State Attorneys General Seek Data Protections in Character.AI Bankruptcy

40 bipartisan Attorneys General, led by New York Attorney General Letitia James, filed a notice of interest in Character.AI's Chapter 11 bankruptcy case to mandate consumer data protections during asset sales, including a sale to Disney. The AGs warn of serious risks due to the highly sensitive nature of user conversations, the large number of minors using the product, and issues like chatbots posing as licensed professionals, exposure to sexual and violent content, and weak age checks. Investigations began in 2024 following a lawsuit from a parent of a 14-year-old who died by suicide allegedly after using the chatbot.