Comment by themanmaran
9 days ago
I'm curious when it crossed the line into "fraud" here. Since almost every "AI" application has tons of human fallback. Waymo has human drivers that can teleoperate the vehicle when it gets stuck. The Amazon Go stores were really powered by teams in India [0]. And companies have been pitching "powered by AI" for a decade.
Perhaps this came up because investors finally got a peak at margins and saw there was a giant off shore line item. Otherwise it seems like an "automation rate" is a really ambiguous number for investors to track.
> This type of deception not only victimizes innocent investors
Also this was a funny line
[0] https://www.businessinsider.com/amazons-just-walk-out-actual...
It’s fraud when they lie to investors, or allow them to assume the wrong thing.
Doesn’t matter what consumers believe, it’s more or less legal to lie to consumers about how a product works, as long as investors know how the sausage is made. (Though, in reality it’s near impossible to lie to customers without also misleading investors, especially for publicly listed companies)
In this case, investors were under the impression that the AI worked, completing 99% of transactions without any human intervention. In reality, it was essentially 0%
When you claim "without human intervention... except for edge cases" and the truth is it's all "edge cases" ie 0% AI.
> Saniger raised millions in venture funding by claiming that Nate was able to transact online “without human intervention,” except for edge cases where the AI failed to complete a transaction. But despite Nate acquiring some AI technology and hiring data scientists, its app’s actual automation rate was effectively 0%, the DOJ claims.
> I'm curious when it crossed the line into "fraud" here.
Fraud is often defined as gaining something (or depriving someone else from something, or both) via false pretences. Here the something is money (this is most commonly the case) and the gaining/depriving is gaining money and depriving investors of it. It is more complicated than that, with many things that fit this simple description not legally being considered fraud (though perhaps being considered another crime), and can vary a fair bit between legal jurisdictions.
A cynical thought is that the key line being crossed here is that the victims are well-off investors, if you or I were conned similarly the law might give less of a stuff because we can't afford the legal team that these investors have. This is why cases like this one are successful, but companies feel safe conning their customers (i.e. selling an “unlimited” service that has, or developers five minutes after signing up, significant limits). Most investors wouldn't agree to the forced arbitration clauses and other crap that we routinely agree to by not reading and subsequently not accepting the Ts & Cs, etc, and anyway can afford large, capable, legal resources where our only hope would be a class-action from which only the lawyers really benefit.
Another cynical thought is that the line crosses was the act of not being successful. I'm sure the investors wouldn't have cared about the fraud if the returns had been very good.
Crossing the line into fraud is how you pitch it.
I would imagine it turns into fraud when you don't tell investors about the human fall backs.