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What is an AI hallucination?
Short answer
An AI hallucination is when a tool like ChatGPT, Copilot or Gemini states something false as if it were true: an invented price, law, statistic, quote or web link. It happens because these tools predict likely-sounding words rather than looking facts up. The fix is to check anything that matters against the original source.
Why it happens
Large language models are trained to produce fluent, plausible text. When they don't know something, they don't always say so; they fill the gap with something that sounds right. Web search features reduce this, but don't remove it, because the tool can still misread or mix up sources.
Examples that cost small businesses
- A VAT rate, tax threshold or deadline from a previous year
- A made-up clause "required by UK law" in terms and conditions
- A supplier price or product code that doesn't exist
- An invented customer review or statistic in marketing copy
- A link to a GOV.UK page that leads nowhere
Five habits that catch them
- Ask for sources, then open them. If the link doesn't say what the AI claims, discard the claim.
- Give it the facts. Paste the price list, the job notes or the GOV.UK text and ask it to work only from that.
- Tell it to admit gaps. Add "If you're not sure, say so" to your prompt.
- Check numbers yourself. Use a calculator or the official tool for tax and money.
- Keep a human sign-off on anything going to a customer, HMRC or a contract.
Where hallucinations matter less
Brainstorming names, rewording an email you wrote, or making a list of ideas. If nothing factual is being claimed, there's less to get wrong.
Related questions
Do paid AI plans hallucinate less?
Stronger models and search features can help, but every current AI tool can still make things up. The checking habits apply whatever you pay.
Is it the same as AI lying?
Not quite. The tool isn't trying to deceive; it's producing likely text without a reliable sense of what's true. The effect on you is the same, so check.
More on getting started with ai
- Can ChatGPT be used for business?
- Does ChatGPT have up-to-date information?
- Will Copilot work on Windows 10?
- Are there free AI courses in the UK?
- How do AI chatbots and AI tools work?
- How do you use AI agents in a small business?
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