LLMs consistently hallucinate Web domains for legitimate brands that attackers can register for malicious activity in a difficult-to-detect attack vector.
July 1, 2026
Cybercriminals are taking advantage of a new large language model (LLM)-driven attack vector called "phantom squatting" to threaten the software supply chain by registering nonexistent domains linked to legitimate brands to intercept traffic generated by AI systems. One attacker even used an AI coding assistant to build a full phishing kit targeting a high-risk phantom domain that researchers had identified earlier.
LLMs consistently hallucinate Web domains for legitimate brands, and this leaves the door open for cybercriminals to exploit of these domains, according to research from Palo Alto Networks' Unit 42 published Tuesday. The researchers analyzed 913 global brands via 685,339 URL queries across multiple configurations of two distinct LLM models, which generated 250,000 hallucinated domains. They exist alongside the more than 13,220 confirmed malicious URLs related to the brands, the researchers found.
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