U.S. federal prosecutors have charged Albert Saniger, the former CEO of e-commerce startup Nate, Inc., for allegedly lying to investors about using artificial intelligence (AI) to automate online shopping. Instead of AI, Nate reportedly relied on overseas workers—mainly based in the Philippines—to process transactions manually while keeping investors in the dark.
Why It Matters: This case raises questions about the exploitation of low-cost labor in the Philippines to support tech startups that claim to be powered by automation. It also reflects how the hype around AI is being used to mislead investors while hiding the role of real people doing the actual work behind the scenes.
According to the indictment, Nate promoted itself as a “universal shopping app” that could complete purchases online with a single tap, using its own AI to handle the checkout process. But prosecutors say that Nate’s automation claims were false. The company’s AI was not capable of consistently processing purchases, and the real work was done by hundreds of human “purchasing assistants” in a call center in the Philippines.
The workers manually completed each step of the checkout process—selecting product options, filling in shipping and payment details, and placing orders—all while users believed an AI system was handling it. Prosecutors say this manual setup was kept secret from both investors and most Nate employees.
Saniger reportedly raised over $40 million from venture capital investors based on claims that Nate could complete transactions without human help. Prosecutors say he limited access to the company’s automation performance data and told employees that the figures were trade secrets.
The company later added bots to assist with transactions, but these were also far from being fully autonomous.
Saniger, 35, is facing one count of securities fraud and one count of wire fraud. Both charges carry a maximum prison sentence of 20 years. He is presumed innocent unless proven guilty in court.
Do you think more tech companies are quietly relying on hidden human labor while claiming AI is doing the work?
Discover more from WalasTech
Subscribe to get the latest posts sent to your email.
