AI-powered shopping app supposedly developed by humans.
A founder of a technology company allegedly deceived investors by making claims about the supposed artificial intelligence capabilities of his company.
Recently, a tech industry founder, Albert Saniger, has come under scrutiny after being accused of making misleading claims about his company's technology. Saniger, who is the co-founder and former CEO of Nate, marketed his universal shopping app as an innovative product "powered by AI." However, following an investigation, it was revealed that instead of utilizing artificial intelligence, the app's functionality relied on a group of employees at a call center in the Philippines.
The accusation came from the U.S. Department of Justice, which reported the indictment of Saniger for defrauding investors who had put more than $50 million into the shopping app. This app, launched seven years ago, promised to enhance the e-commerce experience by allowing users to skip the checkout process at online stores, supposedly using AI to autonomously complete purchases with a single touch.
Users who found, for example, a pair of shoes on an e-commerce site could quickly buy them through Nate, which handled all steps of the checkout process, such as selecting the size and providing shipping and billing information. However, the U.S. Attorney's Office pointed out that while Saniger had acquired AI technology from a third party and hired data scientists for its development, the app never consistently completed e-commerce purchases on its own.
It is alleged that Saniger concealed this information from investors, as the company, rather than using AI, relied on a team of human workers who manually processed transactions, simulating actions that users believed were performed by artificial intelligence. According to the allegations, the founder employed "hundreds" of contractors at a call center in the Philippines to finalize purchases through the Nate app, and at times of high demand, the company's engineering team created bots to automate some transactions.
Prosecutor Matthew Podolsky commented on the case, stating that this type of deception not only harms innocent investors but also diverts capital from legitimate startups, breeds distrust in genuine innovations, and ultimately hinders progress in the development of artificial intelligence. This issue echoes the warnings from the U.S. Federal Trade Commission, which has urged companies to be cautious with their claims about the use of AI, advising them to avoid exaggerations and unfounded promises regarding their technological capabilities.