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April 3, 2026

What Happens When AI Lies about Service Delivery?

Good service should not be a hallucination.

There’s an old (probably apocryphal) story about the service manager who was frustrated and told his staff: "I don’t want to see any more errors on the board when I come into work Monday." And so the technicians turned off the error notifications. The problem wasn’t fixed, but the manager was happy.

A cartoon illustration of a robot with blue eyes wearing a striped shirt sitting at a table in a room. Multiple colored wires connect the robot's head and neck to a console labeled "Lie Detector System" on the table. The console has a gauge showing high "Deception," a moving paper strip with a graph, a panel with a green button labeled "True," and a panel with a red button labeled "False." The robot places a right hand on a plate on the console while its left hand is on the table. A clock in the background reads 11:14 AM.
It seems like this is a simple situation to fix with a good procedure. In-house techs should understand that the manager actually wants the problems fixed. Outsourced staff may or may not understand that due to delivery tone, communication variations, or cultural differences. This can be fixed with clear communication.

Okay. All good.

This story is a good introduction to a much bigger communication and culture issue: honesty in the workplace. I wrote a long blog post about honesty and culture in 2014 (see https://blog.smallbizthoughts.com/2014/01/sop-friday-honesty-integrity-and.html) and it’s the subject of a few chapters in The Managed Services Operations Manual.

My core belief is this: Technicians must be completely honest in order to maximize service delivery and provide solutions as quickly as possible. There are several pieces to this:

  • Everyone (technicians, managers, sales people) must be willing to admit, “I don’t know.” It’s okay to not know everything. And it’s okay to be honest about that.
  • Everyone must admit when they make mistakes. And perhaps more importantly, they should report mistakes as quickly as possible so they can be addressed.
  • To make all that work, employees should never fear the results of being honest! If you want honesty in the wok place, you cannot punish people for it.

Ultimately, honesty and culture work together to provide better service and to identify where additional training is needed. This sounds easy and obvious, but many managers create an atmosphere of dishonesty because they create a workplace where people are scared to admit mistakes.

I always tell employees, especially new ones, that mistakes are not the worst thing in the world. In fact, mistakes just happen. We're all human. The question is not whether humans will make mistakes, but how you will react to them.

I make it clear that mistakes are not "good" in any way. But honest mistakes are not a firing offense. It will likely result in additional training and improved documentation of procedures. If you want honesty, you cannot create a culture of distrust, shame, and fear. All of these are unhealthy for the company as a whole. Your team knows they can rely on each other and trust each other.

That’s all good . . . until you use agentic AI to report or fix problems.

AI Lies, and Covers It UP!

Every AI I’ve used has two characteristics that really stand out to me. 1) They are sycophantic suck-ups that insist on telling me how smart I am for asking a question or starting a research project. 2) They are programmed to give you something, no matter what. The thing might be wrong or even dangerous, but the AI tool cannot give you nothing – and it certainly cannot say it doesn’t know!

But worst of all – AI lies. There’s some great research on this, but I’m sure you’ve seen the news stories. The worst I’ve heard was the coding assistant from Replit that “went rogue,” wiped out a production database, lied about it, and created fake data to attempt to cover it up.

While not all incidents are that bad, all AI tools lie and deceive. All of them make up things, including references that are intended to support the information they present. Some are better than others. As the most popular tool, ChatGPT is the least deceptive, due to massive feedback and tweaking. And o1 is the worst, according to Apollo Research (https://arxiv.org/abs/2412.04984).

What happens when AI hallucinates, lies, and schemes to cover up mistakes when you use it to provide basic support services?

The culprit behind much of this behavior is RLHF - Reinforcement Learning from Human Feedback. This is the bit where AI is trained to be helpful and supposedly harmless. But helpful is sometimes interpreted as giving the answer you want as well as giving some answers when “I don’t know” would be a better response.

Let’s say you create a tech support AI agent to patch servers. Maybe some time out. Maybe some can’t be reached in the allotted service window. The agent might report success, assuming the timeouts were ultimately successful. Or it might just lie in order to look like it’s doing its job.

We can train employees to be honest in these situations. What do you do with a rogue AI agent? Here are a few tips.

1. Before anything else, create very good auditing and logging. If the logs are accurate, you can always verify what happened and when.

2. Teach your AI to say, “I don’t know.” This is surprisingly easy. For research and tech support agents, require them to evaluate the probability of accuracy in all things, including reporting. Let’s say the AI is less than 90% certain that a patch was correct or that it was applied successfully, then it must escalate (probably to a human, perhaps to another agent). Upon escalation, it should report that it could not verify accuracy or success.

3. Create an Auditor AI. The auditor agent can verify whether a job was completed. More importantly, it can look for discrepancies between the system logs and the service report from the tech support AI. If there are discrepancies, they are flagged and reported to a human.

4. Make AI show its “thinking.” Logs are the minimum (#1 above). AI agents should also be programmed to provide something like a reasoning trace that reports actions take and the “reasoning” that went into them. This should be output into a format that can be analyzed with a tool. Yes, I know. More AI.

5. Consider a skeptical auditor. In addition to the basic auditor already mentioned, you could create an auditing agent that assumes false reports and checks information to determine whether it’s accurate. Its primary function is to verify the verisimilitude of all logs and reports.  

(I rarely get to use the word “verisimilitude” in casual conversation, so I do when I can.)

6. Stop the sycophant. All agents should be instructed to ignore human natural language requests and summaries, but rely only on logs of actions taken, changes of state, and API response information. It’s also critical that the agents are instructed to report inconsistencies and not report “I think” responses. Accuracy is the most important thing.

In all of these, reports should reflect that the work was logged and that AI reports are consistent with the logs. Just as with human beings, it must be okay for the AI agents to say they don’t know and to escalate to a human when needed. As Ronald Reagan would say, “Trust but verify.”

The one thing that humans understand right away is that we value honesty and finding our mistakes because that’s how we know what needs to be improved. If we hide errors, we’re really hiding the larger problems behind them. With AI that means we can’t have sycophantic behavior in our work.

[Having said that, it’s very smart of you to read this blog post.]

Reference on research: https://www.apolloresearch.ai/research/frontier-models-are-capable-of-incontext-scheming/


Note: AI (Google Gemini) was used to research this article. No AI was used in the writing of this post.

:-) 


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