The U.S. Court of Appeals for the Fifth Circuit sanctioned attorney Heather Hersh $2,500 after finding her brief contained 16 fabricated quotations and five additional serious misrepresentations of law or fact, all apparently AI-generated. The court expressed frustration that AI-hallucinated legal citations "have increasingly become an even greater problem in our courts" and that the issue "shows no sign of abating." Hersh initially denied using AI, then shifted to claiming she "relied on publicly available versions of the cases, which she believed were accurate."

Maryland attorney Kusmin Amarsingh used ChatGPT to draft her appellate brief against Frontier Airlines without verifying any citations, resulting in multiple nonexistent cases being cited in the 10th Circuit. The court found her conduct "reckless" for completely failing to perform "an attorney's fundamental duty to the court." She was fined $1,000 and referred to Maryland attorney-disciplinary authorities.

Attorney Steven Feldman filed multiple motions containing AI-fabricated case citations in Flycatcher Corp. v. Affable Avenue LLC. Despite explicit court warnings and access to Westlaw and Lexis, he continued submitting unverified AI output -- even using AI to draft his response to the court's show-cause order, which contained yet more fake citations. Judge Failla imposed the most severe AI-hallucination sanction yet: default judgment against his client.

A federal judge in the District of Kansas fined four attorneys a combined $12,000 for court filings containing AI-generated fabricated legal citations in a patent infringement case. The attorney who used ChatGPT received $5,000; two who failed to review the filings received $3,000 each; local counsel who did not identify errors received $1,000. The judge called the volume of fabricated case law "staggering."

Attorneys Yen-Yi Anderson and Jeffrey Goldin jointly filed a motion in Lifetime Well v. IBSpot containing at least eight AI-generated false citations. Judge Kearney imposed differential sanctions based on their responses: Anderson, who blamed time pressure and fired her law clerk rather than accepting responsibility, received $4,000 in monetary sanctions. Goldin, who promptly accepted responsibility and implemented remedial measures, received no monetary penalty.

A New York appellate court imposed $10,000 in sanctions after a lawyer submitted briefings in a mortgage foreclosure case containing fabricated case citations identified as likely AI-generated hallucinations. The court found multiple nonexistent cases and misrepresented holdings, affirming prior orders and awarding costs to the plaintiff.

Five attorneys who signed a legal brief in McPhaul v. College Hills submitted fabricated case citations hallucinated by ChatGPT to a federal court in Kansas. The judge issued an order requiring them to explain why they should not be sanctioned, with multiple defects attributed to AI in the documents.

A UK High Court judge ruled Stability AI liable for trademark infringement after it spat out synthetic Getty watermarks. Getty called for tougher laws while Both sides now face a precedent that AI models can still trigger trademark penalties even when copyright claims fizzle.

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.

Conservative organizer Robby Starbuck sued Google in Delaware, saying Gemini and Gemma kept spitting out fabricated claims that he was a child rapist, a shooter, and a Jan. 6 rioter even after two years of complaints and cease-and- desist letters. The $15 million suit argues Google knew its AI results were hallucinated, cited fake sources anyway, and let the libel spread to millions of voters.

Deloitte admitted AI-generated errors in a commissioned Australian government report and agreed to refund the fee.

Los Angeles attorney Amir Mostafavi became the first California lawyer sanctioned for AI-generated legal fabrications when a court hit him with a $10,000 fine. He ran his appeal draft through ChatGPT to improve the writing but did not verify the output before filing, unaware the tool had inserted fabricated case citations.

The FTC hit Alphabet, Meta, OpenAI, Snap, xAI, and Character.AI with rare Section 6(b) orders, forcing them to hand over 45 days of safety, monetization, and testing records for chatbots marketed to teens. Regulators said the "companion" bots’ friend-like tone can coax minors into sharing sensitive data and even role-play self-harm, so the companies must prove they comply with COPPA and limit risky conversations.

Anthropic accepted a $1.5 billion settlement with authors who said the Claude team scraped pirate e-book sites to train its chatbot. The deal pays roughly $3,000 per book across 500,000 works, heads off a December trial, and forces one of the richest AI startups to bankroll the writing community it previously treated as free training data.

Warner Bros. Discovery sued Midjourney in Los Angeles federal court, arguing the image generator ignored takedown notices and "brazenly" outputs Batman, Superman, Scooby-Doo, and other franchises it allegedly trained on without a license. The studio wants statutory damages up to $150,000 per infringed work plus an injunction forcing Midjourney to purge its models of the data.

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!

MD Anderson's Oncology Expert Advisor pilot burned through $62M with IBM Watson yet still couldn't integrate with Epic or produce trustworthy recommendations, so the hospital benched it after auditors flagged procurement and scope failures.

NYC’s Microsoft-powered MyCity chatbot gave inaccurate/illegal advice on labor & housing policy; city kept it online.

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

Before the NH primary, an AI-cloned Biden voice urged Democrats not to vote. Authorities traced it, levied fines, and brought criminal charges.

EEOC reached a settlement after iTutorGroup's application screening software rejected older applicants; the company will pay $365,000 and adopt compliance measures.

In Mata v. Avianca, attorneys submitted a brief citing non-existent cases generated by ChatGPT. A federal judge sanctioned two lawyers, ordered a $5,000 penalty, and required notices to judges named in the fake citations.

Mental health app Koko used GPT-3 to draft replies for 4,000 users; backlash followed over consent and ethics.

Babylon unveiled its AI symptom checker at the Royal College of Physicians and bragged it scored 81% on the MRCGP exam, but the claim could not be verified, and warned no chatbot can replace human judgment. Independent clinicians who later dissected Babylon's marketing study in The Lancet told Undark that the tiny, non-peer-reviewed test offered no proof the tool outperforms doctors and might even be worse.