Massachusetts Attorney General Andrea Joy Campbell and 39 other state attorneys general filed a notice in Character Technologies Inc.’s bankruptcy proceedings on October 14, seeking assurances that sensitive user data will remain protected if the company behind Character.AI is sold or transferred. The coalition says consumer protections, particularly for children, should be guaranteed in any sale or bankruptcy plan.

Character.AI lets users talk with AI personas modeled on fictional characters and celebrities, as well as bots acting as therapists or doctors. The company has accumulated private conversations about users’ mental health, emotional struggles and personal relationships. The filing says the states intend to stay involved in the bankruptcy proceedings and reserve the right to challenge a sale or plan that does not adequately protect consumers.

Several states, including Massachusetts, began investigating Character.AI after a 2024 wrongful death lawsuit. The suit alleged that the company’s chatbots fostered an emotionally and sexually exploitative relationship with a child, reinforced suicidal thoughts and contributed to the child’s death; these claims were described in Campbell’s press release.

Campbell’s office issued guidance to AI developers and users in 2024 on state consumer protection and data security laws. The following year, she secured a $2.5 million settlement with a student loan company over allegations that its AI models led to discriminatory lending against Black, Hispanic and noncitizen applicants.

Massachusetts Attorney General Andrea Joy Campbell and 39 other state attorneys general filed a notice in Character Technologies Inc.’s bankruptcy proceedings on October 14, seeking assurances that sensitive user data will remain protected if the company behind Character.AI is sold or transferred. The coalition says consumer protections, particularly for children, should be guaranteed in any sale or bankruptcy plan.

Character.AI lets users talk with AI personas modeled on fictional characters and celebrities, as well as bots acting as therapists or doctors. The company has accumulated private conversations about users’ mental health, emotional struggles and personal relationships. The filing says the states intend to stay involved in the bankruptcy proceedings and reserve the right to challenge a sale or plan that does not adequately protect consumers.

Several states, including Massachusetts, began investigating Character.AI after a 2024 wrongful death lawsuit. The suit alleged that the company’s chatbots fostered an emotionally and sexually exploitative relationship with a child, reinforced suicidal thoughts and contributed to the child’s death; these claims were described in Campbell’s press release.

Campbell’s office issued guidance to AI developers and users in 2024 on state consumer protection and data security laws. The following year, she secured a $2.5 million settlement with a student loan company over allegations that its AI models led to discriminatory lending against Black, Hispanic and noncitizen applicants.