The process_refund tool returns two error categories: transient technical errors (503 Service Unavailable, Connection timeout) affecting 5% of calls, and permanent business errors (Order exceeds 30 day return window, Item already refunded) affecting 12% of calls. Monitoring shows that the agent wastes 3–4 turns retrying business errors that can never succeed. At present, both error types return only a plain-text message to Claude.
What is the most effective way to reduce wasted retries while improving the quality of customer-facing responses?
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