Bitcoin Forum

Let's run this up the flagpole.  Is Butterfly labs breaking any known American federal or state laws?  


I'm wondering about:

Technology Export Laws
Mail or mail order fraud (Like the ?founder? appears to have plead guilty to)
Uniform Commercial Code
Money printing machine laws
FCC (https://bitcointalk.org/index.php?topic=110805.msg2622757#msg2622757)
FTC (see post #3 below)
other


This is in response to the long running thread here:

https://bitcointalk.org/index.php?topic=110805.0

FTC also comes to mind.

I've also read about RICO, but not versed in it.

Since they have stopped issuing refunds it certainly appears to me (IANAL) they are at least breaking FTC regulations.  It would seem that UNTIL the product is physically shipped a customer has the right to cancel their order (for ANY reason) and the company MUST issue a prompt refund. 

Below is quoted from the link at the FTC site (bolded is mine)

When You Must Cancel an Order

You must cancel an order and provide a prompt refund when:
•the customer exercises any option to cancel before you ship the merchandise;
•the customer does not respond to your first notice of a definite revised shipment date of 30 days or less and you have not shipped the merchandise or received the customer’s consent to a further delay by the definite revised shipment date;
•the customer does not respond to your notice of a definite revised shipment date of more than 30 days (or your notice that you are unable to provide a definite revised shipment date) and you have not shipped the merchandise within 30 days of the original shipment date;
•the customer consents to a definite delay and you have not shipped or obtained the customer’s consent to any additional delay by the shipment time the customer consented to;
•you have not shipped or provided the required delay or renewed option notices on time; or
•you determine that you will never be able to ship the merchandise.


http://business.ftc.gov/documents/bus02-business-guide-mail-and-telephone-order-merchandise-rule

Direct link to FTC compliant form:

https://www.ftccomplaintassistant.gov/FTC_Wizard.aspx?Lang=en





More information from the link above:

WHERE TO GO FOR HELP

For more information about the Mail or Telephone Order Merchandise Rule, call the Federal Trade Commission toll-free: 1-877-FTC-HELP; write: Federal Trade Commission, Consumer Response Center, 600 Pennsylvania Avenue, N.W., Washington, DC 20580; or visit: www.ftc.gov.

You also may want to contact relevant trade associations, such as the Direct Marketing Association. Contact the DMA’s Washington, DC office at: 202-955-5030; write: 1111 19th Street, N.W., Suite 1100, Washington, DC 20036-3603; or visit: www.the-dma.org.

Your local U.S. Postal Service or consumer protection agency may offer additional assistance. State and local governments also may have requirements with which you must comply. You should consult appropriate state agencies for information about laws that affect your business.




For More Information

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Could you provide us with names of people who have ordered, paid, asked for a refund and did not get it? I've ordered a unit from BFL so this keenly interests me.

Their website states that they do not offer refunds.

I asked for a refund today and this was the response i received :

 ________________________
Hi,

As stated on the order form, all sales are final. Unfortunately, we cannot give you a refund. We truly do appreciate your business.

Best Wishes,
Abbey
BF Labs, Inc.
 ___________________



 It was for a Jalapenos 5GH (no upgrade) ordered June 3 2013. (#100063809‏).


This is reportedly and email received from BFL by a customer who wanted a refund.

https://forums.butterflylabs.com/bfl-forum-miscellaneous/3521-bfl-doesnt-refund-anymore.html

The entire thread if it interest you.

There are others (I'm not that interested to dig them up tbh) but from what I have read recently this seems to be the trend (which could be a huge red flag and possibly against FTC regulations if I read them correctly).

The website has said that for a long time however from what I have seen they have always cancelled an order and refunded them when asked to (even sometimes when not asked to LOL), that is up until recently.

IMO BFL is playing a very dangerous game, time will tell though, I have my popcorn (and fortunately no skin in the BFL game!).

I thought fraud was part of the common law. They're certainly guilty of that.

As seen above, BFL (Butterfly Labs Inc.), owned my Sonny Vleisides, was giving refunds as late as June 19, 2013.


So, if a customer read the above, and up to two weeks ago read that people were getting refunds, he felt safe to order. Due to whatever circumstances, said customer asked for a refund but was denied.

What the fuck has changed, BFL?

Butterfly Labs, El Monte Street, Leawood, KS  :)

Probably one of the choices should be Kansas laws.

OOOPS. I seem to have goxed it all up.   Fixed.

Looks like a straightforward violation of the FTC's Mail Order Rule (http://business.ftc.gov/documents/bus02-business-guide-mail-and-telephone-order-merchandise-rule). They can take the position that orders are "final" only if they ship the item ordered within 30 days. Once they fail to deliver, they have to give refunds. They do not have the option of keeping the money and not delivering product.

In the early days of the dot-com era, many small companies got into trouble for this. Their "online stores" would take every order that came in, without checking inventory first. The FTC clamped down on that. Now, almost everybody who sells online has the order system connected to the inventory system, so the order is rejected if it can't be filled. That fixed the problem.

Added European Law as an option to the poll.  Should that read "European Union" law?  Excuse my ignorance.



"BFL ASIC seized by EU , european & german Customs"
https://bitcointalk.org/index.php?topic=248406.0

To clarify the EU position, I send an email to the Swiss Customs.

Excellent, thank you.  Please do report your findings here.

Self-certification

Depending on the level of risk of the product, the CE marking is affixed to a product by the manufacturer or authorized representative who decides whether the product meets all the CE marking requirements. If a product has minimal risk, it can be self-certified where manufacturers a Declaration of Conformity and affixes the CE marking to their own product. Manufacturer then must do several things:
1. Decide whether the product needs to have a CE marking and if the product applies to more than one directive it needs to comply with all of them.
2. Choose the conformity assessment procedure from the modules called out by the directive for the product. There are several modules available for the Conformity Assessment Procedures as listed below:
Module A – Internal production control.
Module B – EC type-examination.
Module C – Conformity to type.
Module D – Production quality assurance.
Module E – Product quality assurance.
Module F – Product verification.
Module G – Unit verification.
Module H – Full quality assurance.
These will often ask questions about the product to classify the level of risk and then refer to the "Conformity Assessment Procedures" chart. This shows all the acceptable options available to a manufacturer to certify the product and affix the CE marking.

[continued ...]


Legal implications

There are mechanisms in place to ensure that the CE marking is put on products correctly. Controlling products bearing CE marking is the responsibility of public authorities in Member States, in cooperation with the European Commission. Citizens may contact national market surveillance authorities if the misuse of the CE marking is suspected or if a product's safety is questioned.
The procedures, measures and sanctions applying to counterfeiting of the CE marking vary according to the respective Member State's national administrative and penal law. Depending on the seriousness of the crime, economic operators may be liable to a fine and in some circumstances, imprisonment. However, if the product is not regarded as an imminent safety risk, the manufacturer may be given an opportunity to ensure that the product is in conformity to the applicable legislation before it is obliged to take the product off the market

Source : http://en.wikipedia.org/wiki/CE_marking

It also appears as though BFL has shipped Jalapenos with no UL cert on the device OR the power brick.  Can this company do anything legitimately?

Not 100% required but chances are pretty high IMO they are shipping to a municipality that has laws, regulations or codes.  It's on everything that plugs into the wall for a reason.

Do I need to have the UL Mark on my product in the United States? Is there a law stating that my product should have a UL Mark? Does our product require UL testing?


Manufacturers submit products to UL for testing and safety certification on a voluntary basis. There are no laws specifying that a UL Mark must be used. However, in the United States there are many municipalities that have laws, codes or regulations which require a product to be tested by a nationally recognized testing laboratory before it can be sold in their area. UL is the largest and oldest nationally recognized testing laboratory in the United States. UL does not, however, maintain a list of the jurisdictions having such regulations.


http://www.ul.com/global/eng/pages/corporate/contactus/faq/general/background/

BFL refusing to refund, date July 4, 2013 and indicating people may be contacting the FTC

https://bitcointalk.org/index.php?topic=249396.msg2657249#msg2657249




IMHO being open on July 4th is un-American

Yes, American Federal Law    29 (51.8%)
Yes, Kansas State Law    2 (3.6%)
No    8 (14.3%)
I don't know    12 (21.4%)
Nobody Knows    3 (5.4%)
Yes, European Law    2 (3.6%)


(European law was added after the poll began)

I asked for and received a refund on one device June 26, 2013.

I asked for a refund on June 27th and just received email confirmation from BFL that they were processing the refund today. I haven't seen it hit PayPal, but I presume that will happen over the course of the next few days. Once that happens, I'll cancel my CC chargebacks.

While I've seen others get less than stellar customer service, other than a bit of a delay in the response, I personally haven't had any problems.

What's your approximate order date?

Thanks

1 25Ghz from early april 2013, 2x 5ghz from late april 2013. If they could give me a shipping date, I would probably have kept my order.

Thanks for the info. noted.

IMHO, if BFL tells you that a condition of your order is that all sales are final and no refunds will be given, and you agree to those terms and purchase anyway, then you shouldn't cry to the FTC and ask mommy to make the bad man give you your money back.

You are welcome to an opinion.  Mine is that BFL has been scamming people for a year and today has only delivered 1% of the hardware they promised to deliver nine months ago in November of 2012.  

My fear is that people who do not know any better, and perhaps even see BFL ads in these forums, purchase their hardware assuming it to be legitimate (they have a very slick website) later finding out that they have been scammed by con men (read: Sonny).  It is clear that people responding to my poll agree in overwhelming numbers.  

Is Butterfly Labs breaking the law?

Yes, American Federal Law   - 33 (50.8%)
Yes, Kansas State Law   - 2 (3.1%)
No   - 10 (15.4%)
I don't know   - 14 (21.5%)
Nobody Knows   - 4 (6.2%)
Yes, European Law   - 2 (3.1%)

Total Voters: 65



My advice to anyone who has been scammed by them to contact one or more government agencies immediately.  If they are not scammers they will be fine when the FTC shows up at the door.  So given the two possibilities:

1) they are a scam and the regulators have not yet discovered the scam.
2) they are not a scam.

If I were a customer of theirs and they refused a refund as they apparently have, I would call anybody who would listen.  

Stealing ~$1000 from 99% of 30,000 people is a serious crime.  


Any victims of the BFL scam should read the top two posts on this page: 
https://bitcointalk.org/index.php?topic=250985.60


 

If "the law" is following the orders of nutjobs in blue uniforms that are funded by extorting homeowners, then, as a homeowner, I would be willing to fund some guys to dress up and put the BFL guys in handcuffs and beat them while saying
"stop resisting", and then throw them in a cage.

Scummy fuckers. Don't sell shit you don't have.

 :D

Wrong.  Wrong.  Wrong.

I have no stake in this, however I am fairly certain that the "all sales are final" disclaimer is not sufficient here.

The legal definition of a "sale" implies a transfer of goods has taken place.  As long as the seller has not preformed on their end of the sale, it could likely be argued (successfully) that no sale was made, and therefore the "all sales are final" disclaimer is not enforceable.  And because a sale has not been made, the seller is in breach of the contract until the unit ships, and the buyer would have the right to receive their money back.

Further, because the units shipping are different from the description of the units ordered, this is also a breach of contract by the seller, because a valid "sale" would imply the buyer receiving the item as described.

This is a class-action suit waiting to happen.

Back on page one we talk about the FTC and how someone can make a claim with them because refusing a refund is criminal.

just becaue you agree to terms of purchase dosnt mean it complies with fair trading laws

If the contract is not legal then it is not a contract and the fact that you agreed is meaningless.

They have to either ship the product in a reasonable time period or refund the customers.

Otherwise it is fraud, regardless of what the customer agreed to.

And if they change their "policy" after you have paid your money? I'm glad that you are so perfect that you have never been victumized. Some day your time will come and you will get to cry too.

A contract is not legal if the will of one of the parts is not to carry out her compromise. Then is a fraud.

I guess they are using the fiat to run the business till they run out of cash. Then they file for bankruptcy, but keeping the bitcoins.

Time will tell.

Also this:
https://en.wikipedia.org/wiki/Consideration

After reading and reflecting more on it, I changed my position and agree with the rest of you.  Reasonable standard of care is an expectation, and if they are not providing that, then yes, they should offer timely refunds and comply with the law.

It's about time someone made a formal complaint to the BBB, the FTC and the FBI.

Needs to be an option "Yes, every freaking law"

;-)

I think its clear they must refund if people ask for a refund. 

What people need to realize is that their only protection other than shipping in a reasonable timeframe is bankruptcy.  If they go there, then you are *NEVER* going to get a refund.. bankruptcy *protection* protects them against you (a lowly creditor behind all the bondholders and banks.)

I would make sure people think long and hard about what happens when the difficulty increases faster than the shipping can keep orderers happy.  I think you could make a prediction here either way, but the very real possibility that they declare bankruptcy is certainly a possible outcome.

Has anyone started collecting members for a class action lawsuit?  It seems like you could easily out some legal pressure on them, if that is what you're trying to do.

On the other hand, I think a lot of people still want their mining rigs, no?  I also don't think they have the money to refund everyone's orders.  Its not necessarily a good thing to have a court order come down saying "give them their money back" because its liable to induce bankruptcy.

Maybe if they were willing to upgrade everyone with pre-orders to the next generation mining rig, they might be able to take off some of the heat?

I wonder if there's a statement in the American law saying that the vendor must indicate more or less strict shipping dates and bear responsibility for delays (discounts, free upgrades etc...). The BFL's "2 months or more..." is the same as "years" or "forever". For example 1297 or 924 months is more than 2 right? :). We've accepted it. Their 25% discount on further orders for those poor guys who wait more than 1,5 year since April 2012 looks like a derision :(.   

bitcoin is new，& law too later

It be interesting to see what lawsuits have been filed against them.

 :) butterfly labs is willing to say anything . They don't care about the law .

https://i.imgur.com/jDjmFu8.jpg

It's not nice to fuck with Racoons.

My $.02.

;)