An AI Customer Service Chatbot Made Up a Company Policy--and Created a Mess

On Monday, a developer using the popular AI-powered code editor Cursor noticed something strange: Switching between machines instantly logged them out, breaking a common workflow for programmers who use multiple devices. When the user contacted Cursor support, an agent named "Sam" told them it was expected behavior under a new policy. But no such policy existed, and Sam was a bot. The AI model made the policy up, sparking a wave of complaints and cancellation threats documented on Hacker News and Reddit. This marks the latest instance of AI confabulations (also called "hallucinations") causing potential business damage.