AI Hallucination
An AI hallucination is when an AI model produces information that sounds plausible but is incorrect or made up, because it generates likely-sounding text rather than verified fact.
Hallucinations are a core reliability challenge for AI in business, where a wrong answer stated confidently can cause real harm. The main defenses are grounding the model in trusted, current data, giving it tools to look up facts rather than recall them, adding a semantic layer so business terms are interpreted correctly, and keeping a person in the loop for consequential outputs.
In a CRM, grounding the model in actual customer records is a primary way to reduce hallucination.
Frequently Asked Questions
It is when an AI model generates information that seems credible but is false or fabricated, because it predicts likely text rather than checking facts.