, the website owner, say, Bob, was a scammer.</p>
<p>Suppose that Bob and Tom are all in the US, and are all under the jurisdiction of the US.</p>
<hr />
<p><strong>Below is how this thing happened:</strong></p>
<p>One day, Tom opened Bob's website while surfing Google. The website said:</p>
<blockquote>
<p>&quot;we have a software, which mines bitcoin at a very fast speed - because it uses new technology to mine bitcoin.&quot;</p>
<p>&quot;It is more than 1000 times faster than traditional mining.&quot;</p>
</blockquote>
<p>Tom was allured by the &quot;potential wealth&quot;, so he downloaded the software, and went through the setup, and installed that alleged &quot;New Technology Bitcoin Miner&quot;.</p>
<p>The software was made by Bob, too. During the setup, there was a window of &quot;terms of use&quot;, written by Bob. At the very end of the &quot;terms of use&quot;, Bob wrote down this:</p>
<blockquote>
<p>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 <strong>simulation</strong>, therefore, it will not produce real bitcoin.</p>
<p>Agreement to this term of use means that any payment you make in the software is regarded as payment for the <strong>simulation</strong>.</p>
</blockquote>
<p>However, Tom was too hurry, so he didn't read the tedious &quot;terms of use&quot;. He straight clicked &quot;Agree&quot; and installed the software, a/k/a &quot;New Technology Bitcoin Miner&quot;.</p>
<p>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.</p>
<p>So, Tom paid $999 and started &quot;mining bitcoin&quot; in this alleged &quot;New Technology Bitcoin Miner&quot;. The software <strong>simulated</strong> the mining process. At last, Tom got <strong>no</strong> bitcoin into his wallet.</p>
<p>(And, in fact, the alleged &quot;New Technology Bitcoin Miner&quot; didn't do real mining at all.)</p>
<p>Tom felt he was defrauded, so he was about to report the website owner, Bob.</p>
<hr />
<p><strong>My questions:</strong></p>
<ul>
<li><p>From the perspective of US law, is Bob doing this regarded a fraud?</p>
</li>
<li><p>Is this a criminal case, or a civil case?</p>
</li>
<li><p>What evidence can Tom provide to support the lawsuit?</p>
</li>
</ul>

<h2>A contract can’t legalise illegality</h2>

<p>Let’s assume that absent the “simulation” disclosure in the ToS, this would be <a href="http://www7.austlii.edu.au/au//legis//nsw//consol_act//ca190082/s192e.html" rel="noreferrer">fraud</a>.</p>

<p>The question then becomes, does making the disclosure make it <em>not</em> fraud?</p>

<p>Fraud requires <a href="http://www7.austlii.edu.au/au//legis//nsw//consol_act//ca190082/s4b.html#dishonest" rel="noreferrer">dishonesty</a> and <a href="http://www7.austlii.edu.au/au//legis//nsw//consol_act//ca190082/s192b.html#deception" rel="noreferrer">deception</a>. These are measured by what a reasonable person would determine from the <strong>overall</strong> conduct so a small piece of truth in amongst a web of half-truths and outright lies is still dishonest and deceptive.</p>

<blockquote>
  <ul>
  <li>From the perspective of US law, is Bob doing this regarded a scam?</li>
  </ul>
</blockquote>

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

<blockquote>
  <ul>
  <li>Is this a criminal case, or a civil case?</li>
  </ul>
</blockquote>

<p>Both</p>

<blockquote>
  <ul>
  <li>What evidence can Tom provide to support the lawsuit?</li>
  </ul>
</blockquote>

<p>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.</p>
