Founder of Nate app faces fraud charge for using "AI" that was really human call center workers

What just happened? There's plenty of debate about the definition of AI, but one thing it certainly isn't is a group of humans working away in the Philippines and Romania. Albert Saniger, the founder and former CEO of shopping app Nate, tried to pass off the work of these flesh-and-blood contractors as AI, and has now been charged with defrauding investors by the DoJ.

Saniger launched the Nate app in 2018. It promises to act as a universal shopping cart that simplifies online shopping by enabling users to skip the checkout on any retail website by reducing the process to a single tap.

The app was advertised as being powered by AI, with the technology entering billing and shipping information and confirming the purchases. But according to the DoJ, it actually relied heavily on hundreds of human workers mostly located in call centers in the Philippines and Romania to manually complete the transactions.

Saniger had also repeatedly made assurances that Nate did not use "dumb bots," but in fall 2021, he directed the app's engineering team to develop bots to automate some transactions on the app. These were used alongside the manual teams to complete the purchases, not the promised AI, states the DoJ.

Nate had raised over $50 million from investors since launch, raising $38 million in 2021, thanks mostly to Saniger's claims that the app completed purchases without human interaction, except for edge cases where the AI failed to complete a transaction.

In 2022, The Information carried out an investigation into Nate. Sources told the publication that during 2021, the share of transactions Nate handled manually rather than automatically ranged between 60% and 100%.

The DoJ indictment says that Nate was forced to sell its assets in January 2023 after running out of money, leaving investors with "near total" losses.

35-year-old Saniger, of Barcelona, Spain, is charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison, and one count of wire fraud, which also carries a maximum sentence of 20 years in prison.

This isn't the first case of human workers being passed off as AI. In December 2023, Presto Automation, which calls itself one of the largest labor automation technology providers in the industry, revealed in an SEC filing that almost three-quarters of orders taken by its fast food voice-ordering products were aided by off-site agents working in areas such as the Philippines. Presto previously claimed that 95% of orders received by its drive-thru chatbots were taken without human intervention.