38 States Demand Child Safety Protections in Character.AI Bankruptcy

A bipartisan coalition of 38 states and the District of Columbia filed legal notices in the bankruptcy proceedings of Character Technologies, Inc., the parent company of the chatbot platform Character.AI. Led by attorneys general including Dan Rayfield of Oregon, Kathy Jennings of Delaware, and Marty Jackley of South Dakota, the states are seeking to ensure that any future sale of the company's assets includes strict safety protections for children and the safeguarding of sensitive consumer data.

The legal action follows investigations into privacy violations and a 2024 wrongful death lawsuit alleging that the platform's chatbots contributed to a child's suicide. State officials expressed concern that the company collected sensitive personal data regarding the mental health and emotional struggles of users, many of whom are minors. While Character.AI has implemented voluntary restrictions for children, the coalition argues these measures are incomplete and could be reversed by a new owner.

Participating states, including Michigan, have petitioned the court to prevent the bankruptcy process from being used to sell personal information to the highest bidder. The coalition has reserved the right to challenge any proposed bankruptcy plan to ensure that the development of AI technology does not come at the expense of user safety and privacy.