Policy requires human approval for refunds over $500. A team adds a hook that rejects process_refund calls above $500 with a generic "not permitted" error. Afterwards, customers with large refunds report the agent apologizing and ending the conversation with no next step. What is the best improvement?

Answer: C — Keep the block, but have the hook explain the limit and redirect the agent to escalate_to_human

Tool call interception hooks should block the policy-violating action and redirect to an alternative workflow, here human escalation. Removing the hook (a) trades a guarantee for probabilistic compliance, raising the threshold (b) changes the policy rather than the design, and an alert after allowing the refund (d) reports the violation instead of preventing it.