Fintech Founder Accused of Fraud: ‘AI’ Shopping App Revealed as Human-Powered Scam in the Philippines
In a significant development in the tech industry, Albert Saniger, the founder and former CEO of Nate, an innovative AI shopping app, has been charged with defrauding investors. This news follows an announcement from the U.S. Department of Justice, shedding light on the controversial practices surrounding the app’s claimed capabilities.
Overview of Nate and Its Promised Features
Nate, founded in 2018, aimed to revolutionize online shopping by providing a “universal” checkout experience. The app attracted considerable attention and raised over $50 million in venture funding from notable investors, including Coatue and Forerunner Ventures. The most recent funding round occurred in 2021, where Nate secured a $38 million Series A led by Renegade Partners.
Claims vs. Reality: The Automation Controversy
According to the DOJ, Nate boasted that its app allowed users to make purchases from any e-commerce site with just a single click, powered entirely by advanced AI technology. However, the reality was starkly different:
- Heavy Reliance on Human Labor: The app depended on hundreds of human contractors based in a call center in the Philippines to manually process transactions.
- False Claims: Saniger reportedly claimed that Nate’s transactions could be completed “without human intervention,” with exceptions for edge cases.
- Actual Automation Rate: The DOJ alleges that the app’s automation rate was effectively 0%, contradicting the promotional claims made by the company.
Investigation and Fallout
The Information conducted an investigation in 2022 that highlighted Nate’s reliance on human contractors, raising questions about the integrity of the platform’s claims. In January 2023, Nate ran out of funds and was compelled to sell its assets, resulting in substantial losses for investors.
Saniger’s Current Status
Currently, Albert Saniger is listed as a managing partner at Buttercore Partners in New York, although he has not responded to requests for comment regarding the allegations. Notably, his LinkedIn profile indicates that he is no longer the CEO of Nate as of 2023.
Industry Trends: Misleading AI Claims
Nate is not alone in facing scrutiny over exaggerated AI capabilities. Other startups have also been accused of similar practices:
- Drive-Through Software: An AI-driven drive-through software company was reported to be largely operated by humans in the Philippines, as highlighted by The Verge in 2023.
- Legal Tech Unicorn: EvenUp, an AI legal tech company, was revealed by Business Insider to rely heavily on human efforts for its operations.
As the tech landscape continues to evolve, it remains critical for investors and consumers to remain vigilant about the authenticity of claims made by startups, particularly in the rapidly advancing field of artificial intelligence.
