Tech CEO charged with fraud as his 'AI' shopping app is allegedly powered call center in PH
Albert Saniger, the founder and former CEO of AI shopping app Nate, was charged with fraud for making false claims about his company's supposed proprietary AI.
In a statement, the Federal Bureau of Investigation alleged that Saniger defrauded investors with fabrications of his company's AI capabilities while covertly employing humans to do the automation the app promised.
Nate, according to its website, is a "universal" shopping app that "uses AI to navigate websites the way humans do, so you never have to check out again. Let machines do the heavy lifting." With it, users no longer have to fill out details like credit card information and address.
Saniger raised more than $40 million (PhP2.3 billion) from multiple investors to develop Nate and deploy its AI. The US Attorney's Office, Southern District of New York said that while Saniger acquired AI tech from a third party and hired a team of data scientists to develop it, the proprietary AI "never achieved" the ability to consistently complete transactions.
"The app's actual automation rate was effectively zero percent," federal prosecutors said, adding that Saniger concealed this from investors and most of the app's employees.
Instead, Nate allegedly relied "heavily" on human workers, including a call center in the Philippines, to process transactions in secret.
"When a natural disaster occurred in the Philippines in October 2021, which created a backlog of customer purchases on Nate, Saniger directed a Nate employee to set up a new call center in Romania to serve as a backup to the team in the Philippines,' the indictment read.
The Information reported on Nate's heavy usage of manual labor in 2022.
Saniger faces one count of securities fraud and one count of wire fraud, which both carry a maximum sentence of 20 years in prison.
Nate isn't the only company that has allegedly used human workers in the Philippines in the guise of AI. In December 2023, AI drive-thru company Presto Automation was found to be employing Filipinos to complete over 70% of orders.