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 person contacted Cursor help, an agent named “Sam” informed them it was anticipated habits below 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 known as “hallucinations”) inflicting potential enterprise injury. Confabulations are a sort of “artistic gap-filling” response the place AI fashions invent plausible-sounding however false data. As a substitute of admitting uncertainty, AI fashions typically prioritize creating believable, assured responses, even when which means manufacturing data from scratch.
For firms deploying these methods in customer-facing roles with out human oversight, the implications may be fast and dear: annoyed prospects, broken belief, and, in Cursor’s case, doubtlessly canceled subscriptions.
How It Unfolded
The incident started when a Reddit person named BrokenToasterOven observed that whereas swapping between a desktop, laptop computer, and a distant dev field, Cursor classes 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 person wrote an electronic mail to Cursor help and rapidly obtained a reply from Sam: “Cursor is designed to work with one gadget per subscription as a core safety function,” learn the e-mail reply. The response sounded definitive and official, and the person didn’t suspect that Sam was not human.
After the preliminary Reddit submit, customers took the submit as official affirmation of an precise coverage change—one which broke habits important to many programmers’ each day routines. “Multi-device workflows are desk stakes for devs,” wrote one person.
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 fully.” Others joined in: “Yep, I am canceling as effectively, that is asinine.” Quickly after, moderators locked the Reddit thread and eliminated the unique submit.
“Hey! Now we have 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 help bot.”
AI Confabulations as a Enterprise Danger
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 help after his grandmother died, and the airline’s AI agent incorrectly informed him he may 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 accountable for its personal actions.” A Canadian tribunal rejected this protection, ruling that firms are accountable for data offered by their AI instruments.
Relatively than disputing accountability as Air Canada had finished, Cursor acknowledged the error and took steps to make amends. Cursor cofounder Michael Truell later apologized on Hacker Information for the confusion concerning the non-existent coverage, explaining that the person had been refunded and the problem resulted from a backend change meant to enhance session safety that unintentionally created session invalidation issues for some customers.
“Any AI responses used for electronic mail help are actually clearly labeled as such,” he added. “We use AI-assisted responses as the primary filter for electronic mail help.”
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 person wrote on Hacker Information.
Whereas Cursor mounted 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 help system invent a coverage that alienated its core customers represents a very awkward self-inflicted wound.
“There’s a specific amount of irony that folks attempt actually arduous to say that hallucinations usually are not a giant drawback anymore,” one person wrote on Hacker Information, “after which an organization that might profit from that narrative will get straight harm by it.”
This story initially appeared on Ars Technica.