Albert Saniger, the founder and former CEO of the once-hyped AI shopping app Nate, has been charged with defrauding investors. According to a statement from the U.S. Department of Justice released Wednesday.
Nate launched in 2018 with a bold promise: users could shop from any e-commerce site with a single tap. Thanks to its so-called AI-driven “universal checkout.” The startup quickly gained attention, raising more than $50 million from top-tier investors including Coatue, Forerunner Ventures, and Renegade Partners, which led its $38 million Series A round in 2021.
But behind the scenes, the technology that supposedly powered Nate was far from what was marketed.
According to prosecutors, the app wasn’t automated at all. Instead of relying on artificial intelligence to complete transactions. Nate used hundreds of human contractors based in the Philippines to manually fulfill online purchases. The DOJ alleges that Saniger knowingly misrepresented the product’s capabilities, claiming it only required human involvement in rare edge cases.
In reality, they say the app’s automation rate was “effectively 0 percent,” despite efforts to acquire AI tools and hire data scientists. Saniger allegedly raised millions based on these false claims. Securing backing from high-profile venture firms under the pretense that Nate was a breakthrough in automated online shopping.
These revelations come after a 2022 investigation by The Information first exposed Nate’s dependence on human labor. While the company projected an image of sleek, AI-powered convenience. Most of its functionality was outsourced manual labor hidden behind the curtain.
By January 2023, Nate had run out of money and sold off its assets. Saniger quietly stepped down as CEO, according to his LinkedIn profile. He now lists himself as a managing partner at New York-based VC firm Buttercore Partners, which has yet to issue a statement regarding the charges. Saniger himself has not responded to media inquiries.
This case highlights a growing pattern in the tech industry, where startups are accused of exaggerating their AI capabilities to raise capital. In 2023, The Verge reported a similar story involving a supposed AI drive-through software startup that was also largely powered by humans in the Philippines. More recently, Business Insider uncovered that EvenUp. A legal tech unicorn claiming to use AI for legal document creation, relied heavily on human input behind the scenes.
The charges against Saniger mark another cautionary tale in the fast-moving world of artificial intelligence. Where investor excitement often outpaces the actual technology.
