New Jersey joins multistate effort to protect consumer data in Character.AI bankruptcy
TRENTON, N.J. — New Jersey Attorney General Jennifer Davenport has joined a bipartisan coalition of state attorneys general seeking stronger consumer privacy and safety protections in the bankruptcy proceedings of Character Technologies Inc., the company behind the artificial intelligence chatbot platform Character.AI.
Davenport and the New Jersey Division of Consumer Affairs announced Thursday that the coalition filed a notice in the bankruptcy case raising concerns about the company’s handling of sensitive personal information, particularly data involving children.
The filing calls for safeguards to ensure consumer information is protected in any potential sale or transfer of Character.AI’s business or assets.
Character.AI allows users to interact with AI-powered chatbots designed to simulate human conversations and relationships. The platform features characters modeled after fictional personalities, celebrities and children’s cartoon characters, as well as chatbots that present themselves as psychologists, therapists and doctors.
According to the Attorney General’s Office, the platform has collected sensitive information through users’ conversations with chatbots, including discussions about mental health, relationships and emotional struggles.
Several states, including New Jersey, began investigating Character.AI following a 2024 wrongful death lawsuit alleging that the platform’s chatbots developed an emotionally and sexually exploitative relationship with a child, reinforced his suicidal thoughts and contributed to his death by suicide.
The multistate investigation identified potential violations of consumer protection and privacy laws, according to state officials.
“Given the serious safety risks associated with Character.AI, New Jersey is joining a bipartisan coalition of attorneys general working to ensure that these bankruptcy proceedings prioritize the protection of consumers, and especially children,” said Attorney General Davenport. “Character.AI’s chatbots have amassed vast amounts of deeply personal and sensitive conversations. That information must not be treated as a commodity to be sold to the highest bidder without meaningful safeguards.”
The coalition’s filing highlights concerns about the amount of private information Character.AI possesses, including conversations involving children and adults that could be transferred to another company through bankruptcy proceedings.
State officials also raised concerns that existing safety measures could be weakened or eliminated if the company’s assets are sold.
Character.AI has voluntarily restricted minors’ access to certain chatbot features, but the attorneys general contend those restrictions are incomplete, are not legally required and could potentially be circumvented or reversed by a future purchaser.
“Protecting the online privacy of New Jersey residents, particularly our children, is a responsibility we take seriously,” said Christopher Peterson, Acting Director of the Division of Consumer Affairs. “Character.AI has taken steps to mitigate the potential harms associated with its product. We want to ensure those safeguards are not compromised by the bankruptcy process and that any entity acquiring this data has robust safety and privacy protections in place.”
New Jersey and the other states said they intend to remain involved in the bankruptcy proceedings to address outstanding regulatory concerns and protect consumers whose information may be affected.
The coalition has reserved the right to challenge any proposed sale or bankruptcy plan and seek additional protections for personal information collected by the platform.
Joining New Jersey in the filing are the attorneys general of Alaska, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, Wisconsin and West Virginia.
