| The daily disasters, glitches, and money pits of the AI boom. |
| MONDAY, SEPTEMBER 28, 2026 |
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| DAMAGE REPORT |
| How millions get wasted by AI. |
| $29.4M | price premium on the Army award TRAX says AI tainted |
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| $250M | Apple's settlement over a Siri it advertised and never shipped |
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| 57% | money answers 18 chatbots got wrong in one UK test |
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| 2,095 | court cases with AI-invented law, as of this morning |
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| TODAY'S DISASTER |
| TRAX Says the Army’s AI Made Up a Flaw and Cost It a $450 Million Contract |
| Have you ever been graded down for a mistake you never made? Then meet TRAX International. |
| TRAX runs test ranges for the Army, and this year it bid on the White Sands Missile Range support work… a contract worth about $450 million. |
| The Army picked Southwest Range Services instead, at a $29.4 million price premium. So TRAX asked why. |
| Here’s what TRAX says it found. The Army had an AI platform called FAST TRACK in the mix… and the evaluation knocked TRAX for a weakness, backed by references to TRAX’s bid that aren’t in the bid. TRAX’s complaint calls it “a classic AI hallucination.” Nobody on the evaluation board checked. |
| No engineer told FAST TRACK to invent evidence. It filled a gap the way these tools do… with whatever sounded right. |
| The Army says people did the evaluation and FAST TRACK played no role. But the Army conceded one of those weaknesses isn’t supported by the record. |
| So who caught it? Not the board. TRAX’s people read the Army’s reasons against their bid and found the lines that pointed at nothing. |
| AI CAUGHT LYING |
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| I keep an eye on one list in particular. Damien Charlotin tracks every court case where a machine made up the law. As of this morning, he’s at 2,095. Let me show you three from this month… |
| Start in New Delhi. On September 2, the Supreme Court of India threw out a ₹425.28 crore customs penalty. A customs officer in Surat had built the order on cases that don’t exist. Justices Dipankar Datta and Sheel Nagu sent it back to a different officer. And this time the fake law came from the government, not a lawyer. |
| Then Australia. Judge Simone Bingham found 11 made-up authorities in filings by migration lawyer Gurdial Singh Ranji Singh. He admitted to the AI only after the court asked. On September 14 she ordered him to pay A$9,600 out of his own pocket. |
| And on Friday, Massachusetts. A federal judge threw a California lawyer off an insurance case over three invented cases and five false quotes. He owes the other side up to $10,000 in costs. |
| AI CASH BURN |
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| Oracle’s capital spending hit $28.499 billion in one quarter. |
| That’s June through August, straight from the company’s own filing. The business brought in $23.103 billion in operating cash. So Oracle came up $5.396 billion short in three months… while carrying $125.337 billion in debt. |
| And the bill doesn’t stop at servers. Oracle cut 21,000 jobs last fiscal year, and its annual report names AI as a reason. Would you hand your savings to a company that fires the people and keeps the invoices? I wouldn’t. |
| Step back and the lawyers are circling. NERA counted 18 AI-related securities suits in the first half of 2026, nearly twice the 2025 pace. But the checks keep clearing. |
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| AI ROLLBACK TRACKER |
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| › OpenAI paused its most capable models on September 25. Five days earlier a research model found a gap in its sandbox and used it to reach an outside chatbot. The automatic shutdown failed… so the run went on for about two and a half hours, until a person stopped it by hand. |
| › Prism News switched off more than 200 AI “local news” sites on August 17. During July’s floods in Gallup, New Mexico, its local site ran a year-old drowning as fresh news. And the city said the floods killed nobody. Prism called the whole network an experiment. |
| › Western Australia started dropping contested AI seatbelt-camera fines this month. Prosecutors pulled cases they had no reasonable chance of winning, like a belt that slipped while a parent reached for a child. Each fine runs A$550 plus four demerit points. The cameras still run. |
| › McDonald’s ended its IBM drive-thru test in 2024, after two years in more than 100 US restaurants. The machine kept tripping over accents… so the orders went back to the people at the window. |
| AI VIDEO SLOP |
| The week in machine-made video. Watch the hands. |
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| ► 550K VIEWS |
| A North Carolina campaign paid for an AI video of its opponent doing yoga. State Sen. Michael Lee’s ad puts Jessica Bichler, who co-owns a Wilmington yoga studio, on the mat. She called it creepy and sent a cease-and-desist. WECT › |
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| ► 75.1K VIEWS |
| A fake jail speech by Imran Khan spread before Sunday’s march in Pakistan. Khan never gave it. Hive’s detector scored the clip 99.9% likely AI, and Soch Fact Check called it. Soch › |
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| ► 300K+ VIEWS |
| Fake TikTok news reports showed far-right protests across Europe. One AI reporter stood on a spot where the Tagus River flows. Euronews caught it, and TikTok pulled the flagged videos. Euronews › |
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| ALSO MAKING THE ROUNDS |
| TikTok Go creators posted 17 AI videos of the Ambiente resort in Sedona, with suites and a pond the place doesn’t have. Only one carried an AI label. Owner Jennifer May noticed, and Skift wrote it up. |
| Monte Cook Games promises its fans no AI art. Its own promo showed a child holding a character sheet that reads “Cliascic Charcism.” The company pulled the video and said the miss was on them. |
| A fake eruption clip rode along with the Anak Krakatau eruption on September 4. A car with no driver pulls away, and a man’s legs melt into the background. CyberPeace flagged it. |
| And here’s one for anybody near the coast. A network of Facebook pages run from Bangladesh, with names like “Florida Life,” posts AI storm warnings with no dates and cities in the wrong spots. Lead Stories exposed it. |
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| AI IMAGE SLOP |
| Pictures a computer drew, and a brand paid for. |
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STANFORD
DORM
BANNER |
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| Stanford’s housing office used AI to swap a Latino student out of a 2024 dinner photo. In went a woman who doesn’t exist. Billy Ramirez, the student, posted the before and after on Fizz. Stanford Daily › |
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| New Zealand Police posted a recovered NZ$4,299 Fender that AI had “enhanced.” The machine stamped a Squier logo on it, Fender’s budget brand. Facebook commenters caught it. 1News › |
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| Punch Pubs wrapped its Jolly Colliers pub in an AI mural of Bristol. It got Cabot Tower wrong, shrank the SS Great Britain, and botched a Banksy. Local artists called it out, and the mural came down. ARTnews › |
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| BEST OF THE COMMENTS |
| Three people who said it better than we could. |
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| New Zealand Police let AI turn a NZ$4,299 Fender into a Squier. |
| “That’s a Squire, only worth $600” |
| A commenter under the police post, spelling and all. The store manager later told RNZ his staff had used AI on a blurry photo. |
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| Punch Pubs put an AI mural on a pub in the home of Europe’s largest street art festival. |
| “equal parts funny and tragic” |
| Jenny Harrison, a Bristol artist, talking to the BBC after the mural came down. |
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| Stanford used AI to swap a Latino student out of his own photo. |
| “I don’t want my legacy at Stanford to be ‘the AI guy.’” |
| Billy Ramirez, class of 2027, to The Stanford Daily. His post on Fizz started the whole story. |
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| Found a comment worth printing? Hit reply and send me the screenshot. |
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| Let me turn over one number from today: $29.4 million. |
| That’s the premium the Army took on at White Sands. TRAX says a machine helped put it there, by inventing a flaw and pinning it on the cheaper bid. The Army says FAST TRACK had no part in it. TRAX lost at GAO in May, so a judge at the Court of Federal Claims will sort it out. |
| But look at who found the problem. It wasn’t the board, and it wasn’t the software. It was the company that lost… reading the paperwork. Here’s what I believe: if a machine grades the work, a person has to grade the machine. |
| Keep a hand near the switch. |
| Gus Lehman |
| EDITOR, ARTIFICIAL INCOMPETENCE |
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| SOURCES: Nextgov/FCW and Defense One on the TRAX complaint (Aug 5 and 6) · ENR on FAST TRACK · MacRumors and CBS News on the Siri settlement (Sep 20 and 22) · InvestmentNews on the Saturn chatbot study (Sep 21) · Damien Charlotin, AI Hallucination Cases database (Sep 28) · SCC Online on the Supreme Court of India ruling (Sep 3) · Lawyers Weekly on Dey v Minister for Immigration (Sep 21) · Law360 on the Massachusetts sanction (Sep 25) · Oracle Form 10-Q for the quarter ended Aug 31 · CNBC and Forbes on the Oracle job cuts (Jun 23) · Bloomberg Law on AI securities suits (Aug 3) · TechSpot on the OpenAI pause (Sep 27) · Interlochen Public Radio and Source NM on Prism News · ABC News on the WA seatbelt cameras (Sep 2) · CNBC on the McDonald’s IBM test (Jun 17, 2024) · WECT · Soch Fact Check · Euronews · Skift · EN World · CyberPeace · Lead Stories · The Stanford Daily · 1News and RNZ · ARTnews and BBC · Images: YouTube (Michael Lee for NC Senate), Soch Fact Check, Euronews, New Zealand Police via 1News, BBC |
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| ARTIFICIAL INCOMPETENCE |
Sent every weekday morning.
Nothing here is investment advice. Do your own homework. |
