| The daily disasters, glitches, and money pits of the AI boom. |
| TUESDAY, OCTOBER 20, 2026 |
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| DAMAGE REPORT |
| How millions get wasted by AI. |
| €95M | Fideuram sent abroad after a fake CEO text and an AI-cloned voice |
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| $20M | Disney’s bid for pieces of Character.AI, after Google’s $2.7B deal in 2024 |
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| 26% | share of AI spending wasted, per a Harness survey of 700 engineering leaders |
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| $100B+ | AI contract backlog at bitcoin miners, against just over $1B a year in AI revenue |
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| TODAY'S DISASTER |
| Fargo Police Jailed a Tennessee Grandmother for Six Months on an AI Face Match |
| Have you ever had to prove where you were on a day you can’t remember? Angela Lipps had to do it from a jail cell. |
| Lipps is a 50-year-old Tennessee grandmother of five. In July 2025, about a dozen officers came for her while she babysat a neighbor’s kids. And she’d never set foot in North Dakota. |
| Here’s how. Facial recognition software matched her photo to a fake ID from a string of Fargo-area bank thefts… and that match was enough. A Fargo detective, Lucas Heck, asked for the warrant. Lipps faced eight felonies and a $100,000 bond she couldn’t pay… so she stayed behind bars, first in Tennessee, then North Dakota. |
| No programmer told the software to jail a grandmother. It found a face that looked close enough… and the detectives treated close enough as proof. The former Fargo police chief said they “assumed wrongly.” |
| She sat for about six months. She walked out on Christmas Eve with no way home… and her house and car were gone. |
| So who caught it? Lipps did, with her bank records. They put her in Tennessee the whole time, and the charges were dropped. So now she’s suing Fargo for $10 million. |
| AI CAUGHT LYING |
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| I check one list every morning. Damien Charlotin, a legal researcher, tracks every court case worldwide where a machine made up the law and a filing used it anyway. This morning he’s at 2,202. That’s a lot of fake law. But it isn’t only lawyers anymore… let me show you three from this month. |
| Start in Argentina. On October 1, an appeals court in Morón threw out a lawyer’s appeal. The brief cited two cases that don’t exist… and bent a third one to fit. So the court sent the lawyer to the bar. |
| Then Israel. On October 8, a magistrates’ court in Nof HaGalil-Nazareth struck an expert’s report over invented law. That’s an expert witness, not an attorney. And the court ordered 2,500 shekels in costs. |
| And Florida. On October 9, a federal judge in the Middle District caught a lawyer citing a case that doesn’t exist… and quoting a ruling that never said what he claimed. He admitted he hadn’t checked the AI’s work. So he apologized, gave about $10,000 in fees to Jacksonville Area Legal Aid and took an ethics class. |
| AI CASH BURN |
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| Character.AI filed for bankruptcy on October 12, two years after a $2.7 billion Google deal. |
| Let me explain the deal. Google never bought the company. Read that twice. Google paid to hire the founders and license the chatbot tech… and left the rest behind. Now Disney’s bidding $20 million to license some of that tech, which works out to less than a penny on each of Google’s dollars. And Google tops the list of creditors, owed more than $4 million. |
| Who else is waiting on a check? Hogan Lovells, the law firm, is owed about $2.1 million. DigitalOcean wants about $1.9 million… and even DoorDash is on the list, for $89,996. |
| Step back and look at the bitcoin miners who turned themselves into AI landlords, because their story is the whole boom in miniature. CoinShares counts more than 4 gigawatts of AI capacity under contract… but only about 550 megawatts is billing customers. That’s over $100 billion in backlog against just over $1 billion a year in AI revenue. Would you lend against that? I wouldn’t. Not a dime. |
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| AI ROLLBACK TRACKER |
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| › Frederick County Public Schools in Maryland banned student AI on October 7. The board voted 6-1… pre-K through 12th grade. Weeks earlier, the district had started piloting Google’s Gemini with middle and high schoolers, so the board voted down its own experiment. Board members worried about cheating… and some teachers went back to paper and pencil. |
| › Google stopped taking product bug reports in its open-source bounty program on October 1. AI tools flooded maintainers with thousands of junk reports… many of them flat-out hallucinations. So Google shut the door and promises an update by early 2027. |
| › Microsoft dropped a planned Nscale AI data center in Loughton, England. CoinDesk reported it on October 19. The site was supposed to run 23,040 Nvidia chips for Microsoft’s cloud by early 2027… on power the grid couldn’t promise. But the local grid operator told Nscale the power might not be there until the early-to-mid 2030s. |
| › Commonwealth Bank of Australia took back 45 job cuts on August 21, 2025. The bank had announced in July that an AI voice bot would take over those customer-service jobs. But the union says calls kept rising, and team leaders were picking up phones. So CBA apologized to the workers. I like a bank that admits it’s wrong. |
| AI VIDEO SLOP |
| The week in machine-made video. Watch the hands. |
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| ► 50K VIEWS |
| Fanta ran an all-AI Halloween ad in cinemas. The AI studio GRAiL built the monsters for Coca-Cola’s brand, including a cyborg Frankenstein and a werewolf DJ that spins records. Creative Bloq panned the choppy jump cuts… and moviegoers on X said they’d stop buying Fanta. Creative Bloq › |
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| ► X AND FACEBOOK, OCT 5 |
| A fake clip showed Australia’s prime minister falling face-first in Fiji. But Anthony Albanese never fell. An X account labeled parody made the clip with Grok Imagine, and other accounts on X and Facebook shared it as if it were news. The Grok watermark sits in the corner, and the beams behind him bend as he drops. Full Fact called it. Full Fact › |
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AI JENNA ORTEGA
ON TIKTOK |
| ► 67.6M VIEWS |
| A TikTok account called Friday Adams posts an AI double of actress Jenna Ortega. One 15-second clip pulled 67.6 million views… and the account has about 1 million followers. And its bio asks fans to subscribe for more. The X account Kelmruns spotted it, and Cybernews wrote it up. Cybernews › |
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| ALSO MAKING THE ROUNDS |
| The Quint caught three AI videos of a “Gen-Z” woman blocking buses at a Delhi protest. In two of them… a reporter’s microphone passes right through her elbow. |
| Brazil’s election court ordered an AI campaign clip down within 24 hours on October 13. Jorge Messias, the government’s top lawyer, posted it with no AI label. But its grandpa and grandson never existed. |
| Lead Stories debunked a clip of Palestinian and Jordanian flags flying from the top of the Eiffel Tower… posted with a jab at Emmanuel Macron. The giveaway? The people in it are far too big for the tower. |
| And here’s one for animal lovers. A clip of an officer freeing a bear cub stuck in a concrete highway barrier, after its mother couldn’t, was made by AI. Hive rated it 92.7% likely machine-made, and Lead Stories called it. |
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| AI IMAGE SLOP |
| Pictures a computer drew, and a brand paid for. |
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| ChatGPT has been signing its fake New Yorker cartoons with the names of working New Yorker cartoonists. Andrew Deck at Nieman Lab found the signatures of more than 15 New Yorker cartoonists on ChatGPT’s work, from Brendan Loper to Emily Flake. Loper first heard about it in a text… from his twin brother’s friend. Nieman Lab › |
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REVEALED RECORDINGS
AI COVER ART |
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| Hardwell’s label, Revealed Recordings, put AI cover art on a Kevin D’Angello single on October 1. It showed a neon dog in a chain… with a “DIRTY” pendant. But the label’s 3D designers never touched it. Fans pushed back online, and the label apologized on X and swapped the art. EDM.com › |
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UK GAMES EXPO
AI PROMO ART |
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| UK Games Expo banned AI art from its halls, then posted AI art itself. A promo for exhibitor Killer Board Games went through a filter in the Expo’s design software that had an AI tool built right into it. Tabletop artists spotted it… and the Expo said sorry. Geek Native › |
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| BEST OF THE COMMENTS |
| Three people who said it better than we could. |
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| Sen. Marsha Blackburn’s campaign posted an AI clip of her doing Kendrick Lamar’s halftime show. |
| “Boomer thinks AI makes her look cool.” |
| Adam Kinzinger, the former congressman, on X. No like count was published with it. |
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| Fanta played an all-AI Halloween ad before a horror movie. |
| “I couldn’t quite believe my eyes, but it was certified AI slop.” |
| @cantworkitout, a moviegoer on X, October 1, quoted by Creative Bloq. No like count was published. |
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| ChatGPT signed fake cartoons with Joe Dator’s name. |
| “When they hacked my credit card, they didn’t dress up like me.” |
| Joe Dator, New Yorker cartoonist, talking to Nieman Lab. |
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| Found a comment worth printing? Hit reply and send me the screenshot. |
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| Let me tally up today’s machines, and the people who beat them. Four of each. |
| A face-match program put Angela Lipps in jail, and her own bank records got her out. Grok faked a fall for Anthony Albanese… and Full Fact took the clip apart. ChatGPT forged Emily Flake’s signature… and Andrew Deck at Nieman Lab caught it. An AI voice talked Fideuram out of €95 million… and investigators have clawed back about €53 million. |
| Here’s my verdict. The machines were fast. But the people were right… and I’ll take right every time. |
| Keep a hand near the switch. |
| Gus Lehman |
| EDITOR, ARTIFICIAL INCOMPETENCE |
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| SOURCES: Biometric Update on Fideuram, citing Reuters (Oct 15) · The Star and SFGate on the Character.AI filing (Oct 17) · NPR Planet Money on the Google deal (Oct 16) · Techstrong.ai on the Harness survey (Jul 30) · CoinDesk on Nscale and CoinShares (Oct 19) · ABC7 and FOX 9 on the Lipps lawsuit (Sep 16 and 18) · Damien Charlotin, AI Hallucination Cases database (Oct 20) · FOX 5 DC on Frederick County (Oct 8) · Tom’s Hardware on Google’s bug bounty (Oct 3) · Information Age on Commonwealth Bank (Aug 21, 2025) · Creative Bloq · YouTube (Fanta) · Full Fact · Cybernews · The Quint · The Rio Times · Lead Stories · Nieman Lab · EDM.com · Geek Native · Sinclair/KMPH on the Blackburn clip (Oct 14) · Images: Coca-Cola (AI-generated) via Creative Bloq, Full Fact (Facebook post), Nieman Lab (ChatGPT output) |
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| ARTIFICIAL INCOMPETENCE |
Sent every weekday morning.
Nothing here is investment advice. Do your own homework. |
