A Tech Founder’s AI Scam
A Cutting-Edge AI Shopping App Exposed as a Fraudulent Scheme
A tech founder who raised over $40 million pitching a cutting-edge AI shopping app has been charged in the U.S. with fraud after it was revealed the AI powering the app was a call center full of human workers in the Philippines.
Albert Saniger, 35, founder and former CEO of “nate,” allegedly misled investors by claiming the company’s e-commerce app used proprietary AI to automate online purchases.
The Fraudulent Scheme
Launched around 2018, nate marketed itself as a universal shopping cart, offering users a single-tap checkout experience across any e-commerce site.
Saniger told investors that nate’s tech could smartly fill in shipping details, select sizes, and complete purchases without human involvement.
For example, if a shopper found a pair of sneakers online, they could open the nate app, tap “buy,” and the app claimed it would handle the rest, including selecting the size, entering payment and shipping details, and completing the purchase using AI.
However, much like Elizabeth Holmes’ Theranos blood testing devices, it didn’t work, and the “AI” couldn’t handle most transactions.
So instead, nate quietly turned to humans and hired a call center of workers in the Philippines to mimic the automation users believed was happening behind the scenes.
The Consequences
Saniger has been charged with one count of securities fraud and one count of wire fraud, both of which carry a maximum sentence of 20 years.
The U.S. Securities and Exchange Commission has filed a parallel civil action.
Impact on the Industry
“This type of deception not only victimizes innocent investors, it diverts capital from legitimate startups, makes investors skeptical of real breakthroughs, and ultimately impedes the progress of AI development,” said Matthew Podolsky, Acting U.S. Attorney for the Southern District of New York.
Conclusion
The case highlights the importance of fact-checking and due diligence in investing, particularly in the AI and tech industries. It also underscores the need for regulatory bodies to crack down on fraudulent schemes and protect investors.
FAQs
- What was the AI shopping app? nate, a universal shopping cart that claimed to use proprietary AI to automate online purchases.
- Who was the founder? Albert Saniger, 35, founder and former CEO of nate.
- What was the alleged fraud? Saniger allegedly misled investors by claiming the company’s e-commerce app used proprietary AI when, in reality, it used human workers in the Philippines to mimic automation.
- What are the charges? Saniger has been charged with one count of securities fraud and one count of wire fraud, both carrying a maximum sentence of 20 years.
- What is the impact on the industry? The case highlights the importance of fact-checking and due diligence in investing, particularly in the AI and tech industries, and underscores the need for regulatory bodies to crack down on fraudulent schemes and protect investors.
