At the height of the artificial intelligence boom, a fintech startup named Nate promised to change the way consumers shopped online. Marketed as a revolutionary AI-powered shopping assistant, Nate claimed to streamline the e-commerce experience by allowing users to purchase items from any website with just a few taps. On the surface, it looked like the future of retail—slick branding, confident founder interviews, and a flood of venture capital. But beneath the polished tech facade was a truth more human than high-tech.
According to a joint investigation by the U.S. Department of Justice and the Securities and Exchange Commission, Nate was never what it claimed to be. While the company pitched investors and users alike on a platform run entirely by AI, the reality was that every single order placed through the app was processed manually—by a team of contractors based in the Philippines.
The founder and CEO, Albert Saniger, is now facing fraud charges. He allegedly misled investors by portraying Nate as a fully autonomous AI platform, when in fact it relied on human labor to fulfill its core function. The complaint states that Saniger raised millions in venture capital under these false pretenses, spending heavily on marketing and expansion while the platform continued to function like a modern-day Mechanical Turk.
This kind of misrepresentation isn’t just a one-off scandal—it’s part of a wider issue plaguing the tech startup ecosystem. As the allure of AI continues to drive investor enthusiasm, many companies are rushing to slap “AI-powered” labels on services that barely use machine learning at all. It’s called “AI-washing,” and experts are warning it’s becoming more common—and more dangerous.
In Nate’s case, the deception didn’t just mislead investors. It also skewed the competitive landscape, drawing attention and funding away from genuine innovation. Competing startups that were actually building scalable, automated solutions found themselves overlooked in favor of Nate’s flashy marketing and inflated promises.
By 2023, the cracks began to show. Users reported inconsistent service. Orders would take longer than expected, or be inexplicably canceled. Behind the scenes, the human workers responsible for placing these orders were reportedly overworked and underpaid. When journalists and analysts began to dig deeper, it became clear that the AI Nate bragged about was more fiction than fact.
Once the truth emerged, the company crumbled quickly. Investors pulled out, funding dried up, and Nate ceased operations. The damage, however, was already done—millions of dollars gone, reputations in tatters, and trust in AI-based solutions once again under fire.
Saniger’s indictment marks a cautionary tale for both founders and funders. In a climate where buzzwords often matter more than actual technology, due diligence has never been more important. Slick demos and bold claims are no substitute for transparent operations and verified functionality.
The Nate scandal may be the first high-profile AI-washing case of 2025, but it likely won’t be the last. As artificial intelligence continues to transform industries, the line between innovation and illusion will only grow thinner. The real question now is whether regulators—and the investing public—will be able to keep up.