Albert Saniger, the founder and former CEO of Nate, an AI shopping app that promised a “universal” checkout experience, has been charged with defrauding investors. Far from AI assisting shoppers, human contractors in the Philippines were manually completing customers’ transactions.
TechCrunch reports that the DOJ announced this week that it has charged Albert Saniger, the founder and former CEO of Nate, with fraud. Nate is a fintech startup that claimed its AI-powered shopping app enabled users to purchase from any e-commerce site with a single click. However, an investigation revealed that the app actually relied heavily on human contractors in the Philippines to manually complete transactions, rather than AI as Saniger claimed. The practice of faking AI to raise prestige and investor cash is referred to as “AI washing.”
Founded in 2018, Nate had raised over $50 million from prominent investors such as Coatue, Forerunner Ventures, and Renegade Partners. The startup’s most recent funding was a $38 million Series A round led by Renegade Partners in 2021.
According to the DOJ, Saniger misled investors by claiming that Nate could transact online “without human intervention,” with AI only failing in rare edge cases. In reality though, the app’s actual automation rate was effectively zero percent, despite Nate acquiring some AI technology and hiring data scientists.
The heavy reliance on human contractors at Nate was previously reported by The Information in a 2022 investigation. When reached for comment, Saniger did not respond. He is currently listed as a managing partner at New York VC firm Buttercore Partners, which also did not respond to a request for comment.
The DOJ’s indictment states that Nate ran out of money and had to sell off its assets in January 2023, resulting in “near total” losses for investors. Saniger’s LinkedIn profile indicates he stepped down as Nate’s CEO sometime in 2023.
As Breitbart News previously reported, one of the most high profile examples of AI washing occurred at Amazon:
According to The Information, the “Just Walk Out” technology, which uses cameras and sensors to track customer purchases, employed more than 1,000 people in India to watch and label videos to ensure accurate checkouts. These workers essentially served as remote cashiers, monitoring customers as they shopped.
The report stated that as of 2022, 700 out of every 1,000 ‘Just Walk Out’ sales required human intervention, falling significantly short of Amazon’s internal goal of less than 50 reviews per 1,000 sales. This revelation raises questions about the true nature of the technology and its reliance on human labor.
Read more at TechCrunch here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
