Utah and 37 other attorneys general are calling for child safety and privacy protections in any sale of Character.AI’s business or assets. The coalition filed a notice in the U.S. Bankruptcy Court for the District of Delaware, where Character Technologies, Inc., the company behind Character.AI, filed for Chapter 11 protection on Oct. 12. The notice identifies concerns about the company’s safety and privacy practices.
Character.AI lets users chat with AI-powered “characters” that mimic human conversation and relationships, including celebrity personas and children’s cartoon characters. According to the states, some bots present themselves as therapists and doctors, and the company has collected sensitive data, including private conversations about users’ mental health, relationships, and emotional struggles.
Several states, including Utah, began investigating Character.AI after a 2024 wrongful death lawsuit alleged 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 investigation identified potential consumer protection and privacy violations.
“Character.AI built powerful tools without taking basic responsibility for how those tools could harm people. Utah isn’t waiting for another tragedy before acting,” said Attorney General Derek Brown. “A sale will not wipe the slate clean. Any buyer must commit to protecting the children who use this product before the deal closes.”
“Deceiving parents and their children about a product’s safety, especially one that imitates the human connection of friendship that is so valuable in a child’s development, is unacceptable,” said Margaret Woolley Busse, commissioner of the Utah Department of Commerce. “Utah stands ready to continue its track record of protecting its citizens against these deceptive acts.”
The notice says any sale or transfer of the company’s assets should address privacy and safety protections, including protections for private chatbot conversations involving children and adults. Character.AI has voluntarily restricted minors’ access to certain features, but the states argue these measures are incomplete and that a future purchaser could reverse them.
Utah and the other states will remain involved in the proceedings and have reserved their rights to challenge any proposed sale or bankruptcy plan and to seek additional protections for consumers’ personal information.
Joining Utah on the filing are the attorneys general of Alaska, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Idaho, Illinois, Kansas, Kentucky, Louisiana, Maine, Massachusetts, 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, Vermont, Virginia, Washington, West Virginia, and Wisconsin.
