DOJ Seeks Privacy Protections Amid Character.AI Bankruptcy

• •DOJ seeks privacy ombudsman for Character.AI bankruptcy proceedings.
• •Character.AI has 12 million users, many of whom share sensitive information.
• •User data may be sold as part of bankruptcy, raising significant privacy concerns.

The Department of Justice is advocating for privacy protections for millions of Character.AI users as the company undergoes bankruptcy proceedings. The DOJ's Executive Office for U.S. Trustees has requested the appointment of a consumer privacy ombudsman to oversee the potential sale of user data, which may include sensitive information. Character.AI, which has 12 million active monthly users, allows users to interact with chatbots that often receive personal disclosures, including mental health issues. The company has faced lawsuits from families of users who have committed suicide or experienced mental health problems linked to the chatbot. The court has the authority to limit what data can be sold, and the DOJ's filing emphasizes the need for transparency regarding user data handling during the bankruptcy process. Character.AI's policy allows for the disclosure of user data in connection with asset sales, raising concerns about user privacy expectations. The situation reflects broader issues in data privacy, especially concerning AI technologies.