They claim that they don't do any image processing. Personally I'm pretty convinced that it's fake. (And I'm guessing that the TC50 judges are at least skeptical as well.)
To clarify, I think the augmented reality bit is fake. (Where you point the camera at something to get information about it.) Getting information about which stores are in the area as well as adding comments to a location is neither new nor particularly hard.
I'm wondering what UPC database they query? Does anyone know of a company that provides an API? (aside from http://www.upcdatabase.com/)