The former CEO of fintech app Nate has been charged with fraud for making false claims about the app’s use of artificial intelligence. According to the FBI, the app didn’t use AI as advertised—instead, human workers in the Philippines were manually performing tasks that users thought were automated.
In a twist on the typical AI startup narrative, the U.S. Attorney’s Office for the Southern District of New York alleges that Albert Saniger misled investors by presenting a false image of cutting-edge innovation. He reportedly used the allure of AI to secure over $40 million in investments.
Authorities say Nate’s e-commerce checkout process was marketed as AI-driven, but in reality, teams of human workers, primarily in the Philippines, were completing transactions by hand. These workers operated in a call center, posing as automation while manually processing purchases.
FBI Assistant Director Christopher G. Raia noted that Saniger employed hundreds of contractors to replicate the appearance of AI-powered automation. The deception went so far that many users and investors believed tasks were being completed by machines, not people.
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Dubious Practices Grow Alongside the AI Boom
Nate isn’t alone. Several startups have allegedly disguised human labor as AI-powered systems. Presto, a company serving drive-thru clients like Carl’s Jr. and Checkers, claimed to use AI for order-taking, but in reality, outsourced workers reportedly handled about 70% of those orders.
Even legal tech firm EvenUp, which claims to use AI for personal injury claims, was found to rely heavily on human staff. Reports suggest a broader trend where startups use the AI label to attract funding while relying on manual labor behind the scenes.
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Investors Misled, Charges Filed
According to The Information, Nate may have been exaggerating its AI capabilities as early as 2022. During the pandemic-driven e-commerce boom, many startups were desperate to impress investors. The new indictment claims that Saniger concealed Nate’s true automation metrics—even from employees—labeling the data a trade secret.
The “fake it till you make it” mindset has long been part of startup culture. But as this case shows, it’s a risky gamble when it crosses into deception. Saniger now faces charges of securities fraud and wire fraud, each carrying a potential sentence of up to 20 years in prison.
Mashable reached out to Saniger for comment and will update if a response is received.
