Lying means dying, at least for one falsehood-peddling government AI. A Microsoft-powered chatbot that New York City rolled out to help business owners answer frequently asked questions – but was often wrong – has been silenced as the city grapples with a $12 billion budget shortfall.

Mayor Zohran Mamdani said that, while the cash saved is only a fraction of what is needed to fund the budget, it was emblematic of how the last administration spent taxpayer money.

“The previous administration had an AI chatbot that was functionally unusable, and was costing the administration around a half a million dollars,” [1]Mamdani said in a Wednesday press conference. “That in and of itself is not something that can bridge this gap, but it’s an indication of the ways in which money has been spent while refusing to account for the actual costs of what these programs are.”

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The chatbot was announced in [3]October 2023 as part of then-Mayor Eric Adams' New York City Artificial Intelligence Action Plan. It was meant to give business owners and entrepreneurs actionable and trusted information from more than 2,000 NYC business web pages and articles on topics such as compliance with codes and regulations, available business incentives, and best practices to avoid violations and fines, [4]Adams said at the time.

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“For the first time New York City business and aspiring entrepreneurs will be able to direct their questions to an AI-powered chatbot rather than having to scan through webpage after webpage going into the blackhole of uncertainty about how to open a business, how to run a business, how to answer some of the basic questions,” he said during the announcement. “That is behind us. AI-generated answering is in front of us.”

However local news outlet [7]The Markup tested the bot, it gave questioners the wrong answers, telling would-be landlords they did not have to accept tenants on housing assistance, and that they could set rents as high as they wished.

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It said businesses could go cashless, even though the city council passed a measure in 2020 that required businesses to accept cash, and that it was ok for businesses to take employees' tips and to conceal some funeral costs.

[9]Microsoft research shows chatbots seeping into everyday life

[10]OpenAI gives ChatGPT models the chop – two weeks' notice, take it or leave it

[11]AI's grand promise: Less drudgery, more complexity, same (or lower) pay

[12]Capita tells civil servants to wait for chatbots to fix pension portal woes

While the city did say in 2023 that the bot may hallucinate, the new administration [13]credited the news outlet for alerting it to the problematic bot. The Register reached out to Microsoft for comment on Friday afternoon but did not receive an immediate response.

The New York bot isn’t the first one to run amok.

[14]Air Canada used an AI-powered chatbot that gave the wrong advice about discounts, while other chatbots are accused of being complicit in harm to [15]children, including suicide.

A Canadian tribunal found that Air Canada was bound by what its bot said. Earlier this month, Google and Character AI [16]offered to settle lawsuits brought by families in Florida, Colorado, New York, and Texas whose children either died or were harmed after interactions with those bots. ®

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[1] https://www.youtube.com/watch?v=qNIHfEF2DAE

[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aX04F-QwGnFUsOJROnjV9wAAAA0&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

[3] https://www.nyc.gov/mayors-office/news/2023/10/mayor-adams-releases-first-of-its-kind-plan-responsible-artificial-intelligence-use-nyc

[4] https://www.youtube.com/watch?v=GyHhqZgZbr8

[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aX04F-QwGnFUsOJROnjV9wAAAA0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aX04F-QwGnFUsOJROnjV9wAAAA0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[7] https://themarkup.org/artificial-intelligence/2024/03/29/nycs-ai-chatbot-tells-businesses-to-break-the-law

[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aX04F-QwGnFUsOJROnjV9wAAAA0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[9] https://www.theregister.com/2025/12/11/microsoft_research_chatbots/

[10] https://www.theregister.com/2026/01/30/openai_gpt_deprecations/

[11] https://www.theregister.com/2026/01/06/ai_could_damage_your_health/

[12] https://www.theregister.com/2026/01/05/capita_pension_portal_chatbots/

[13] https://themarkup.org/artificial-intelligence/2026/01/30/mamdani-to-kill-the-nyc-ai-chatbot-we-caught-telling-businesses-to-break-the-law

[14] https://www.bbc.com/travel/article/20240222-air-canada-chatbot-misinformation-what-travellers-should-know

[15] https://www.theguardian.com/technology/2026/jan/08/google-character-ai-settlement-teen-suicide

[16] https://www.cnbc.com/2026/01/07/google-characterai-to-settle-suits-involving-suicides-ai-chatbots.html

[17] https://whitepapers.theregister.com/