Character.ai files for bankruptcy, sells assets to Disney for $20m, data could be sold

Calli Schroeder, director of the AI and Human Rights Program at the Electronic Privacy Information Center, says the risk is heightened because people often disclose intimate details to personified bots. She notes that bankruptcy clauses often exempt companies from privacy promises, leaving data vulnerable. A coalition of 40 U.S. state attorneys general has asked a judge to impose child‑safety and privacy safeguards, though their enforceability is uncertain. The article also cites a tragic case where a teenager allegedly acted on advice from a Character.ai bot.

Schroeder and law professor Melissa Jacoby stress that without stronger rules, data from AI services could become a lucrative asset in future bankruptcies. The piece ends with practical steps for users to delete their data from the platform, acknowledging that the process may require effort and may not be uniformly available worldwide.