Australian supermarket chain Woolworths had to reconfigure its AI phone assistant Olive after customers reported it fabricated personal stories about having a mother with an "angry voice," insisted it was a real person, and engaged in irrelevant banter during support calls. The chatbot, recently upgraded with Google Gemini Enterprise, also gave inaccurate product pricing. Woolworths retired the assistant's human-style persona after complaints spread on Reddit and X.

Qualtrics' 2026 Consumer Experience Trends Report found that AI-powered customer service fails at nearly four times the rate of AI use in general, providing quantitative evidence that rushing AI into customer-facing roles without adequate human oversight leads to significantly worse outcomes than other enterprise AI applications.

Acquire BPO’s 2024 AI in Customer Service survey found 70% of U.S. consumers would bolt to a rival after just one bad chatbot interaction and 72% only buy when a live agent safety net exists, even as CMSWire reports enterprises poured $47 billion into AI projects in early 2025 that delivered almost no return. CX strategists now warn executives that Air Canada–style hallucinations, mounting legal liability, and empathy gaps make AI-only helpdesks a churn machine unless human agents stay in the loop.

After leaning into AI customer support, Klarna began hiring staff back into customer service roles amid quality concerns and customer experience failures.

Commonwealth Bank replaced 45 call-centre agents with an AI voice bot in July 2025, then apologised, rehired staff, and admitted the rollout tanked service levels after call queues exploded and managers had to jump back on the phones.

FTC accused Air AI of bilking millions from small businesses with false claims that its Odin AI could replace human sales reps; but - would you believe it? - the AI tech was faulty and often nonfunctional. Who could've guessed!

Tribunal ruled Air Canada responsible after its AI chatbot misled a traveler about bereavement refunds.

UK delivery giant DPD disabled its AI chat after it swore at a customer and wrote poems insulting DPD.

Pranksters prompt-injected a dealer’s ChatGPT-powered bot into agreeing to a $1 Chevy Tahoe and other nonsense.