- Definition: the app gives misleading or incorrect information.
1:01 - Key framing: hallucination is "not a bug but a feature" — everything an LLM produces is made up, so LLMs should never be used for factual information without some form of fact-checking. In business contexts, responses are usually grounded in a specific information source.
1:01 - Real cases with consequences
1:18:- Air Canada's chatbot gave refund advice that contradicted company policy; a court ruled the airline had to compensate the customer.
- A New York City business chatbot told users to break local laws, exposing missing safeguards for factual accuracy.
Mitigation covered later: RAG grounding with required citations (product design choices).