arXiv:2610.32883v1 Announce Type: new Abstract: Generative AI systems increasingly mediate how people seek information, yet communicating AI factuality to laypeople remains challenging. Through a mixed-methods investigation involving interviews (N=8), a survey (N=1,000), and an experiment (N=5,151), we examine how people evaluate AI-generated information for gardening, mathematical, and medical queries, and how factuality indicators (confidence and sources) shape perceptions. Our interviews and survey show people selectively verify AI responses using external and AI-provided evidence, moderated by contextual factors. Although confidence-indicators affected trust and accuracy perceptions, people hold diverse, ambiguous interpretations of AI confidence. Sources were viewed as crucial, yet users raised concerns about source reliability and verification effort. Our experiment showed that confidence and source-based indicators influenced initial perceptions, but effects disappeared once participants learned the response's correctness. Medical queries elicited skepticism regardless of indicator. Findings motivate helping users interpret model confidence and integrating source information into the interface to support calibrated trust in AI-supported information-seeking.