AI Shopping App Fraud: How a Startup Used Filipino Workers Instead of Real AI

Many people get excited about new AI technology. But sometimes, what companies promise is not what they deliver, leading to issues like AI Shopping App Fraud.

Recently, the U.S. Department of Justice (DOJ) charged Albert Saniger, the 35-year-old founder of the shopping app Nate, with fraud. He claimed his app used artificial intelligence (AI) to make online shopping easier. But in reality, it was Filipino call center workers doing the work behind the scenes.

This case is now a major example of AI shopping app fraud.

What Was Promised

In 2018, Saniger launched Nate.
He said users could shop from any website easily, using smart AI technology that would handle the checkout process.

Because of this promise, Nate raised over $50 million from investors who believed in his idea. People thought Nate would change online shopping with real AI.

The Truth Behind the AI Shopping App Fraud

In 2022, a report from The Information revealed that Nate was not using real AI.
Instead, real people in the Philippines were manually completing users’ shopping orders.

Even though Nate had hired data scientists and bought some AI tools, the company’s automation rate was almost zero.
The app heavily depended on human workers, not AI technology.

This discovery confirmed that Nate was a case of AI shopping app fraud.

What Happened to Nate

By January 2023, Nate went bankrupt.
Investors lost nearly all their money, and Saniger resigned as CEO.

The DOJ charged Saniger with:

• Securities fraud, which carries a maximum sentence of 20 years in prison.
• Wire fraud, which also carries a maximum sentence of 20 years in prison.

Officials said false AI claims hurt not just investors but also honest startups working on real AI innovations.

Not the Only Case of AI Shopping App Fraud

Nate is not the only company caught in AI shopping app fraud.
In 2023, another company, Presto Automation, was exposed for doing the same thing.

Presto claimed to use AI to handle drive-thru orders. But in reality, more than 70% of the orders were handled by Filipino workers instead of AI.

This shows a growing pattern: companies pretend to use AI but actually rely on cheaper human labor behind the scenes.

Why This Matters

The rise of AI shopping app fraud affects many people:

• Investors lose money they believed was going to real technology.
• Customers are misled about how services work.
• Real AI startups lose trust and face more challenges when raising money.

It also hides the real efforts of workers, especially Filipino call center agents, who were actually keeping these apps running.

Final Thoughts

AI technology is changing the world, but honesty matters.
Not every company that says “we use AI” is telling the full truth.

The story of Nate is a big reminder: always look deeper before trusting a new AI product or investing in an AI startup.

Reference

BitPinas. (2024, April 17). US DOJ says “AI” shopping app was run by humans in the Philippines. BitPinas. https://bitpinas.com/business/shopping-app-filipino-call-center-agents-ai/