ATTORNEY GENERAL RAOUL SEEKS CONSUMER PROTECTIONS IN CHARACTER.AI BANKRUPTCY

ATTORNEY GENERAL RAOUL SEEKS CONSUMER PROTECTIONS IN CHARACTER.AI BANKRUPTCY

October 14, 2026

Chicago - Attorney General Kwame Raoul today, as part of a bipartisan coalition of 40 attorneys general, filed a notice in the bankruptcy proceedings of Character Technologies, Inc., the company behind the popular chatbot company Character.AI. Raoul's court filing identifies serious concerns about the company's safety and privacy practices and calls for protections for children and consumers in any sale of the company's business or assets.

"Character.AI's bankruptcy proceedings highlight the sensitive information collected by AI-chatbots and the need to ensure transparency and privacy," Raoul said. "I will continue to work across party lines to ensure AI development is responsible and transparent and above all protects children's safety and the privacy of all users."

Character.AI is an artificial intelligence chatbot platform that allows users to interact with AI-powered chatbot "characters" designed to mimic human conversation and relationships. These chatbot characters include fictional and celebrity personas, children's cartoon characters and others that present themselves as psychologists, therapists and doctors. Through chats with these characters, the company has collected sensitive consumer data, including private conversations about users' mental health, relationships and emotional struggles.

Several states, including Illinois, began investigating Character.AI following a 2024 wrongful death lawsuit alleging that its chatbots fostered an emotionally and sexually exploitative relationship with a child, reinforced his suicidal thoughts and contributed to his death by suicide. The states' investigation identified potential consumer protection and privacy violations.

Today's filing highlights the significant volume of sensitive consumer information held by Character.AI, including private chatbot conversations involving children and adults, and identifies privacy and safety protections that should be addressed in any sale or transfer of the company's business or assets. Although Character.AI has recently voluntarily restricted minors' access to certain chatbot features, the states have raised concerns that these measures are not compulsory, incomplete and could be circumvented or reversed by a future purchaser.

Raoul and the coalition intend to remain actively engaged in the bankruptcy proceedings to protect consumers and address outstanding regulatory concerns. The states have reserved their rights to challenge any proposed sale or bankruptcy plan and to seek additional protections for consumers' personal information.

The filing is the most recent in Raoul's ongoing efforts to protect consumers, especially children and youth, from the harms presented by AI. Earlier this year, Raoul and a bipartisan coalition of attorneys general demanded that xAI, the company that owns both the X social media platform and the AI chatbot Grok, take action to prevent Grok from generating nonconsensual intimate images and child sexual abuse material. In 2025, Raoul co-led a coalition calling on major artificial intelligence (AI) companies to ensure that AI chatbots do not engage in sexually inappropriate conversations with children. Also in 2025, Raoul and a coalition of attorneys general called on the industry to address sycophantic and delusional outputs from AI chatbots and the dangers they present to children and vulnerable people.

Joining Attorney General Raoul in filing this notice are the attorneys general of Alaska, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Hawaii, Idaho, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Hampshire, New Jersey, 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.