What do the state attorneys general want the bankruptcy judge to require?

They are urging the judge to require the purchaser of Character.AI's assets to implement effective age-assurance systems, restrictions on how minors engage with the chatbots, crisis safeguards, and the ability for users to delete their data.

Why do the AGs say the transfer of the technology is risky?

They point to the highly sensitive nature of the conversations many users have with Character.AI chatbot characters, the large number of minors who use the product, and the serious risks posed by specific features of the product.

What did the states' investigation uncover about Character.AI?

According to James' office, the investigations uncovered exceptionally serious dangers and potentially unlawful conduct, including chatbots posing as licensed professionals, exposure to sexual and violent content, weak age checks, misleading safety claims, and potential violations of state privacy laws.

Large Language ModelsAI Safety & AlignmentAI Regulation & PolicyThe Verge AI3m agoOct 15, 2026, 04:00 JST

Character.AI bankruptcy: Letitia James, 40 AGs demand data safeguards

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3 Key Points

What happened
Letitia James and 40 bipartisan AGs filed a notice of interest in Character.AI's Chapter 11 case, urging the judge to require any buyer to add age checks, crisis safeguards, and data deletion. Character.AI announced Tuesday it is selling some assets to Disney.
Why it matters
The AGs say the deal carries serious risk because the chatbots handle highly sensitive conversations and many minors use the product, so a buyer may be pushed to protect that data before taking the assets.

WHO IT HITSCharacter.AI's users, especially minors and their families, could see how a buyer handles their conversation data and chatbot safety features decided in the bankruptcy sale. State regulators and the bankruptcy judge may also shape what protections any purchaser must adopt.

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Context & Analysis

Character.AI's bankruptcy filing came after several states had already been investigating the company. The states say they opened a probe into consumer protection and privacy concerns in 2024, following a lawsuit from the mother of a 14-year-old who died by suicide allegedly seconds after talking with the chatbot. When Character.AI filed for Chapter 11, those investigations were still underway and no agreement had been reached.

The attorneys general are now using the bankruptcy proceeding as a venue to press for safeguards. Their notice of interest is meant to put all parties on notice of the regulatory issues that will need to be addressed in any sale or transfer of the company's business or assets. James said the company collected some of the most private thoughts children have ever shared, and that she is fighting to make sure any buyer puts children's safety first and puts real protections in place.

FAQ

What do the state attorneys general want the bankruptcy judge to require?: They are urging the judge to require the purchaser of Character.AI's assets to implement effective age-assurance systems, restrictions on how minors engage with the chatbots, crisis safeguards, and the ability for users to delete their data.
Why do the AGs say the transfer of the technology is risky?: They point to the highly sensitive nature of the conversations many users have with Character.AI chatbot characters, the large number of minors who use the product, and the serious risks posed by specific features of the product.
What did the states' investigation uncover about Character.AI?: According to James' office, the investigations uncovered exceptionally serious dangers and potentially unlawful conduct, including chatbots posing as licensed professionals, exposure to sexual and violent content, weak age checks, misleading safety claims, and potential violations of state privacy laws.

The Verge AIRead Original Article

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