Attorney General Jeff Jackson Asks Court to Protect Kids’ Data in A.I. Company Bankruptcy
Says users should have the right to delete their data before any sale
FOR IMMEDIATE RELEASE
Tuesday, October 20, 2026
Contact: comms@ncdoj.gov
919-538-2809
RALEIGH – Character.AI is an artificial intelligence chatbot powered by “characters” designed to mimic human conversation and relationships. Some of these bots presented themselves as psychologists, therapists, and doctors. Children as young as 13 were allowed to use the platform.
Character.AI’s parent company is now seeking bankruptcy protection, and Attorney General Jeff Jackson and a bipartisan coalition of state attorneys general warned the court that Character.AI holds a significant amount of users’ private data.
While it was operating, Character.AI collected data including private conversations involving children, sensitive conversations about users’ mental health, relationships, and emotional struggles. Now that the company is seeking bankruptcy, the question is whether that information can be sold or transferred along with the company’s other assets.
“Character.AI collected deeply personal conversations from millions of people, including kids,” said Attorney General Jeff Jackson. “Now that the company is going bankrupt, that information shouldn’t just become another asset they can sell to the highest bidder. This will be an important test case for what happens to our personal data when an AI company goes bankrupt. We need to get the rules right.”
Attorney General Jackson wants the bankruptcy court to prioritize this issue and make sure Character.AI cannot transfer users’ sensitive personal information to a buyer without strong privacy and safety protections. That includes giving users the right to access and delete their data before any sale and limiting how private conversations can be used afterward. The states are also reserving the right to object to any proposed sale or bankruptcy plan that does not adequately protect consumers.
North Carolina joined several states in 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.
Although Character.AI has recently voluntarily restricted minors’ access to certain chatbot features, the states have raised concerns that these measures are voluntary, incomplete, and could be circumvented or reversed by a future purchaser.
Joining Attorney General Jackson in this filing with the court 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 Jersey, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, Wisconsin, and West Virginia.
A copy of the states’ filing is available here.
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