Albert Saniger, the former CEO of Nate, has been charged with defrauding investors after the Department of Justice found his AI shopping app was powered by hundreds of call center employees.
Saniger founded Nate back in 2018 and raised more than $40 million from multiple investors based on the app’s development and deployment of AI.
He marketed the Nate app as a universal shopping card program that simplified online shopping, allowing users to “skip the checkout” on retail websites by reducing the process to a “single tap.” It claimed to use proprietary AI technology to autonomously complete online purchases on behalf of the people using it.
However, it turns out that he was falsely marketing the product and putting actual people to work instead.
CEO used real people to fuel “AI” app
An investigation from the United States Department of Justice revealed that Saniger acquired AI tech from a third party and hired developers for it, but it never achieved the ability to complete online purchases.
Instead of using AI to complete the checkout for users, Nate relied on the use of human workers to process transactions in secret. Saniger used hundreds of “purchasing assistants” in a call center located in the Philippines before creating an army of bots to automate the process.
As a result of the investigation, Albert Saniger has been charged with one count of securities fraud and one count of wire fraud, which both carry a maximum sentence of 20 years in prison each.
“Albert Saniger allegedly defrauded investors with fabrications of his company’s purported artificial intelligence capabilities while covertly employing personnel to satisfy the illusion of technological automation,” said FBI Assistant Director in Charge Christopher G Raia.
“Saniger allegedly abused the integrity associated with his former position as the CEO to perpetuate a scheme filled with smoke and mirrors. The FBI will continue to investigate any business owner who withholds material information to encourage additional investments.”
Amazon was under fire for doing something similar with their “Just Walk Out” tech. Until 2024, Amazon spent years promoting its AI-based checkout technology, but they pulled a similar ruse to what Nate did.
The company claimed that Amazon Fresh customers could put items in their cart and the store’s technology would send customers a bill as they walk out of the store. However, an investigation revealed that the technology relied on about 1000 people in India to process orders manually.
Content shared from www.dexerto.com.