Phantom Squatting Uses AI-Hallucinated Domains for Phishing and Malware

Large language models frequently invent web addresses that don't exist, and attackers are now registering these fake domains before anyone else can, then hosting phishing pages on them to catch people following AI-generated links. Palo Alto Networks' research found that when two AI models answered 685,339 questions about major brands, they generated 2.1 million links, including roughly 250,000 made-up domains with no owner yet and 13,229 known-malicious addresses. This attack, called phantom squatting (a technique where criminals register fake domains that AI systems invented), works because brand-new domains have no reputation history for security filters to flag them, so victims reach the phishing site before defenses catch up.