🎉 AI Engineers: Join our webinar on Prompt Engineering for AI Agents. Register here >>

May 30, 2024 - last updated
Artificial Intelligence

AI Chatbot Hallucinations: Understanding and Mitigating Risks

While some people find them amusing, Chatbot hallucinations can be very dangerous and harm businesses. Here’s why.

Niv Hertz
Niv Hertz
4 min read May 22, 2024

Imagine asking a chatbot for help, only to find that its answer is inaccurate, even fabricated. This isn’t just a hypothetical scenario. It’s a reality that highlights the need to address the phenomenon of AI chatbot hallucinations.

To understand this concept in detail, let’s review a real-world case of chatbot hallucinations. 

What Are Chatbot Hallucinations?

Chatbot hallucinations occur when an AI-driven chatbot generates false or misleading responses. While similar to AI hallucinations, chatbot hallucinations specifically refer to instances within conversational AI interfaces.

These errors can stem from:

  • Knowledge base limitations
  • Bad user queries
  • Poor retrieval in RAG chatbots
  • Gaps in the AI’s learning algorithms

The distinction lies in the interaction. Chatbot hallucinations directly impact user experience. The AI application’s inaccurate output often leads to confusion or misinformed decisions.

Chatbot Hallucinations Real-Life Example

In this example, a grieving passenger turned to Air Canada’s AI-powered chatbot for information on bereavement fares and received inaccurate guidance.

The Air Canada Chatbot Hallucination Case

The chatbot indicated that the passenger could apply for reduced bereavement fares retroactively. However, this claim directly contradicted the airline’s official policy.

Misinformation led to a small claims court case, where the Tribunal awarded the passenger damages. It acknowledged the chatbot’s failure to provide reliable information and the airline’s accountability for its AI’s actions.

Air Canada chatbot hallucination use case

Who’s To Blame When The Chatbot is Hallucinating?

This incident didn’t just spotlight the immediate financial and reputational repercussions for Air Canada. It also sparked broader discussions about the reliability of AI-driven customer service solutions and the accountability of their creators.

Air Canada argued that the chatbot is liable for the mistake. This, however, didn’t hold up in civil court. The Tribunal’s decision highlighted a notable expectation: companies must ensure their AI systems provide accurate information.

This case emphasizes the necessity of rigorous testing, continuous detection and safety, and clear communication strategies. It underscores the balance between leveraging AI innovation and maintaining accuracy in customer interactions.

What’s The Impact of Chatbot Hallucinations in This Case?

The ramifications of the Air Canada chatbot hallucination extend beyond one legal ruling. They raise questions about reliability and the legal responsibilities of companies deploying AI apps.

Businesses that rely on AI to interact with customers, have to make sure that their apps are advanced and drive value, but also accountable for their output.


Why does a chatbot hallucinate?

A chatbot hallucinates due to limitations in its algorithms and training data, causing it to generate information that seems plausible but is not accurate.

What causes ChatGPT to hallucinate?

ChatGPT hallucinates because it is trained on both accurate and inaccurate information from the internet, lacks real-time data verification, and can misinterpret ambiguous queries.

What is an example of AI chatbot hallucinations?

An example of AI hallucination is a chatbot incorrectly stating that the Declaration of Independence was signed in 1787 instead of the correct year, 1776.

How often do AI chatbots hallucinate?

The frequency of hallucinations varies. Simple queries often result in accurate answers, while complex or ambiguous queries are more likely to produce hallucinations.

Mitigate Chatbot Hallucinations in Real-Time With AI Guardrails

The case of Air Canada underscores the need for such a solution. With Aporia AI Guardrails, the chatbot could have been subjected to real-time checks against company policies. Guardrails would have flagged the misleading bereavement fare information before it impacted the customer.

Ensure Safe And Reliable Chatbot Interactions

Aporia Guardrails is a robust layer of protection around generative AI applications. It is designed to:

  • Mitigate hallucinations
  • Prevent prompt injections
  • Block data leakage
  • Flag inappropriate responses

Guardrails promote safety and trust while offering total control over your AI-powered chatbot’s performance. They can be customized to your GenAI application’s needs 

By integrating Aporia Guardrails into AI chatbots, companies can reduce the risk of hallucinations. They ensure that the chatbot’s responses align with factual information and company policies. 

Key Advantages of Aporia Guardrails:

  • Real-time risk mitigation
  • GenAI app security
  • Enhanced user trust
  • Centralized control
  • Customize policies


The injection of AI in customer service, while transformative, carries inherent risks. This is clearly illustrated by the Air Canada chatbot incident. Chatbot hallucinations can severely undermine user trust. They can also lead to financial and reputational damages. Implementing preventive measures is key to avoiding such cases in the future.

Don’t let chatbot hallucinations be a pain.
Get a live demo of Aporia and see Guardrails in action. 

Green Background

Control All your GenAI Apps in minutes