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Michigan Attorney General · October 15, 2026 · Primary source

Attorney General Nessel Seeks Consumer Protections in Character.AI Bankruptcy

Score 46PRIMARYregulatoryState AGMI

Summary

On October 15, 2026, Michigan Attorney General Dana Nessel joined a 41-state coalition filing a notice in the bankruptcy proceedings of Character Technologies, Inc., the operator of the Character.AI chatbot platform, raising consumer protection and privacy concerns about the company's handling of sensitive user data including mental health conversations. The filing calls for privacy and safety protections to be incorporated into any sale or transfer of the company's assets, particularly with respect to data collected from minors. The states identified potential consumer protection and privacy violations stemming from a 2024 wrongful death lawsuit and subsequent state investigations.

What this may mean

The states' bankruptcy filing does not impose new regulatory obligations on healthcare organizations but signals multistate attorney general interest in AI platforms that collect sensitive mental health and therapeutic conversation data, including platforms presenting chatbot characters as psychologists, therapists, or doctors. Any purchaser of Character.AI's assets could face continuing state regulatory scrutiny over the privacy and safety practices flagged in the filing. The proceeding does not involve HIPAA covered entities or business associates directly, as Character.AI is not a covered entity.

Informational only. Not legal, medical, financial, or other professional advice. Always consult a qualified professional familiar with your specific facts before relying on any item.

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