Chatbots are AI-powered conversational agents that have changed how interactions happen in cyberspace in this Internet era. This opened up new avenues for effective customer interactions with excellent coatings of convenience to all industries. It eventually introduced new attack vectors and previously concealed cyber-attack scenarios. This research looks into chatbots’ security risks in many industries, classifying them into interactive and industry-specific forms, such as rule-based and AI-powered versions. Through an extensive analysis of existing literature and actual investigation, we unearth hazards related to users, organizational considerations, and authentication problems with chatbots. This research reveals weaknesses in chatbot security, including input validation issues and suggests mitigation techniques. We also aim to promote the appropriate use of chatbots, protecting user confidence and organizational resilience in the face of changing risks.