Hallucinations are fabrications — specifications that don't exist, policies no merchant has written, return windows that were never offered. They happen when the retriever hands the model a thin or ambiguous context and the model fills the gap from its training distribution.
The commerce risk is substantial: a hallucinated free-shipping policy can trigger customer-service escalations and chargebacks. The fix is defensive — emit exhaustive Product schema, ship an NDJSON feed, and use a monitoring tool (like Surfient's Hallucination Guard) to detect misstatements in the wild.