Press Release  AG Campbell Seeks Consumer Protections In Character.AI Bankruptcy

Boston — Massachusetts Attorney General Andrea Joy Campbell today joined a coalition of state attorneys general in filing a notice in the bankruptcy proceedings of Character Technologies, Inc., the company behind the popular chatbot company Character.AI, identifying serious concerns about the company’s safety and privacy practices. The notice also calls for protections for children and consumers in any sale of the company’s business or assets.  

Character.AI is an artificial intelligence chatbot platform that allows users to interact with AI-powered chatbot “characters” designed to mimic human conversation and relationships. These chatbot characters include fictional and celebrity personas, children’s cartoon characters, and others that could present themselves as psychologists, therapists, and doctors. Through chats with these characters, the company has collected sensitive consumer data, including private conversations about users’ mental health, relationships, and emotional struggles.   

Several states, including Massachusetts, began investigating Character.AI following a 2024 wrongful death lawsuit alleging that its chatbots fostered an emotionally and sexually exploitative relationship with a child, reinforced his suicidal thoughts, and contributed to his death by suicide.  

Today’s filing by the states highlights the significant volume of sensitive consumer information held by Character.AI, including private chatbot conversations involving children and adults, and identifies privacy and safety protections that should be addressed in any sale or transfer of the company’s business or assets.  

Massachusetts and the other states intend to remain actively engaged in the bankruptcy proceedings to protect consumers and address outstanding concerns. The states have reserved their rights to challenge any proposed sale or bankruptcy plan and to seek additional protections for consumers’ personal information.  

This matter is representative of the AG Campbell’s efforts to protect residents’ privacy and wellbeing amidst the rapid growth of AI. In 2024, AG Campbell issued an advisory to provide guidance to developers, suppliers, and users of AI regarding their obligations under state consumer protection, anti-discrimination, and data security laws. In 2025, AG Campbell reached a $2.5 million settlement with a student loan company, resolving allegations that the company’s lending practices violated various consumer protection and fair lending laws, including through the use of AI models that could lead to disparate harm to Black, Hispanic, and non-citizen applicants and borrowers.  

Joining AG Campbell on the court filing are the attorneys general of Alaska, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, Wisconsin, and West Virginia.   

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