Global Spotlight: Real-World Examples of AI Washing

AI washing is a worldwide phenomenon that isn't limited to any one market or sector. Companies all across the world, from established IT giants to up-and-coming startups, have been found inflating their AI capabilities in an attempt to draw in clients, investors, or media attention. The cases listed below illustrate some of the more noteworthy examples, providing a clear view of how the rush to market goods as "AI-powered" can obscure reality.

Nate App

With its 2018 introduction, the Nate app marketed itself as an AI-powered solution that let users buy goods from any e-commerce website with just one click. In 2021, Renegade Partners led a noteworthy $38 million Series A round, with participation from Forerunner Ventures, Canaan Partners, and Coatue Management. Nate, which positioned itself as a universal shopping tool driven by proprietary artificial intelligence, garnered a lot of attention and investment, raising over $50 million.

Investigations later showed, however, that Nate had made false claims regarding its AI capabilities. The business mostly depended on physical labor to automate internet purchases rather than using sophisticated AI. According to reports, employees in the Philippines executed between 60% and 100% of transactions by hand, completing purchases on users' behalf. The business continued to present itself as an AI-powered platform while hiding this behavior from users and investors.

When federal authorities accused Nate's founder and former CEO, Albert Saniger, of wire fraud and securities fraud, the situation became more heated. According to the indictment, Saniger deceived investors by saying that Nate's software automated internet purchases using proprietary AI technology. In actuality, the company used hundreds of human workers to simulate automated transactions, and the app's automation rate was almost 0%. This case is a well-known illustration of "AI washing," a practice where businesses inflate or fake their use of AI in an attempt to seem more creative and draw in investment. In addition to misleading consumers and investors, these dishonest tactics erode confidence in the tech sector and stifle true innovation.

Delphia (USA) Inc. and Global Predictions Inc.

The U.S. Securities and Exchange Commission (SEC) fined two financial advising businesses, Global Predictions Inc. and Delphia (USA) Inc., for making false and deceptive representations regarding their use of artificial intelligence. This is another prominent instance of AI washing. With the claim that its technology could forecast profitable businesses and trends for early investment, Delphic promoted the use of AI to improve its investment strategy. The SEC discovered, however, that Delphia lacked the cutting-edge AI technology it had boasted. As the "first regulated AI financial advisor," Global Predictions also misrepresented its offerings and resources. Without acknowledging or disputing the SEC's conclusions, both companies consented to pay a total of $400,000 in fines to resolve the claims.

Amazon's "Just Walk Out" technology

Amazon's "Just Walk Out" system, which is used at its Amazon Go and Amazon Fresh stores, is another noteworthy example of AI washing. With sensors and cameras monitoring transactions and automatically invoicing consumers, this system was marketed as a state-of-the-art, AI-powered solution that let customers pick up things and leave the store without the need for typical checkout procedures. Reports, however, emerged in April 2024 suggesting that the system was mostly dependent on human assistance. According to reports, a considerable percentage of transactions were manually reviewed and processed by about 1,000 employees in India; estimates indicate that up to 70% of purchases needed human scrutiny. The degree to which the technology was actually autonomous and AI-driven was called into question by this discovery.

In response, Amazon called the reports "erroneous" and explained that, as is customary with AI systems, human reviewers were used to assure accuracy. However, the event brought to light worries about businesses exaggerating their AI capabilities, which raised doubts about the veracity of such technology assertions. This story emphasizes how crucial it is for AI apps to be transparent and how users must evaluate the technologies they use critically.

DoNotPay’s “Robot Lawyer”

DoNotPay began as a legal tech business and advertised the world's first "robot lawyer"—a chatbot that allegedly used artificial intelligence (AI) to help consumers dispute parking tickets, bring legal action, or receive refunds. It attracted a lot of investment and media coverage. However, after investigations showed that the company had overstated its technology, the Federal Trade Commission (FTC) penalized the corporation $193,000 in 2024. It was discovered that the chatbot lacked true legal intelligence and frequently gave inaccurate or deceptive legal advice. In several instances, responses were generated by humans, and the system was not based on a strong AI legal foundation. This was a classic case of AI washing, in which a bold idea was promoted using AI jargon but fell short of the capabilities that was promised.

Coca-Cola’s Y3000 Beverage

Coca-Cola introduced Y3000, a new beverage, in 2023 and marketed it as the "first futuristic flavor co-created with AI." The assumption that AI had influenced the creation of the product's flavor and packaging design was a major component of the marketing campaign. Coca-Cola, however, never revealed the precise function of the AI. The beverage was probably created using conventional product development techniques, according to industry analysts and detractors, with AI perhaps being utilized primarily for little data analysis or design adjustments. This ambiguous use of the phrase "co-created with AI" was viewed as a quintessential instance of AI washing, which is the practice of utilizing the appeal of AI without genuinely innovating technology. It was less of a true technological milestone and more of a brilliant marketing gimmick.

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