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LANSING – Michigan Attorney General Dana Nessel today announced that Michigan is joining a coalition of state attorneys general in filing a notice in the bankruptcy proceedings of Character Technologies, Inc. (PDF), the company behind the popular chatbot company Character.AI. The court filing identifies serious concerns about the company's safety and privacy practices and 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 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 Michigan, 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. The states’ investigation identified potential consumer protection and privacy violations.
“Character.AI’s financial troubles should not leave consumers to deal with the privacy fallout the company leaves in the wake of its bankruptcy,” said Attorney General Nessel. “Voluntary safety measures are not enough if they can be reversed by a business’ next owner. I’m joining my fellow attorneys general to push for safeguards that will remain in place no matter who takes control of this company.”
The states’ filing 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.
Although Character.AI has recently voluntarily restricted minors' access to certain chatbot features, the states have raised concerns that these measures are not compulsory, are incomplete, and could be circumvented or reversed by a future purchaser.
Michigan and the other states intend to remain actively engaged in the bankruptcy proceedings to protect consumers and address outstanding regulatory concerns. The states have reserved their rights to challenge any proposed sale or bankruptcy plan and to seek additional protections for consumers' personal information.
Joining Attorney General Nessel in the court filing are the attorneys general of Alaska, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Hawai’i, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, 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, West Virginia, and Wisconsin.
A copy of the states' filing is available here (PDF).
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