Idaho Attorney General seeks data protections for residents in Character.AI parent company's bankruptcy proceedings
AG Labrador Demands Data Protections for Idahoans in Chatbot Corporate Bankruptcy - Idaho Office of Attorney General
Idaho Attorney General Labrador announced that the state has joined a multistate coalition of attorneys general in filing a notice in the bankruptcy proceedings of Character.AI parent company Character Technologies, seeking protections for children and consumers in any sale of the company's business or assets. The filing states that the company's safety and privacy practices have serious problems, saying it collected large amounts of sensitive user information through chats, including private conversations involving mental health, relationships and emotional distress, involving both children and adults. Idaho opened an investigation after a 2024 wrongful death lawsuit alleging that its chatbot formed an emotionally and sexually exploitative relationship with a child, reinforced the child's suicidal thoughts and contributed to the child's suicide; the investigation found potential consumer protection and privacy violations. The states believe that Character.AI's recent voluntary measures restricting minors' use of some chat features are incomplete and non-binding, and could be circumvented or revoked by a future buyer, and said they will continue to participate in the bankruptcy proceedings and reserve the right to challenge any sale proposal or bankruptcy plan.
Multistate attorneys general seek protection of children's and consumers' data in asset sales during Character.AI parent company's bankruptcy proceedings, offering a window into how regulators follow AI companies' bankruptcy proceedings.