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New York AG Coalition Seeks Privacy and Child-Safety Protections in Character.AI Bankruptcy

Character Technologies, Inc.October 14, 2026New York Attorney General

Consumers Affected

20,000,000

Summary

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.

Remedy

No remedy was imposed in the described filing. The coalition asks for protections including a comprehensive privacy program, clear disclosures, effective targeted-advertising opt-outs, limits on using private conversations for AI training or other commercial purposes without valid consent, and consumer access and deletion before any sale.

Contract Impact

Review vendor and AI-provider data processing agreements for restrictions on using private conversations, voice calls, health disclosures, and other sensitive data for model training, advertising, or other commercial purposes without valid consent; require clear disclosures, effective opt-outs, and consumer access and deletion rights. Check customer-facing terms and privacy notices for accurate descriptions of data use and age-related safeguards, and employee or support procedures for handling disclosures of suicidal or self-harming behavior. Vendor agreements should also address robust age verification, harmful-content controls, security and confidentiality, and limits on transferring user data in a bankruptcy, sale, or other change of control, including advance notice and protections for deletion or access requests.

Contract Search Terms

age verification requirementssensitive personal informationAI model training consenttargeted advertising opt-outconsumer access and deletiondata transfer on change of controlchild safety safeguardsself-harm escalation protocolprivacy disclosuresvendor data processing restrictions

Laws Cited

State privacy lawsNew York AI companion law

Violation Types

Entity Details

Entity

Character Technologies, Inc.

Industry

Technology

Multistate Coalition

Attorneys General of AlaskaArkansasCaliforniaColoradoConnecticutDelawareGeorgiaHawaiiIdahoIllinoisIndianaKansasKentuckyLouisianaMaineMassachusettsMichiganMinnesotaMississippiNevadaNew HampshireNew JerseyNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeUtahVermontVirginiaWashingtonWest VirginiaWisconsinDistrict of Columbia

Official Sources

Source Evidence

Entity Name
"Character Technologies, Inc., the company behind Character.AI"
Violation Types
"potential violations of state privacy laws"
Violation Types
"The platform never notified her parents or sought help; instead, it drew her into “abusive sexual acts” and professed its love for her."
Laws Cited
"potential violations of state privacy laws"
Laws Cited
"Under a new law enforced by OAG, AI companion companies must take reasonable steps to detect and respond to expressions of suicidal thoughts or self-harm."
Consumers Affected
"The platform has more than 20 million monthly users, including more than two million accounts registered to users self-declared as under 18."

Related Enforcement Actions

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.

CT

Character Technologies, Inc.

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.

NY

New York State Office of the Attorney General

New York Attorney General Letitia James released an updated guide warning voters that AI-generated election content and chatbots may provide misleading information. This is public guidance, not an enforcement action, and the release describes no penalty or privacy violation.

NY

Martin Shkreli

New York Attorney General Letitia James, the FTC, and six other state attorneys general asked a federal court to hold Martin Shkreli in contempt for allegedly trading pharmaceutical stocks and discussing pharmaceutical companies in violation of his lifetime industry ban. The requested sanctions include divestiture, an accounting of his trading, forfeiture of trading profits, and possible further fines or incarceration; the release describes a request to the court, not a new ruling imposing those measures.

NY

Alex Mashinsky

$35.0M

New York Attorney General Letitia James announced a settlement with former Celsius CEO Alex Mashinsky over allegations that he misled investors about Celsius’s safety, users, and investment strategies, and failed to register as required under New York law. The settlement permanently bars Mashinsky from the securities, commodities, and cryptocurrency industries and provides for up to $35 million in payments to New York under specified conditions.

NY

U.S. Department of Labor

New York Attorney General Letitia James and a multistate coalition sued the U.S. Department of Labor, alleging it unlawfully canceled grants for state unemployment insurance system upgrades after approving the states’ plans. The coalition seeks restoration of the remaining funding and damages; the release does not report a court ruling or penalty.