On Monday, a developer utilizing the favored AI-powered code editor Cursor observed one thing unusual: Switching between machines immediately logged them out, breaking a typical workflow for programmers who use a number of units. When the consumer contacted Cursor assist, an agent named “Sam” informed them it was anticipated conduct beneath a brand new coverage. However no such coverage existed, and Sam was a bot. The AI mannequin made the coverage up, sparking a wave of complaints and cancellation threats documented on Hacker Information and Reddit.
This marks the newest occasion of AI confabulations (additionally referred to as “hallucinations”) inflicting potential enterprise injury. Confabulations are a kind of “inventive gap-filling” response the place AI fashions invent plausible-sounding however false data. As a substitute of admitting uncertainty, AI fashions usually prioritize creating believable, assured responses, even when meaning manufacturing data from scratch.
For corporations deploying these techniques in customer-facing roles with out human oversight, the implications will be fast and expensive: annoyed clients, broken belief, and, in Cursor’s case, doubtlessly canceled subscriptions.
How It Unfolded
The incident started when a Reddit consumer named BrokenToasterOven observed that whereas swapping between a desktop, laptop computer, and a distant dev field, Cursor periods have been unexpectedly terminated.
“Logging into Cursor on one machine instantly invalidates the session on some other machine,” BrokenToasterOven wrote in a message that was later deleted by r/cursor moderators. “It is a vital UX regression.”
Confused and annoyed, the consumer wrote an e-mail to Cursor assist and shortly acquired a reply from Sam: “Cursor is designed to work with one machine per subscription as a core safety characteristic,” learn the e-mail reply. The response sounded definitive and official, and the consumer didn’t suspect that Sam was not human.
After the preliminary Reddit put up, customers took the put up as official affirmation of an precise coverage change—one which broke habits important to many programmers’ every day routines. “Multi-device workflows are desk stakes for devs,” wrote one consumer.
Shortly afterward, a number of customers publicly introduced their subscription cancellations on Reddit, citing the non-existent coverage as their purpose. “I actually simply cancelled my sub,” wrote the unique Reddit poster, including that their office was now “purging it utterly.” Others joined in: “Yep, I am canceling as properly, that is asinine.” Quickly after, moderators locked the Reddit thread and eliminated the unique put up.
“Hey! We’ve got no such coverage,” wrote a Cursor consultant in a Reddit reply three hours later. “You are in fact free to make use of Cursor on a number of machines. Sadly, that is an incorrect response from a front-line AI assist bot.”
AI Confabulations as a Enterprise Threat
The Cursor debacle remembers a comparable episode from February 2024 when Air Canada was ordered to honor a refund coverage invented by its personal chatbot. In that incident, Jake Moffatt contacted Air Canada’s assist after his grandmother died, and the airline’s AI agent incorrectly informed him he might e book a regular-priced flight and apply for bereavement charges retroactively. When Air Canada later denied his refund request, the corporate argued that “the chatbot is a separate authorized entity that’s answerable for its personal actions.” A Canadian tribunal rejected this protection, ruling that corporations are answerable for data offered by their AI instruments.
Somewhat than disputing accountability as Air Canada had completed, Cursor acknowledged the error and took steps to make amends. Cursor cofounder Michael Truell later apologized on Hacker Information for the confusion in regards to the non-existent coverage, explaining that the consumer had been refunded and the difficulty resulted from a backend change meant to enhance session safety that unintentionally created session invalidation issues for some customers.
“Any AI responses used for e-mail assist at the moment are clearly labeled as such,” he added. “We use AI-assisted responses as the primary filter for e-mail assist.”
Nonetheless, the incident raised lingering questions on disclosure amongst customers, since many individuals who interacted with Sam apparently believed it was human. “LLMs pretending to be individuals (you named it Sam!) and never labeled as such is clearly supposed to be misleading,” one consumer wrote on Hacker Information.
Whereas Cursor fastened the technical bug, the episode reveals the dangers of deploying AI fashions in customer-facing roles with out correct safeguards and transparency. For a corporation promoting AI productiveness instruments to builders, having its personal AI assist system invent a coverage that alienated its core customers represents a very awkward self-inflicted wound.
“There’s a certain quantity of irony that folks strive actually exhausting to say that hallucinations aren’t an enormous downside anymore,” one consumer wrote on Hacker Information, “after which an organization that might profit from that narrative will get immediately damage by it.”
This story initially appeared on Ars Technica.