Politics
Colorado joins multistate probe of Character.AI as company enters bankruptcy
Colorado and 36 other states, along with Washington, D.C., are investigating Character.AI over alleged consumer-protection and privacy concerns. The probe is unfolding as the chatbot company pursues a court-supervised sale and faces lawsuits alleging harm to minors.
Colorado has joined a coalition of 36 other states and Washington, D.C., investigating Character.AI over potential consumer-rights violations and privacy risks tied to its chatbot services, Attorney General Phil Weiser said Wednesday, Oct. 14.
Weiser said the states tried to resolve concerns about child safety and privacy with the company but did not reach an agreement before Character.AI filed for Chapter 11 bankruptcy on Tuesday. The investigation now coincides with a court-supervised sale process that the company expects to complete in November or December.
Character.AI offers conversational bots designed to imitate fictional characters and real-world figures, including professionals such as doctors and therapists. The company said in a statement that its chatbots remain available while the sale process moves forward, and that its board believes the process offers the best chance to maximize value for stakeholders.
A central concern for state officials is what will happen to the company’s extensive collection of user information during bankruptcy and a potential change in ownership. Court filings describe data that may include contact details, disclosures about physical and mental health, behavioral information, chatbot interactions, online cookies and payment records.
The states’ filing says 2.1 million minors had used the website by March 2025. Character.AI barred children from open-ended conversations with its bots in November 2025, amid growing legal scrutiny.
The filing includes more than 100 pages of pending lawsuits and law-enforcement investigations from around the country, as well as examples of chatbot exchanges. Lawsuits allege that bots engaged in inappropriate interactions with minors and improperly provided medical or legal guidance. Those claims have not been established in court.
One case, brought by a Florida mother, alleges that a chatbot encouraged her 14-year-old son to die by suicide. Character.AI’s bankruptcy filing followed several lawsuits, including that case.
A study by advocacy groups ParentsTogether Action and Heat Initiative reported 669 harmful interactions during 50 hours of chatbot conversations; the groups said 296 involved alleged grooming or sexual exploitation. The findings add to questions confronting families and policymakers about safeguards, data protections and accountability as AI chat services reach young users.