A fintech founder in the US has been charged with fraud after it was found that his artificial intelligence shopping app relied heavily on Philippines call centre employees to complete the purchases manually.
Albert Saniger, the founder and former chief of the app, was charged with defrauding investors on Wednesday, according to the US Department of Justice.
The app Nate was founded in 2018 and raised more than $50m from investors, promising that thanks to AI, its users could buy from any e-commerce site with a single click.
However, an FBI investigation found that the company was “covertly employing personnel to satisfy the illusion of technological automation” in what it called a “scheme filled with smoke and mirrors”.
“Albert Saniger misled investors by exploiting the promise and allure of AI technology to build a false narrative about innovation that never existed,” acting US attorney Matthew Podolsky said.
“This type of deception not only victimises innocent investors, it diverts capital from legitimate startups, makes investors skeptical of real breakthroughs, and ultimately impedes the progress of AI development,” the attorney said.
The app was reportedly marketed as a universal shopping cart app that simplified online shopping using AI by enabling its users to “skip the checkout” on retail websites by reducing purchases to a “single tap”.
If someone wanted to buy a pair of sneakers, for instance, they could just buy the sneakers by opening the Nate app and clicking “buy”. The app claimed it would take care of the remainder of the checkout using AI, such as “selecting the appropriate size, entering billing and shipping information, and confirming the purchase.”
Investors and the public were told that Nate used “proprietary AI technology” to autonomously complete online purchases on behalf of users, the DoJ said.
But it was found that Nate did not use AI to autonomously navigate the checkout process, The Verge first reported.
While the app claimed to use AI to automate online purchases, its actual automation rate “was effectively zero per cent,” the DoJ alleges.
“In truth, Nate relied heavily on teams of human workers – primarily located overseas – to manually process transactions in secret, mimicking what users believed was being done by automation,” it said.
Hundreds of contractors, or “purchasing assistants”, in a Philippines call centre were working to manually complete purchases occurring over the Nate app, the investigation found.
Mr Saniger has not responded to The Independent’s request for comment.
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