Automated trading software is actually beneficial, but most people don't trust them, people tend to trust only in themselves.
Well they're only really beneficial if you're good at trading yourself. You tell the bot what to do after all. But yeah, I guess it would be hard to trust bots if you haven't seen the code; there are lots of things that could theoretically go wrong, from API bugs to timeouts, etc. and all of those have to be accounted for.
Do people actually buy into it - since if the returns were good why would they sell the software? Is there any public and verifiable evidence that it produces returns that outperform the market?
Bot vendors do not sell automatic returns. They sell a way for you to automate your trades. If you can consistently profit by day trading taking advantage of arbitrage and stuff, and are able to quantify your personal trading rules into variables, it's likely that you'll generate a profit.