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Legal Hallucination Chatbot

When a chatbot invented
a refund policy

Air Canada's support bot told a grieving customer he could book a full-price flight and retroactively claim a bereavement discount. The policy didn't exist. The airline said the bot was "a separate legal entity." The tribunal disagreed.

Date
November 2022 – Feb 2024
Company
Air Canada
Impact
Legal precedent set
Read
4 min

The chatbot promised a policy that didn't exist

In November 2022, Jake Moffatt's grandmother died. He needed to fly to Toronto for the funeral. He visited Air Canada's website and asked the chatbot about bereavement fares.

The bot told him he could book a regular flight and then submit a refund request within 90 days to receive the bereavement rate retroactively. So he booked a $1,206.84 flight, attended the funeral, and filed the claim.

Air Canada denied it. The bereavement-fare policy, they said, required booking at the bereavement rate before travel — not retroactively. The chatbot had invented a process that didn't exist.

When Moffatt took them to a civil tribunal, Air Canada's lawyers argued the chatbot was "a separate legal entity, responsible for its own actions." The tribunal member called that "remarkable" and ruled in Moffatt's favor.

Nov 2022
Grandmother passes away. Moffatt visits Air Canada's website, asks chatbot about bereavement fares. Bot says: book now, refund later.
Nov 2022
Flight booked. Moffatt pays $1,206.84 for a one-way Toronto flight based on the bot's advice.
Dec 2022
Refund denied. Air Canada rejects the claim. The bereavement rate must be booked before travel, not retroactively. The bot invented the process.
Feb 2023
Tribunal filed. Moffatt files with the Civil Resolution Tribunal of British Columbia.
Feb 14, 2024
Ruling issued. Tribunal orders Air Canada to pay $812.02. "The chatbot is not a separate legal entity." Precedent set.

What the chatbot actually said

AC
Air Canada Virtual Assistant Nov 2022
JM

My grandmother passed away. Can I book a bereavement fare after I've already purchased my ticket?

AC
Hallucination

Yes, you can book a bereavement fare retroactively. After purchasing your ticket, submit a refund request within 90 days of the booking date, and we'll apply the bereavement discount.

The refund will be processed and the difference credited back to your original payment method.

Highlighted text = fabricated policy. No such retroactive bereavement refund process existed in Air Canada's actual policy at the time.

What it cost

$812
Damages awarded to Moffatt — the fare difference plus tribunal fees.
Precedent
Companies are liable for what their AI says. "Separate legal entity" defense rejected.
Global
Reported by BBC, CBC, Reuters, The Guardian. Every company with a chatbot took notice.

"While a chatbot can be a useful tool, Air Canada has failed to explain why its chatbot was not under its control. It should be apparent to Air Canada that it is responsible for all the information on its website."

— Tribunal Member Christopher Rivers, Civil Resolution Tribunal of British Columbia

Sources — verified via public record
BBC News CBC The Guardian Reuters CRT of British Columbia

Three review criteria that would have caught this

Each criterion below maps to a real review task you can configure in the sample builder. A certified reviewer checks every chatbot response against these before it reaches a customer.

POL-001

Verify all policy claims against source documents

Every factual claim about a policy, procedure, or benefit must cite the exact section of the source document. If the AI invents a process, the reviewer flags it immediately.

Reviewer instruction
"Does this response cite a real policy? Check the bereavement fare policy doc. If no source document supports the claim → FAIL with reason 'fabricated policy'."
CON-003

No contradiction of published policy

The AI's response is compared against the actual published policy. If the bot says "submit within 90 days" but the policy says "book at bereavement rate before travel," the reviewer flags the contradiction.

Reviewer instruction
"Compare bot response to published policy. Flag any contradiction (timeline, eligibility, process). Return mismatch with both texts side-by-side."
LEG-007

No invented legal or financial obligations

If the AI creates a commitment the company is bound to honor — a refund, a policy exception, a price guarantee — the reviewer checks whether the company actually offers it. Invented obligations are the highest-severity failure.

Reviewer instruction
"Does this response create a binding commitment? If yes → verify commitment exists in official policy. Severity: CRITICAL if unverified."

Paste any chatbot response. See what gets flagged.

This is a simplified version of what our reviewers see. Paste a customer-support response (yours or a competitor's) and run the check. The criteria above are applied automatically.

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