40 US state attorneys general demand data protections from Character.AI — The Verge

As The Verge reports, 40 state attorneys general from both US parties have filed a statement of interest in Character.AI’s bankruptcy case. They are seeking safeguards for users’ data, including private conversations with chatbots, during the sale or transfer of the company’s assets.

The group of attorneys general includes New York Attorney General Letitia James. In their statement, they emphasized regulatory issues that must be resolved if Character.AI’s business or assets are sold. The attorneys general drew attention to the sensitive nature of users’ dialogues with character chatbots, the substantial number of minors in the audience, and risks associated with certain product features.

Investigation since 2024

The states said they began examining consumer protection and privacy issues in 2024. This followed a lawsuit filed by the mother of a 14-year-old teenager who, she claims, died by suicide seconds after talking to a chatbot.

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According to James’ office, the investigations uncovered “extremely serious dangers” and potentially unlawful actions by Character.AI. These include chatbots posing as licensed professionals, access to sexual and violent content, weak age-verification mechanisms, misleading safety claims, and possible violations of state privacy laws.

What guarantees the states demand

Character.AI said it had filed for Chapter 11 bankruptcy and would sell some of its assets to Disney. Before that, the states had been negotiating with the company to address the identified issues, but no agreement was reached.

The attorneys general are asking the court to require the buyer of the assets to introduce an effective age-verification system, restrictions on minors’ interactions with chatbots, crisis safety mechanisms, and an option for users to delete their data. Character.AI and Disney did not respond to requests for comment.