Contacting Authorities regarding KnCMiner Titan Neptune

[retro72]

Maybe if we had some clear info of what Magnus needs and what needs to be done we could move on and get everything together, and not just starting emailing him with "Hi, I heard you wanna sue KNC.."

Where to start?

I am from the UK. I actually think it is best that each person emails Magnus directly since he won't act for anyone without some kind of payment, and this must be arranged first.

Check your Home Insurance policy. If you have LEI (Legal Expenses Insurance) you may be covered for this.

Home insurance LEI typically covers legal proceedings relating to the insured’s home, employment, death or personal injury, as well as cases where you have entered into a contract for the sale and supply of goods and services.

Definitely worth a shot.

[BoscoMurray]

Maybe if we had some clear info of what Magnus needs and what needs to be done we could move on and get everything together, and not just starting emailing him with "Hi, I heard you wanna sue KNC.."

Where to start?

I am from the UK. I actually think it is best that each person emails Magnus directly since he won't act for anyone without some kind of payment, and this must be arranged first. In his reply to me today he said:

"If you purchased the product as a consumer, you have the right to cancel the purchase according to Swedish law. If you are a private consumer the seller can’t deny you this right legally. We can assist you in writing to the company with a legal claim, explaining to them on what grounds they have to refund you. If they haven’t done that in a week I would like to inform them that I have been instructed by you to sue them in court to retrieve the money."

"However, there seem to be a number of disappointed customers who have requested our assistance which will drive down the legal costs..... I can keep you updated on how the costs develop along the way. I will also keep you posted if there is an opportunity for a group law suit, when I have communicated with all the disappointed KnC-customers, that have e-mailed me over the last few days."

Have you told them about the part of the T&C where you agreed that we weren't purchasing as a consumer?

This is exactly the question I asked in my reply, but have not yet had an answer. I suspect that this is an unfair condition to have in the T&C, since it is mentioned nowhere else on KnCMiner's website and is not made clear at any point during the purchase.

The "consumers right to cancel" is not the point I am pushing in my request for a refund. Whether a consumer or a business, KnC have not delivered on their contractual obligations and falsely advertised the product. In my opinion they will need to refund customers.

[notsonerdy]

For those that want the links to the archived web pages, not sure why the links died, but you can go to the website:
http://archive.org/web/

From there you can use these "Current" KNC page links, cut and paste a website URL into the "browse history box", and see the dates on the calendar you are looking for of the "OLD" links. Good Luck, please keep me posted if you get a strrong push against KNC, from what I am reading they only shipped a few hundred to date, this is insane.

https://www.kncminer.com/pages/tandc
https://www.kncminer.com/categories/litecoin-mining-hardware
https://www.kncminer.com/pages/payment
https://www.kncminer.com/pages/faq

[murraypaul]

Maybe if we had some clear info of what Magnus needs and what needs to be done we could move on and get everything together, and not just starting emailing him with "Hi, I heard you wanna sue KNC.."

Where to start?

I am from the UK. I actually think it is best that each person emails Magnus directly since he won't act for anyone without some kind of payment, and this must be arranged first. In his reply to me today he said:

"If you purchased the product as a consumer, you have the right to cancel the purchase according to Swedish law. If you are a private consumer the seller can’t deny you this right legally. We can assist you in writing to the company with a legal claim, explaining to them on what grounds they have to refund you. If they haven’t done that in a week I would like to inform them that I have been instructed by you to sue them in court to retrieve the money."

"However, there seem to be a number of disappointed customers who have requested our assistance which will drive down the legal costs..... I can keep you updated on how the costs develop along the way. I will also keep you posted if there is an opportunity for a group law suit, when I have communicated with all the disappointed KnC-customers, that have e-mailed me over the last few days."

Have you told them about the part of the T&C where you agreed that we weren't purchasing as a consumer?

This is exactly the question I asked in my reply, but have not yet had an answer. I suspect that this is an unfair condition to have in the T&C, since it is mentioned nowhere else on KnCMiner's website and is not made clear at any point during the purchase.

Titan first batch ordering page:
https://web.archive.org/web/20140328222749/https://www.kncminer.com/categories/litecoin-mining-hardware

Titan is our first scrypt mining product and will be shipping in Q2/Q3 of 2014.
The stats and performance that we can release today are
Minimum 250/MH/s of performance
Uses a Standard ATX power supply (customer supplied ATX)
Based on the existing Jupiter form factor but will have blades of cards inside
Shipment begins in Q2/Q3 of 2014
Payment for this product is bitcoins and bank transfer only (we will add litecoin as a payment method in the near future)
as this is KnCMiner we of course reserve the right to increase the performance at any time,
Note** this is a preorder all customers are reminded to please read the terms and conditions carefully before ordering.

Titan second batch ordering page:
https://web.archive.org/web/20140701181846/https://www.kncminer.com/categories/litecoin-mining-hardware

The stats and performance that we can release today are
Minimum 400/MH/s of performance from a 28nm chip
Uses a Standard ATX power supply (customer supplied ATX)
Based on the existing Jupiter form factor
Shipment begins one month after Batch 1
Payment for this product is bitcoins, Litcoins and bank transfer only
as this is KnCMiner we of course reserve the right to increase the performance at any time,
Note** this is a preorder all customers are reminded to please read the terms and conditions carefully before ordering.
This product is nonrefundable

[mishax1]

Maybe if we had some clear info of what Magnus needs and what needs to be done we could move on and get everything together, and not just starting emailing him with "Hi, I heard you wanna sue KNC.."

Where to start?

I am from the UK. I actually think it is best that each person emails Magnus directly since he won't act for anyone without some kind of payment, and this must be arranged first. In his reply to me today he said:

"If you purchased the product as a consumer, you have the right to cancel the purchase according to Swedish law. If you are a private consumer the seller can’t deny you this right legally. We can assist you in writing to the company with a legal claim, explaining to them on what grounds they have to refund you. If they haven’t done that in a week I would like to inform them that I have been instructed by you to sue them in court to retrieve the money."

"However, there seem to be a number of disappointed customers who have requested our assistance which will drive down the legal costs..... I can keep you updated on how the costs develop along the way. I will also keep you posted if there is an opportunity for a group law suit, when I have communicated with all the disappointed KnC-customers, that have e-mailed me over the last few days."

Have you told them about the part of the T&C where you agreed that we weren't purchasing as a consumer?

This is exactly the question I asked in my reply, but have not yet had an answer. I suspect that this is an unfair condition to have in the T&C, since it is mentioned nowhere else on KnCMiner's website and is not made clear at any point during the purchase.

The "consumers right to cancel" is not the point I am pushing in my request for a refund. Whether a consumer or a business, KnC have not delivered on their contractual obligations and falsely advertised the product. In my opinion they will need to refund customers.

I would love to see them try and prove that at least 50% of their customers are business clients and not "private customers".. 

[murraypaul]

Maybe if we had some clear info of what Magnus needs and what needs to be done we could move on and get everything together, and not just starting emailing him with "Hi, I heard you wanna sue KNC.."

Where to start?

I am from the UK. I actually think it is best that each person emails Magnus directly since he won't act for anyone without some kind of payment, and this must be arranged first. In his reply to me today he said:

"If you purchased the product as a consumer, you have the right to cancel the purchase according to Swedish law. If you are a private consumer the seller can’t deny you this right legally. We can assist you in writing to the company with a legal claim, explaining to them on what grounds they have to refund you. If they haven’t done that in a week I would like to inform them that I have been instructed by you to sue them in court to retrieve the money."

"However, there seem to be a number of disappointed customers who have requested our assistance which will drive down the legal costs..... I can keep you updated on how the costs develop along the way. I will also keep you posted if there is an opportunity for a group law suit, when I have communicated with all the disappointed KnC-customers, that have e-mailed me over the last few days."

Have you told them about the part of the T&C where you agreed that we weren't purchasing as a consumer?

This is exactly the question I asked in my reply, but have not yet had an answer. I suspect that this is an unfair condition to have in the T&C, since it is mentioned nowhere else on KnCMiner's website and is not made clear at any point during the purchase.

The "consumers right to cancel" is not the point I am pushing in my request for a refund. Whether a consumer or a business, KnC have not delivered on their contractual obligations and falsely advertised the product. In my opinion they will need to refund customers.

I would love to see them try and prove that at least 50% of their customers are business clients and not "private customers"..  

Can you prove that they aren't?
They are selling industrial machines designed to make money.
They provide no utility other than making money.
For some of the machines, they can't easily be run in a normal US house without wiring modifications.
Each purchaser has agreed that they are purchasing as a business.
You would need to prove that those agreements were shams, or should be set aside for some other reason.

[retro72]

Titan first batch ordering page:
https://web.archive.org/web/20140328222749/https://www.kncminer.com/categories/litecoin-mining-hardware

Titan is our first scrypt mining product and will be shipping in Q2/Q3 of 2014.
The stats and performance that we can release today are
Minimum 250/MH/s of performance
Uses a Standard ATX power supply (customer supplied ATX)
Based on the existing Jupiter form factor but will have blades of cards inside
Shipment begins in Q2/Q3 of 2014
Payment for this product is bitcoins and bank transfer only (we will add litecoin as a payment method in the near future)
as this is KnCMiner we of course reserve the right to increase the performance at any time,
Note** this is a preorder all customers are reminded to please read the terms and conditions carefully before ordering.

What are you saying here? That we should have read the small print?

Hiding one line in their T&Cs about being a B2B company. Yet actively seeking out individual consumers on internet forums, never mentioning anything like this in their advertising, emails, or newsletters and not stating this anywhere else on their website. Seems pretty shady to me. I wonder how a judge would see it?

Try to  find the T&Cs on that webpage, in fact go through the whole website? Nicely hidden away aren't they? Not even one link. Funny how when you email KNC about buying their products, they tell you how to pay, they tell you they won't hold your place in the queue and that their products are running out fast,  but they conveniently forget to mention you have to be a business to buy them or their products are non refundable

I don't think it matters what KNC have/had or will put in their T&Cs, they are a dishonest bunch of crooks. Do you really think they'd be handing out refunds and shipping devices that actually worked if that line wasn't there?
Ask Neptune customers how their refunds or bonus Neptunes are working out?

[retro72]

Can you prove that they aren't?
They are selling industrial machines designed to make money.
They provide no utility other than making money.
For some of the machines, they can't easily be run in a normal US house without wiring modifications.
Each purchaser has agreed that they are purchasing as a business.
You would need to prove that those agreements were shams, or should be set aside for some other reason.

Well the FTC took a different view, so we'll go with that shall we?

http://www.coindesk.com/ftc-butterfly-labs-held-back-shipments-illicit-mining/

“[Butterfly Labs] misrepresented the delivery and profitability of the BitForce machine, and then made the same misrepresentations to induce consumers to purchase the Monarch.”

Note the word consumers. It seems mining crypto doesn't automatically make you a business, so if all KNC are hanging their hat on is that line hidden away in their T&Cs, then they had better strap in and prepare for a rough ride.

[murraypaul]

What are you saying here? That we should have read the small print?

Yes.
You were spending thousands of dollars for a product that didn't exist at the time you ordered it.
Pretty obviously it is going to be important for you to know what happens if something goes wrong.
Read what you are agreeing to.

I don't think it matters what KNC have/had or will put in their T&Cs, they are a dishonest bunch of crooks. Do you really think they'd be handing out refunds and shipping devices that actually worked if that line wasn't there?

I'm not defending them. I think their business practices are pretty unpleasant.
I'm just saying that they successfully got you to agree to opt-out of consumer protection.
That is a benefit for them, and a loss for you.
(And I said it back in August 2013 when the Bitcoinarama shill was trying to convince people that this didn't matter, so this isn't a case of 20-20 hindsight.)

It may well be that if you took this to court, you would be able to convince a judge that this clause shouldn't apply to you, and that you should be considered a consumer.
However, you would have to actually go to court to prove this, which is a time and expense that they know most people won't be bothered to take.
You would also have to either sue them in Sweden (more time and expense), or first convince a judge to allow you to sue them locally (more time and expense).

I'm not saying they haven't screwed you, I'm saying they have successfully screwed you.

[murraypaul]

Can you prove that they aren't?
They are selling industrial machines designed to make money.
They provide no utility other than making money.
For some of the machines, they can't easily be run in a normal US house without wiring modifications.
Each purchaser has agreed that they are purchasing as a business.
You would need to prove that those agreements were shams, or should be set aside for some other reason.

Well the FTC took a different view, so we'll go with that shall we?

http://www.coindesk.com/ftc-butterfly-labs-held-back-shipments-illicit-mining/

“[Butterfly Labs] misrepresented the delivery and profitability of the BitForce machine, and then made the same misrepresentations to induce consumers to purchase the Monarch.”

Note the word consumers. It seems mining crypto doesn't automatically make you a business, so if all KNC are hanging their hat on is that line hidden away in their T&Cs, then they had better strap in and prepare for a rough ride.

Did the BFL terms and conditions contain a term that they were sold on a B2B basis?
If not, that has nothing to do with the KNC position.

[retro72]

Did the BFL terms and conditions contain a term that they were sold on a B2B basis?
If not, that has nothing to do with the KNC position.

It has everything to do with what you wrote.

They are selling industrial machines designed to make money. 
They provide no utility other than making money.                   
For some of the machines, they can't easily be run in a normal US house without wiring modifications.   

You seem to be assuming that owning a bitcoin miner makes you a business. The FTC doesn't see it that way. KNCs only argument is the line in their T&Cs. Which actually says:

1.2   The Products are sold for business use only and Purchaser hereby accepts that it has purchased the Products in order to conduct a business.

Is that enough to make an individual consumer a business? Even if that consumer has stated to KNC they are NOT a business, yet KNC refuses to void their order and continues processing it? Breaching their own T&Cs.

If they were truly a B2B company, surely they would void the orders of anyone who told them they were not a business and refund them. There are plenty of legitimate B2B sites where this is the case, in fact they make it almost impossible to purchase if you are not a legitimate, bona fide business and will terminate your order immediately if they find out you are not.

I have emails with KNC where I asked about buying their products and at no time time did they inform me it was a B2B transaction. I have emails where I told KNC I am not a business and they pretty much told me they don't care I was getting the product anyway. Does that sound like a legitimate B2B company to you?

Nowhere else is it mentioned on their website, advertising or newsletters. It is buried on one unlinked page in their T&Cs.

This will probably have to be tested in court. But I have a feeling a reasonable judge will see this for what it really is, a crude attempt to rob customers of their consumer rights. Once that happens KNC are finished.

[murraypaul]

Did the BFL terms and conditions contain a term that they were sold on a B2B basis?
If not, that has nothing to do with the KNC position.

It has everything to do with what you wrote.

They are selling industrial machines designed to make money.  
They provide no utility other than making money.                    
For some of the machines, they can't easily be run in a normal US house without wiring modifications.  

You seem to be assuming that owning a bitcoin miner makes you a business.

No, I'm saying that on top of you agreeing that you bought as a business, there are a number of issues (such as above), which KNC would point out to show that it was reasonable for them to believe that you were in fact buying for commercial reasons. This isn't like the German car sales example.

This will probably have to be tested in court. But I have a feeling a reasonable judge will see this for what it really is, a crude attempt to rob customers of their consumer rights. Once that happens KNC are finished.

As I've said, it may well be that you would win on this point in court.
But you have to actually get to court first, and while threatening legal action is a favourite internet pastime, hardly anyone actually follows through on it, and KNC probably took that into account.
And if anyone does actually go through the process of starting Swedish proceedings, and looking like they might actually follow through, KNC can simply come to an agreement to refund that person, without it creating any sort of precedent for others.
To really 'win' requires someone to be prepared to spend more on legal costs than they would receive in refunds, because they want to make a principled point / and or because they want to 'get' KNC. (I don't know about the Swedish system, but in the UK, if they have turned down a reasonable refund offer to do this, they may not be able to recover their costs.)
Any volunteers?

They've taken your money and delivered a late, poor quality product.
Is that something to be applauded? No.
Are they probably going to get away with it? Yes.
Is that in large part because purchasers voluntarily signed away their consumer rights? Yes.

[retro72]

As I've said, it may well be that you would win on this point in court.
But you have to actually get to court first, and while threatening legal action is a favourite internet pastime, hardly anyone actually follows through on it, and KNC probably took that into account.
And if anyone does actually go through the process of starting Swedish proceedings, and looking like they might actually follow through, KNC can simply come to an agreement to refund that person, without it creating any sort of precedent for others.

They've taken your money and delivered a late, poor quality product.
Is that something to be applauded? No.
Are they probably going to get away with it? Yes.
Is that in large part because purchasers voluntarily signed away their consumer rights? Yes.

I pretty much agree. Luckily I have home insurance that covers legal disputes over good and services for up to £50,000. So I'm going to call my insurer tomorrow.

I think you're absolutely right. KNC will not want to set a legal precedent and will probably be advised to settle. But as you say most people on the forums are just blowing hot air and will never get anywhere near litigation, KNC are counting on that. But I'm not most people.

[unitedminers]

Updates marked as orange.

This thread collects information on relevant authorities and their replies about KnCMiner's business practices. I will do my best to update this post as we get more responses from the authorities. The idea is to avoid double work for the agencies/authorities and us.

There is an option to organize a class action suit. See my other thread if you are interested.


Contacted authorities and websites

Change.org petition
Please participate, it can only help! It has now been passed on to the swedish consumer

Konsumentverket - swedish consumer agency
They had no interest dealing with me and were extremely unhelpful. They only help swedish residents.
If you are a swedish resident, can you please contact them?
You can find your local bureau here.

*Swedish legal aid
If I understand correctly you can still apply for it as a foreigner! Please read the page whether you fulfill certain requirements, particularly if your financial base is less than ~36000$ per year.

*Your Europe - National Contacts
A great resource to find centres for consumer advice (ECC-Net), ombudsman and alternative dispute resolution mechanisms for your EU country of residence.

European Consumer Centre Network (ECC)
I have contacted the ECC for the UK, and for Services. They said that bitcoin mining may be classed as a business activity and I may be considered a business. However, it is unclear how a judge would see this. They promised to contact the swedish consumer centre for advise. They have referred me to the EEN (see below) for advise as a business.

Enterprise Europe Network
I have contacted the EEN in the UK and asked about consumer vs. business, false advertising and fire hazard. They were very polite and helpful on the phone and promised to look into these matters after an email with all details.

The Swedish Bar Association
I have been looking for a lawyer here. I have contacted several lawyers, but have not got a reply back yet. One commercial lawyer replied, but I believe following the "consumer" route is more promising at this point. He also wanted a substantial retainer payment right away.
Do you know a good swedish lawyer?

*The National Board for Consumer Disputes
"Our main task is to impartially try disputes between consumers and business operators. [...] The Board's recommendations are not binding, but the majority of companies follow them. [...] It usually takes about six months from the claim to a decision"
NOTE: They do NOT provide advice for individual cases.
TODO: contact them to start the process.

*ANEC - Consumer Voice in Standardisaton
I reported the safety issues to them. They were interested on the phone and I have submitted a detailed letter to them explaining the fire hazard. I'd expect that they refer me to yet another organisation. Let's see.
If you have personal experience with the fire hazard or have information to add to my write up below, please contact me or the ANEC!


Further action
Contacting their VC investors may be interesting.
Which authorities in Sweden investigate fraud?

*Direct Selling Association UK
Only handles disputes between consumers and their members. KnCMiner is obviously not a member.

*Other Ideas
Consumer Portal of the EC - there's lots to read and more information.
European e-Justice portal - gives information for mediation services. May be interesting, I need to follow up on that.
Citizens Advice Bureau UK are usually only dealing with consumer issues within the UK. However, they may be able to advise whether bitcoin mining is a business activity in the UK. If I'm not a business, then the local legal system may be relevant and I can get a claim in a UK court.


Points where KnC may break the law

1) KnCMiner sells potentially dangerous products.
1.1) Fire hazard
KnCMiner's Neptune draws 300-400W per cube through 1xPCI-e 8pin connector, which is spec'ed at 150W Wiki. This poses a fire hazard and there are reports of melting cables and fires operating the KnCMiner Neptune [1]
TODO: What are the relevant authorities, if at all?
1.2) KnCMiner does not CE (or FCC) certify its products
Background and authorities: CE advisor, EU, Consumer Lobby].
It is unclear whether the CE marking is required for KnC, as their products operate at 12V DC and do not come with a PSU. The regulations on Low Voltage Electrical Equipment apply only to devices operating at 75V-1500V. KnC apparently doesn't ship a PSU to avoid the CE marking. The regulators may see this differently, as it is a deliberate attempt to side step regulation and as there is a high risk of fire.
TODO: contact authorities (e.g. Consumer Lobby) and find out whether there is a breach of regulations.

2) KnCMiner sells to consumers but avoids consumer rights
2.1) I have paid VAT. I did not and do not run a business. My contract of employment does not allow me to run a business.
2.3) KnCMiner has made no effort to require business information and to sell to businesses only.
2.4) KnCMiner's business depends on selling a (large? how large?) percentage to consumers.
2.5) KnCMiner did not advertise on the order page that it is a "business only" sale. I did not expect to waive all my rights as a consumer and the protection I get as a layman in court. Apparently I am now expected to deal with the full complexity of contract law as a layman.
2.6) In conclusion, KnC's T&C state "for business use only" so that they can avoid consumer rights.

This document has more details on the definition of a consumer (ty mwizard). The uncertainty remains, as bitcoin mining may be considered a "production" and hence a business activity. The most interesting bits:

Accordingly, a consumer is a natural person, who is acting outside the scope of an economic activity (trade, business, craft, liberal profession).
[...] some countries treat them (mixed transactions) as consumer contracts if the personal purpose prevails (Germany, Nordic countries)
In the UK, companies may rely on consumer protection against unfair terms if they purchase goods of a type they do not ordinarily deal with.

3) False advertising to increase sales
This could be a case of fraud and business misconduct, as KnCMiner made false representations to increase sales.
3.1) Delivery date
3.1.1) KnCMiner advertised on the order page that the Titan "will be shipping in Q2/Q3 of 2014" and "Shipment begins in Q2/Q3 of 2014". I consider the first statement to be binding.
3.1.2) A delivery date in Q2 2014 seems entirely impossible. The purpose was to increase sales. TODO: can an expert on ASIC development confirm the timeline for a 28nm device from RTL, tape-out to delivery?
3.1.3) The T&C 8.1 mention "The delivery date is provided for information purposes only and shall not be binding on KnCMiner". This is markedly different to their advertising on the website.
3.2) Specifications
3.2.1) KnCMiner confirmed 300MH/s for around 800W of power.
3.2.2) KnCMiner's Titan uses 1100W according to their public news or 1160W according to their forum post, 37.5% - 45% more than was confirmed and advertised.

4) KnCMiner acts in full conflict to the interest of their customers
This point is somewhat speculative. This may again be a case of fraud and business misconduct at least according to UK legislation, as they have failed to disclose relevant information.
4.1) In principle, new mining devices are valuable because they are rare.
4.2) Selling Batch 2 shortly after Batch 1 for effectively 50% of the price is damaging the interests of their Batch 1 customers.
4.3) They did not disclose their intent for a Batch 2 at the time of Batch 1 pre-order, although it was material for the decision to order or not. Most customers would not have ordered if they had known the intent and pricing for Batch 2.

You can add to this list: Shipped 4 single cubes instead of a Titan in one Jupiter case for batch 1 customers.