LLM Hallucination Controls: The Layer That Reduces the Rate and the Layer That Contains the Damage
A hallucinated answer is a confident, well-formed claim the model invented. Two moments in February 2024 made the cost concrete: a Canadian tribunal held Air Canada liable for a chatbot that invented a refund policy, and a New York court had already sanctioned lawyers who filed six fake cases ChatGPT produced. The controls that reduce hallucination frequency sit upstream in retrieval and prompt design. The controls that contain the damage and produce an accountable record sit at the request boundary. This walks both layers and marks which one enforces.