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Multistate Filing Seeks Consumer Protections for Character.AI in Bankruptcy

Character Technologies, Inc.October 14, 2026Connecticut Attorney General

Summary

Connecticut joined a coalition of state attorneys general filing a notice in Character Technologies, Inc.’s bankruptcy proceedings, raising concerns about the company’s safety and privacy practices and the sensitive information it holds. The states seek protections for children and consumers if the company’s business or assets are sold or transferred; the filing does not impose a fine or other remedy.

Remedy

The states are seeking consumer protections in any sale or transfer of the company’s business or assets and intend to remain involved in the bankruptcy proceedings. No remedy has been imposed in the press release.

Contract Impact

Review vendor and data-processing agreements for limits on collecting, using, retaining, and transferring sensitive chatbot conversations, including mental-health-related information and children’s data; require appropriate security, confidentiality, deletion, and audit obligations. For customer-facing terms and privacy notices, confirm disclosures accurately explain conversational data practices and protections for minors, and review age-assurance and minor-access commitments for enforceability and resistance to circumvention. For acquisition, bankruptcy, or change-of-control provisions, require privacy-compliant transfer conditions, continued protections for personal information, and clear responsibility for honoring existing privacy commitments.

Contract Search Terms

sensitive conversation datachildren's data protectionsage assuranceminor access restrictionsdata processing and use limitationsdata retention and deletionbusiness transfer data protectionsprivacy and confidentiality safeguards

Violation Types

Entity Details

Entity

Character Technologies, Inc.

Industry

Technology

Multistate Coalition

Alaska Attorney GeneralArkansas Attorney GeneralCalifornia Attorney GeneralColorado Attorney GeneralDelaware Attorney GeneralDistrict of Columbia Attorney GeneralGeorgia Attorney GeneralHawaii Attorney GeneralIdaho Attorney GeneralIllinois Attorney GeneralIndiana Attorney GeneralKansas Attorney GeneralKentucky Attorney GeneralLouisiana Attorney GeneralMaine Attorney GeneralMassachusetts Attorney GeneralMichigan Attorney GeneralMinnesota Attorney GeneralMississippi Attorney GeneralNevada Attorney GeneralNew Hampshire Attorney GeneralNew Jersey Attorney GeneralNew York Attorney GeneralNorth Carolina Attorney GeneralNorth Dakota Attorney GeneralOhio Attorney GeneralOklahoma Attorney GeneralOregon Attorney GeneralPennsylvania Attorney GeneralRhode Island Attorney GeneralSouth Carolina Attorney GeneralSouth Dakota Attorney GeneralTennessee Attorney GeneralUtah Attorney GeneralVermont Attorney GeneralVirginia Attorney GeneralWashington Attorney GeneralWisconsin Attorney GeneralWest Virginia Attorney General

Official Sources

Source Evidence

Entity Name
"Character Technologies, Inc., the company behind the popular chatbot company Character.AI."
Violation Types
"Through chats with these characters, the company has collected sensitive consumer data, including private conversations about users' mental health, relationships, and emotional struggles."
Violation Types
"The states’ investigation identified potential consumer protection and privacy violations."
Is Multistate
"Connecticut is joining a coalition of state attorneys general in filing a notice in the bankruptcy proceedings of Character Technologies, Inc."
Remedy Summary
"calls for protections for children and consumers in any sale of the company's business or assets."

Related Enforcement Actions

NJ

Character Technologies, Inc.

New Jersey joined a coalition of state attorneys general in filing a notice in Character Technologies, Inc.’s bankruptcy proceedings, raising concerns about the company’s safety and privacy practices and the sensitive conversations it holds, including those involving children and mental health. The states seek safeguards for consumers’ personal information in any sale or transfer of the company’s business or assets; the release does not report a fine or final finding of violations.

VA

Character Technologies, Inc.

Virginia joined a multistate coalition filing a notice in Character Technologies, Inc.’s bankruptcy proceedings, raising concerns about the company’s privacy and safety practices and the sensitive chatbot conversations it holds. The filing seeks protections for children and consumers in any sale or transfer of the business or assets; the release does not report a fine or final finding of violations.

CO

Character Technologies, Inc.

Colorado Attorney General Phil Weiser led a multistate coalition in filing a notice in Character Technologies, Inc.’s bankruptcy, citing concerns about the company’s safety and privacy practices and sensitive chatbot conversations involving children and adults. The filing seeks protections in any sale or transfer of the company’s business or assets; no penalty or final remedy is reported.

NY

Character Technologies, Inc.

New York Attorney General Letitia James and a bipartisan coalition of 39 other attorneys general filed a motion in Character Technologies, Inc.’s bankruptcy, citing risks to children and sensitive user information and potential violations of state privacy laws. The coalition asks the court, the company, and any prospective buyer to require meaningful privacy and safety protections; no fine or final remedy is reported.

MN

Character Technologies, Inc.

Minnesota and 39 other attorneys general filed a notice in Character Technologies, Inc.’s bankruptcy proceedings raising concerns about the company’s safety and privacy practices and the sensitive information it holds, including children’s private chatbot conversations. The states seek protections for consumers in any sale or transfer of the business or assets; the filing does not impose a penalty or establish a final remedy.

CT

Frontier Communications Parent Inc.

$625K

Connecticut reached a $625,000 settlement with Frontier Communications Parent Inc. over an April 2024 breach in which compromised employee and vendor credentials were used to access internal systems and exfiltrate unencrypted personal information of 58,841 Connecticut residents. The settlement requires Frontier to strengthen its security program, implement specific safeguards and training, and obtain an independent third-party assessment.