Two scandals have just shaken the world of artificial intelligence. Two American companies have sold fake AI-based technologies to their clients. Instead of algorithms, the companies used workers located abroad, who were underpaid for the tasks assigned to them. We take a look at these two revelations.
This anti-fraud was… a fraud
A few years ago, Kubient launched KAI (Kubient Artificial Intelligence), an AI-based anti-fraud solution. Founded in 2017, the New York-based company boasted of being able to detect advertising fraud in real time by identifying fake impressions, fraudulent clicks, or bots that artificially inflate advertisers' campaign figures. Kubient targeted advertisers, agencies, publishers, and technology platforms looking to optimize their advertising budgets and avoid scams.
As revealed by a joint investigation by the Securities and Exchange Commission and the New York District Attorney, Kubient did not develop artificial intelligence. To detect fraud, the firm relied on an army of workers located abroad. All detections were carried out manually by subcontractors. With this trick, Kubient raked in more than $1.3 million in fraudulent revenue between late 2019 and early 2021. The company raised more than $12.5 million in its IPO in August 2020 by leveraging its fake technology.
As a result of this investigation, Paul Roberts, CEO of Kubient, was arrested by the authorities. The company's website has closed, and Kubient appears to have ceased all operations. The group's director was recently sentenced to one year in prison.
A fake universal payment system powered by AI
More recently, Nate, a FinTech offering technologies related to online payments, money management, and purchasing automation, found itself in the crosshairs of the American justice system. The startup, founded in 2018 by a certain Albert Saniger, claimed to have developed a mobile application allowing users to purchase products on any e-commerce site via a single interface.
Using artificial intelligence, Nate automated the purchasing process by filling out order forms and finalizing transactions on behalf of Internet users. With this universal payment solution, Nate raised $38 million.
Again, an investigation revealed that Nate was primarily powered by workers in the Philippines and Romania. These were subcontractors who filled out the order forms, not the AI. An investigation by The Information alleges that more than 60% of the transactions were handled by humans.
Following an investigation by the U.S. Department of Justice with support from the FBI, Albert Saniger was indicted for fraud. He "misled investors by exploiting the promise and attraction of artificial intelligence, constructing a false narrative of innovation that never actually existed." He faces decades in prison.
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