Wisconsin joins 38 states seeking protections in Character.AI bankruptcy

Oct 18, 2026
Wisconsin and 38 other states are seeking consumer safety and privacy protections in Character Technologies' bankruptcy proceedings.

The Wisconsin Department of Justice joined 38 other states in seeking consumer protections in bankruptcy proceedings for Character Technologies, according to the Milwaukee Journal Sentinel. The company operates the Character.AI chatbot platform.

The states allege the company marketed its chatbots to children and adults despite known safety risks. Their filing also says the company collected sensitive conversations about mental health and relationships, and argues that any asset sale should include privacy and safety protections.

Character.AI announced in October 2025 that users under 18 would no longer be allowed to have open ended conversations with its character chatbots. The states contend that restrictions on youth access remain incomplete.

Character Technologies has agreed to sell $20 million in assets to Disney, the initial bidder. Character.AI said the platform can continue operating through a sale, but will close if no companies submit bids.

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