This month, the Office of the Kentucky Attorney General announced that it filed a lawsuit against Character Technologies, Inc., its owners, and its product Character.AI (together, “Character Technologies”), alleging violations of the Kentucky Consumer Data Protection Act and other state laws.

According to the complaint, Character Technologies prioritized “profits over the safety of children” by deploying what the Attorney General characterizes as “dangerous technology that induces users into divulging their most private thoughts and emotions” and manipulates minors through “dangerous interactions and advice.” The complaint alleges that the platform lacks meaningful age-verification mechanisms and effective chat filters, exposing children to sexually explicit material, substance abuse content, and other harmful interactions. The Attorney General’s announcement also references two child deaths in Colorado and Florida, alleging that both followed “self-harm after extensive interaction with the platform’s chatbots.”

The complaint alleges violations of the Kentucky Consumer Protection Act, asserting that Character Technologies engaged in unfair, false, misleading, or deceptive practices by “retroactively repurposing user data to fine tune its underlying” large language model and concealing “material facts regarding their collection and use of children’s data.” The complaint further brings claims under the Kentucky Consumer Data Protection Act due to Character Technologies' alleged failure to implement age gates, obtain parental consent, or deploy identity-verification measures. 

The Commonwealth seeks injunctive relief requiring changes to Character Technologies' practices, as well as monetary damages.

For companies operating AI-driven consumer platforms, particularly those accessible to minors, the lawsuit signals heightened scrutiny from state attorneys general and underscores the growing legal risks at the intersection of artificial intelligence, consumer protection, and child safety.