39 States Just Weighed In on Character.AI's Bankruptcy. Here's What It Says About AI Companion Safety
Wisconsin's DOJ joined 38 states in a bankruptcy-court filing against Character.AI's maker, citing safety risks and unlicensed therapist personas. Here's what the action tells us about where AI companion safety is heading.
October 19, 2026
On October 18, Wisconsin's Department of Justice announced it had joined 38 other states in a court filing tied to Character Technologies, the company behind Character.AI. The platform was once one of the biggest names in AI companionship. Now it's in bankruptcy, and 39 states are asking a court to make sure consumers don't get lost in the creditor line. The filing, as reported by the Milwaukee Journal Sentinel, argues that Character.AI presented serious safety risks to its users, and it singles out a detail that's been quietly bothering regulators for years: the platform let people chat with personas calling themselves psychologists and therapists.
Key points
- Wisconsin's DOJ joined 38 other states in a court filing within Character Technologies' bankruptcy proceedings, arguing the company's Character.AI platform posed serious safety risks to users.
- The states specifically flagged unlicensed 'psychologist' and 'therapist' personas offered alongside celebrity and cartoon characters.
- When a companion platform enters bankruptcy, consumer claims and safety obligations risk being deprioritized, which is why attorneys general intervene.
- Concrete safety architecture exists and is buildable today: ID-based age verification, hard-coded prohibited categories, media screening, in-app reporting, and proactive-messaging controls.
- FlirtAlly ships with that architecture at launch: age-verified 18+ content, no fake credentials, opt-in first texts, and unlimited memory on every plan.
