Due to the high costs of providing long-term care to older adults with cognitive impairment, artificial companions are increasingly considered as a cost-efficient way to provide support. Artificial companions can comfort, entertain, and inform, and even induce a sense of being in a close relationship. Sensors and algorithms are increasingly leading to applications that exude a life-like feel. We focus on a case study of an artificial companion for people with cognitive impairment. This companion is an avatar on an electronic tablet that is displayed as a dog or a cat. Whereas artificial intelligence guides most artificial companions, this application also relies on technicians "behind" the on-screen avatar, who via surveillance, interact with users. This case is notable because it particularly illustrates the tension between the endless opportunities offered by technology and the ethical issues stemming from limited regulations. Reviewing the case through the lens of biomedical ethics, concerns of deception, monitoring and tracking, as well as informed consent and social isolation are raised by the introduction of this technology to users with cognitive impairment. We provide a detailed description of the case, review the main ethical issues and present two theoretical frameworks, the "human-driven technology" platform and the emancipatory gerontology framework, to inform the design of future applications.