SurrogateShield: Beyond Redaction for High-Utility, Privacy-Preserving LLM Interactions

Personally Identifiable Information (PII) redaction usually replaces detected entities with placeholder tokens such as [PERSON], destroying the downstream utility of the redacted text for retrieval and Named Entity Recognition (NER) training. We propose a fully on-device pipeline that substitutes PII with consistent, type-preserving fake values: a 1.5 B mixture-of-experts token classifier (openai/privacy-filter) detects spans, a 1-bit Bonsai-1.7B Small Language Model (SLM) proposes contextual surrogates for names, addresses, and dates, and a rule-based generator (faker) handles patterned fields. We report a prompting finding more important than the quantization choice: with naive fixed three-shot demonstrations, the 1-bit SLM regurgitates demonstration outputs verbatim regardless of input; 1.58-bit Ternary-Bonsai-1.7B reproduces byte-identical failures, ruling out quantization as the cause. We fix this with locale-conditioned rotating few-shot demonstrations: a character-range heuristic picks a locale-pure pool and a per-input MD5 hash samples three demonstrations. With the fix, 482/482 unique Bonsai-1.7B calls succeed (no echoes) and produce locale-correct surrogates, although the SLM still copies from a small same-locale demonstration pool - a residual narrowness we quantify. On a 2000-document multilingual corpus, hybrid perplexity (PPL) beats faker in all six locales under a multilingual evaluator (XGLM-564M); length preservation is best-of-three in 4 of 6 locales. On downstream NER (400 train / 100 test, English), redact yields F1=0.000, faker 0.656, original 0.960; on a matched 160/40 subset including hybrid, faker (0.506) outperforms hybrid (0.346) at p < 0.001. We report this as an honest negative finding: SLM surrogates produce more natural text but a less varied training distribution, and downstream NER benefits more from variety than from naturalness.

In LLM agent pipelines, prompt privacy risk propagates beyond a single model call: raw user content enters retrieval queries, memory writes, tool arguments, OCR-derived text, and logs, and every downstream copy inherits what the first write contained. Existing de-identification pipelines protect document boundaries but not this cross-stage surface. We present BodhiPromptShield, a policy-aware mediation layer that detects sensitive spans before they propagate, replaces each with a typed placeholder, a semantic abstraction, or a secure symbolic token under a configured policy, and defers restoration to authorized execution boundaries. We evaluate it under one protocol against Presidio, Casper-style sanitization, an LLM sanitizer, and transformer and learned detectors, on 300 AI4Privacy documents, 493 PrivacyLens trajectories, 200 PrivacyLens tasks scored by that benchmark's own judge, and AgentDojo tasks under injection. Three findings result. Identifier propagation is controllable: residual exposure falls to 7.4% on AI4Privacy and 1.8% on PrivacyLens, and exact identifiers in an agent's final action fall from 13.7% to 2.1-3.1%. Restoration timing governs what every stage upstream of the authorized boundary sees: deferring it leaves 1.6% of protected values readable in the released context against 51.0%, and 2.7% against 4.8% in what the agent emits, for 0.11 helpfulness points. Measuring factual disclosure is harder: a word-overlap metric and an LLM judge both report that mediation leaves facts intact, and both disagree with blind human annotation (kappa = 0.25 and 0.09). The human labels reverse that: inferability falls from 100% to 24-53% under mediation, so semantic-leakage measures need human validation before they are trusted. These are systems results on English text with open-weight models, not formal guarantees.

As LLMs become increasingly woven into everyday workflows, user queries sent to cloud hosted LLMs routinely mix task-essential content with task non-essential sensitive disclosures, yet type based PII redaction is context agnostic and may raise two issues: over disclosing untyped sensitive context and over removing answer bearing spans. We recast privacy preserving query rewriting under Contextual Integrity: a span should be forwarded only if it is necessary for the task. We introduce DelegateCI-Bench, the first task based Contextual Integrity benchmark for privacy-conscious delegation, comprising 3,167 samples that combine high quality synthetic data spanning 11 tasks and 20 task types, WildChat based real user queries, and a medical challenge set with dense sensitive information. Building on this benchmark, we propose a CI-guided reinforcement learning framework that converts essential and non-essential sensitive spans into verifiable optimization signals, and train a query rewriter to preserve task critical information while suppressing unnecessary sensitive disclosure. Experiments show that our learned rewriter achieves the best privacy-utility tradeoff, achieving up to +10.1 average utility over on-device baselines.