I can see how a layperson would get the two conditions confused.

The history of the condition is part of the problem. It was once considered to be on the boundary of neurosis and psychosis so BPD was often diagnosed as mild schizophrenia. Susanna Kaysen the author of Girl, Interrupted was.

Dissociation a common symptom of BPD is often mistaken for psychosis, especially when paranoia and hallucinations are present. Psychiatrists often have a difficult time determining the difference between the two.

Since many with BPD have histories of abuse the hallucinations and dissociation may actually be a consequence of PTSD, which can easily be mistaken as psychosis.