Intimate conversations shared with Character.AI chatbots may become part of an asset negotiation during the company's bankruptcy. A coalition of 40 American attorneys general asked the court on Wednesday (14) for guarantees to prevent personal information, including data from children and adolescents, from being transferred to new owners without adequate protections.
The filing was submitted to the Delaware bankruptcy court, where Character Technologies, responsible for the platform, initiated a judicial reorganization process under Chapter 11 of U.S. law.
The problem involves the nature of the stored information. Unlike conventional digital services, Character.AI allows extended conversations with artificial intelligence characters that simulate human relationships, including interactions about feelings, relationships and mental health.
According to the New York Attorney General's Office, the platform has more than 20 million monthly active users. Company records indicated that, as of March 2025, more than 2.1 million accounts had been registered by people who stated they were under 18 years old.
The data potentially involved goes beyond messages. The court document identifies voice call histories, health information shared during conversations, behavior patterns, device identifiers and payment data.
For New York Attorney General Letitia James, the possibility of transferring this information requires special attention.
"This company has gathered some of the most intimate thoughts that children have ever shared, and now these conversations can be sold to the highest bidder," she said in an official statement.
Attorneys general want to guarantee data deletion before any sale
The court filing presents concrete demands for potential buyers. Among them are allowing users to access and delete their information before a sale, preserving prior privacy choices and restricting the use of conversations for AI model training or other commercial purposes without valid consent.
The authorities also advocate for more robust age verification mechanisms, controls on targeted advertising and measures to prevent chatbots from falsely presenting themselves as licensed health professionals.
Concern about minors is supported by investigations into how the platform operates. Independent tests cited by the attorneys general identified 669 interactions considered harmful during 50 hours of simulated use by accounts registered as belonging to children aged 12 to 15.
Among the reported behaviors were sexualized conversations, encouragement of violence and potentially dangerous recommendations. These findings are part of the allegations presented by the authorities and do not represent a final court decision on the company's liability.
The document also points to a specific problem: old conversations may contain information from minors who were not correctly identified by age verification mechanisms, making it difficult to separate these records in a possible transfer.
Disney negotiates technology, but not user histories
The bankruptcy comes as Disney offers US$ 20 million for a license to technology and intellectual property from Character.AI. The deal still depends on court approval and may receive competing bids.
During a hearing held on October 14, Character.AI's lawyer, Erin Fay, stated that no buyer had submitted an offer for the user data or for the chatbots' operating business. According to her, Disney is not interested in the private histories that concern the attorneys general.
The distinction is important: the technology negotiation underway does not mean that users' conversations have been sold.
The attorneys general reserved the right to challenge future sale conditions and request the appointment of an independent representative to oversee consumer privacy issues.
For now, the transfer of data remains a possibility, and the safeguards advocated by the authorities still need to be considered in the court proceedings.
