State Attorneys General Seek Protections for Character.AI Users' Data Amid Bankruptcy
New York Attorney General Letitia James and a coalition of 40 bipartisan state attorneys general are intervening in the bankruptcy proceedings of Character.AI to ensure that users’ private data is not sold without proper safeguards. The company, which recently filed for Chapter 11 protection and plans to sell some assets to Disney, has been under investigation since at least 2024 over consumer privacy concerns and risks posed by its chatbot features. The states allege serious issues with Character.AI’s handling of user data, particularly involving minors. These include weak age verification systems, exposure to inappropriate content, misleading safety claims, and potential violations of state privacy laws. The AGs are urging the court to require any buyer of the company's assets to implement strong protections for users' sensitive information. The states had been in discussions with Character.AI before its bankruptcy filing but did not reach an agreement on addressing these concerns.
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Topics: AI regulation bankruptcy proceedings data privacy minors online safety