Meta and Character.AI are under investigation by Texas Attorney General Ken Paxton for marketing AI chatbots as mental health tools without medical credentials. The probe targets deceptive trade practices and misleading claims, especially regarding children’s use.
Paxton slammed the platforms for posing as “sources of emotional support” while feeding users generic, recycled responses based on harvested personal data.
The issue started after Senator Josh Hawley launched a separate investigation into Meta’s AI chatbots reportedly flirting with kids. Texas AG’s office says both companies create AI personas that pretend to offer therapy but lack proper oversight. 
Character.AI hosts millions of AI personas, including a popular user-made bot called “Psychologist” that attracts young users. Meta doesn’t officially offer therapy chatbots for kids but their AI and third-party personas can be accessed by minors.
Meta spokesperson Ryan Daniels said:
“We clearly label AIs, and to help people better understand their limitations, we include a disclaimer that responses are generated by AI — not people.”
“These AIs aren’t licensed professionals and our models are designed to direct users to seek qualified medical or safety professionals when appropriate.”
Paxton calls out privacy concerns: user chats are logged, tracked, and exploited for ads and algorithm training. Both Meta and Character.AI collect data including identifiers, demographics, location, browsing behavior, and share it with advertisers.
Meta’s privacy policy confirms data collection across AI chats to “improve AIs,” with data shared for “more personalized outputs.” Character.AI’s privacy policy reveals similar extensive tracking across platforms like TikTok, YouTube, Reddit, and Instagram.
Neither service is officially for kids under 13, but Meta struggles with policing underage accounts, and Character.AI’s kid-friendly bots lure younger users. Character.AI CEO Karandeep Anand even said his six-year-old daughter uses the platform.
This investigation ties into larger battles over KOSA (Kids Online Safety Act), intended to stop data exploitation and targeted ads aimed at children. Lobbying from tech giants including Meta stalled the bill’s progress.
Paxton has issued civil investigative demands to both companies for documents and data to check if Texas consumer laws were broken.
TechCrunch asked both firms about safeguards for minors and child data tracking — no updates yet.
