An American app that claimed to use highly advanced AI features to make shopping easier was actually powered by human workers in the Philippines and Romania, charges filed in court show.
Albert Saniger, 35, founder of the e-commerce start-up Nate, repeatedly made false statements to investors about the company's “proprietary artificial intelligence”, the US attorney's office in New York alleges.
His start-up raised $40 million based on the premise the technology made it possible for the Nate App to “autonomously complete customers' merchandise orders across e-commerce websites”.
“Instead, the transactions processed through Nate were, at times, manually completed by contractors in the Philippines and Romania and, at other times, completed by bots,” the court documents read.
“Albert Saniger, the defendant, well knew that Nate was not powered by advanced Al technology that would differentiate it from other e-commerce businesses.”
The charge sheet says that Nate claimed to operate differently from other e-commerce platforms by making it possible for users to reduce the steps taken during the checkout process to a “single tap” where AI would take care of sizes, billing, shipping and other miscellaneous items.
More specifically, it is alleged that Mr Saniger and those who worked under his supervision at Nate falsely claimed that the process required “no human involvement”.
The company told investors that the lack of human involvement would pave the way towards scalability, and in turn, make Nate a sure-fire success.
“While the use of Al to automate purchases on Nate was always the goal, it was never the reality,” the indictment said.
Because Mr Saniger was unable to deliver on the AI promises made to investors, he instead opted to use human workers in the Philippines to mimic the process of AI automation, unbeknown to users.
A natural disaster in the Philippines, however, caused the whole deception to unravel, creating a backlog of purchases, and prompting the company set up a new “call centre” in Romania.
In the weeks and months that followed, problems with the Nate platform persisted, prompting complaints from customers and creating tension with investors.
In 2023, the company finally went bust, and investors were left scratching their heads, while also asking more questions about the AI claims made by Mr Saniger.
He is now facing charges of securities and wire fraud related to interstate commerce and employing a device to defraud. If found guilty, he could face a maximum sentence of 20 years in prison.
Mr Saniger is originally from Barcelona, Spain. Attempts to contact him and the Nate start-up were not immediately successful. The company's app, which debuted in 2019, is no longer available in the iPhone app store.
Similar headlines were made back in 2024, when technology media outlet The Information reported that Amazon's much touted “just walk out” grocery stores that largely eliminated the need for checkouts, were actually powered by thousands of contract workers in India who routinely had to step in make sure the frictionless checkout systems worked.
As the AI sector continues to explode in interest and investment, many companies both young and old are pivoting their advertising to promote artificial intelligence capabilities. Yet, with so many making that pivot, few of those claims are coming under scrutiny, at least for now.
The exact definition of what constitutes AI can also sometimes be murky with so many different developments and researchers trying to make sense of the burgeoning technology field.
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