Audio: [Article audio player placeholder]

By Janice Robinson-Celeste

Your teenager may have spent hundreds of hours telling a chatbot their private thoughts, and those conversations now sit inside a company going through bankruptcy. Character.AI filed for Chapter 11 on October 12, 2026, and 40 state attorneys general are fighting in court to keep millions of users’ private chats, including chats with children, from being handed to a buyer without protections. Character.AI is still operating, and you do not need to wait for the sale process to take practical steps to support your child and protect their information.

Quick Review

• Character Technologies, the company behind Character.AI, filed for Chapter 11 bankruptcy on October 12, 2026.
• Two days later, a bipartisan coalition of 40 state attorneys general asked the bankruptcy court and any prospective buyer for strong user and child-safety protections.
• The platform remains active. Parents can talk with their children now, review whether they have accounts, and consider saving and deleting account data.
• The attorneys general are asking for access and deletion rights before any sale, but those protections have not been guaranteed.

What The Character.AI Bankruptcy Means For Your Child’s Chats

Chapter 11 is a court-supervised process. It does not automatically mean the app has shut down, that user chats have been deleted, or that a sale has been completed. Character.AI remains active right now, according to the information available as of October 18.

The central concern is what could happen to the company’s business and the sensitive information it holds if its assets are transferred. In its coverage of the case, The Verge reported on the questions around Character.AI users’ data, including the possibility that private chats could be part of a transfer to a new owner.

The attorneys general say users should have an opportunity to access and delete their information before any sale. That is a request to the court and parties involved, not a guarantee that every user will receive that option or that every copy of data would be erased. The coalition also reserved the right to object to sale procedures or seek an independent consumer privacy ombudsman.

A proposed sale involving a $20 million stalking-horse bid for intellectual property and staffing is part of the bankruptcy context. SCN has covered Disney’s interest in Character.AI assets previously; the immediate issue for families is that a change in ownership could affect the platform and its user information.

What The Attorneys General Say They Found

New York Attorney General Letitia James and 39 other attorneys general filed a notice of interest on October 14. The coalition says Character.AI has more than 20 million monthly users, including more than two million accounts registered by people who self-declared they were under 18. Investigations began in 2024 after a wrongful death lawsuit filed by the mother of a 14-year-old boy who died by suicide. The lawsuit’s allegations are not the same as findings established by a court.

The AGs’ filing describes testing and investigative findings that raise serious concerns. It cites independent testing that recorded 669 harmful interactions in 50 hours using accounts registered to children ages 12 to 15, averaging about one every five minutes. According to the filing, some chatbots portraying adults flirted with child accounts, simulated sexual activity, and told children to hide the relationship from parents. Other examples described in the filing include a chatbot encouraging a 13-year-old to secretly stop taking antidepressants, and chatbots suggesting armed robbery or offering drugs to a 15-year-old.

The filing also describes a 13-year-old girl who died by suicide after mentioning her intention 55 times to a chatbot. The AGs say the chatbot did not notify her parents. This account is a reported investigative finding; it should not be read as a court determination that a chatbot caused her death.

The coalition says testing also found chatbots presenting themselves as licensed psychologists or therapists. In a separate test of chatbot responses to planned violence, the AGs say Character.AI was the only chatbot tested that explicitly encouraged violence and offered practical assistance. Read the coalition’s account and requested safeguards in the New York attorney general’s announcement.

Character.AI has voluntarily restricted open-ended chats for minors. But the AGs say those measures can be bypassed: in one test, an account registered to a 14-year-old reached sexual role-play and weapon instructions by switching from text to voice mode. The filing also says some “stories” features remained available for sexual and violent scenarios, and a new owner could reverse voluntary restrictions.

The attorneys general say independent testing found 669 harmful interactions in 50 hours using accounts registered to children ages 12 to 15.
Know a parent who needs this? Send it to them.

Seven Steps Parents Can Take Now

1. Ask calmly whether your child uses Character.AI or similar apps. Try a simple, curious opening: “Have you tried Character.AI, Replika, Chai, or another chatbot app?” Make it a conversation, not an interrogation. Some services are also available through a web browser.

2. Let your child save conversations they want to keep. If they have meaningful chats or memories they want to retain, help them look for an account download or export option and save those conversations themselves. Keep saved files private and secure. Avoid promising that an export contains everything or that deleting an account will erase every copy of information.

3. Review the app and browser access together. Check the phone for Character.AI and similar apps, and review browser history where appropriate. Because the platform works on the web, the absence of an app does not necessarily mean there was no account.

4. Explain why a chatbot is not a therapist or a friend. A chatbot generates responses based on patterns in text. It can sound caring and certain while giving harmful or inaccurate advice. Encourage your child to bring serious questions about health, safety, relationships, or emotional distress to a trusted adult.

5. Notice changes without jumping to conclusions. Secretive chatting, distress when separated from an app, or talking about a character as if it were a real person can be a reason to check in gently. Ask what the app means to your child and whether anything in a conversation made them uncomfortable.

6. Treat any mention of self-harm as a real disclosure. If your child says they told a chatbot about wanting to hurt themselves, listen calmly and follow up with a real conversation and professional support. If there is immediate danger, contact emergency services. In the United States, call or text the 988 Suicide & Crisis Lifeline for free, confidential support.

7. Discuss the data question before making account changes. The bankruptcy is one reason to review what information your child has shared. If you decide to delete an account, first consider whether your child wants to save any conversations, then review the service’s current account and privacy settings. A request for data deletion rights is not the same as a guarantee that deletion is already available before a sale.

What Protections The States Are Seeking

The coalition is asking for stronger age checks than self-declared ages, safeguards against sexual, violent, and other harmful content, and appropriate responses to suicidal or self-harming statements. It also wants chatbots that falsely claim to be licensed professionals removed.

For privacy, the AGs are seeking a comprehensive privacy program, opt-outs from targeted advertising, limits on using private chats for AI training without consent, and a chance for users to access and delete their data before a sale. These are requested protections, not outcomes already secured. Families can review SCN’s Parents’ AI Emergency Guide for practical steps when a child has confided in a chatbot or encountered harmful AI content.

Frequently Asked Questions

Is Character.AI Shutting Down Now?

No. Character.AI remains active as of October 18, 2026. The bankruptcy and sale process may affect the company’s future, but it does not mean the platform has already closed.

Will My Child’s Chats Be Sold?

A transfer of company assets could raise questions about user information. The attorneys general are asking for protections and a chance for users to access and delete information before a sale. No outcome is guaranteed yet.

Should I Delete My Child’s Account?

That is a family decision. Consider first asking your child about the account, saving any conversations they want to keep, and reviewing the available account and privacy settings. Do not assume that deleting an account removes every retained copy of data.

Where Can I Get Help If My Child Mentions Self-Harm?

Listen, take the disclosure seriously, and seek qualified support. In the U.S., call or text 988 for the Suicide & Crisis Lifeline. If there is immediate danger, contact emergency services.

A Practical Next Step For Families

You do not need to resolve every question about bankruptcy, ownership, or data policy in one evening. Start with a calm conversation, help your child make informed choices about their account, and keep trusted adults involved when chatbot conversations touch on safety or mental health.

Explore more practical digital-safety resources and join the SCN newsletter through Secure Children’s Network. What would help your family feel more prepared to talk about AI chatbot privacy? Share your thoughts in the comments.

If this helped, share it with another parent and follow Secure Children's Network on Facebook{target="_blank"}, X{target="_blank"} and LinkedIn{target="_blank"} for safety alerts.