Character AI lawsuits: every case, settlement and fine so far

Character AI is the company most associated with the legal fight over companion chatbots and young users. Every case below links to its court docket or the regulator's own announcement. Court records change, so each date is the one on the docket when we read it.

The family lawsuits

Florida, October 2024. Megan Garcia sued Character Technologies, its founders Noam Shazeer and Daniel De Freitas, and Google in federal court in Orlando after the death of her 14-year-old son, Sewell Setzer III, alleging the app's design contributed to it. In May 2025 Judge Anne Conway largely refused to dismiss the case, rejecting the argument that the chatbot's output was protected speech that barred the claims at that stage. The case is Garcia v. Character Technologies, M.D. Fla. 6:24-cv-01903.

Texas, December 2024. Two families sued in federal court in Marshall, Texas, over a 17-year-old and an 11-year-old, alleging exposure to self-harm, violence and sexual content (A.F. v. Character Technologies, E.D. Tex. 2:24-cv-01014).

Colorado and New York, September 2025. Three more suits followed on consecutive days: two in federal court in Denver, including the family of 13-year-old Juliana Peralta (Montoya v. Character Technologies, D. Colo. 1:25-cv-02907, and E.S. v. Character Technologies, 1:25-cv-02906), and one in Albany, New York (P.J. v. Character Technologies, N.D.N.Y. 1:25-cv-01295). Google and Alphabet are named in these suits too.

The settlement, January 2026. Within two days, Character AI told each court the cases were resolved. In New York its lawyers advised the court "of a settlement in principle" and asked for a stay; in Florida it filed a notice of resolution and the judge dismissed the case without prejudice, giving the parties time to submit final papers. The Colorado and Texas cases were stayed. By September 2026 none had a final dismissal: the Florida deadline has been extended, and the New York stay was continued in July "while settlement is being finalized". No terms have been made public.

Later suits. A Virginia family's suit, filed in December 2025, was dismissed in April 2026 because the defendants were never served. A new family suit, A.D. v. Character Technologies, was filed in federal court in San Francisco in August 2026 and is at an early stage.

States and regulators

Texas. Attorney General Ken Paxton opened an investigation into Character AI and other platforms over children's privacy in December 2024, and in August 2025 widened it to examine whether Character AI and Meta marketed chatbots to children as mental-health tools.

The FTC. In September 2025 the Federal Trade Commission sent orders to Character AI and six other companies requiring them to explain how they measure and limit harm to children and teens from companion chatbots. It is a study, not an enforcement case.

The Senate. Megan Garcia testified at a Senate Judiciary subcommittee hearing on the harms of AI chatbots in September 2025.

Kentucky. In January 2026 Kentucky's Attorney General sued Character Technologies and both founders in Franklin Circuit Court (case 26-CI-00029). The state calls it the first lawsuit by a US state against an AI chatbot company. It alleges violations of the Kentucky Consumer Protection Act and the Kentucky Consumer Data Protection Act and seeks changes to the product and damages.

Pennsylvania. In May 2026 Pennsylvania's Department of State and its State Board of Medicine sued in Commonwealth Court to stop Character AI chatbots presenting themselves as licensed medical professionals. The complaint describes a character that claimed to be a psychiatrist licensed in Pennsylvania and supplied a licence number that does not exist. This is the case behind searches for a Pennsylvania lawsuit; it is a licensing case, not one brought by a family.

Italy. In July 2026 Italy's data protection authority, the Garante, fined Character Technologies 158,000 euros after an investigation that began in November 2024. Its findings include failings in the protection of minors and in age verification.

Copyright

Disney. In September 2025 Disney sent Character AI a cease-and-desist letter over user-made characters based on its films and franchises. Character AI said it removed the characters Disney named. No lawsuit followed.

We found no copyright suit against Character AI by a studio, publisher or music company. Searches pairing Character AI with the NYT usually lead to the New York Times' reporting on the Garcia case in October 2024, not to a lawsuit.

What changed in the app

In October 2025, with the family suits pending and the FTC inquiry open, Character AI announced that users under 18 would lose open-ended chat, and that it would fund an independent AI Safety Lab. Removal began in the US in November 2025. Teens now use Stories, and adults whose age the app cannot estimate may be asked to confirm it through Persona. The change log dates each step.

What it means for users

For adults, nothing in these cases changes how the app works today; the practical effects came earlier, through the under-18 rules and age checks. For parents, the record is the useful part: a federal judge has let a design-defect claim against a chatbot go forward, two states have sued, and the company itself decided that open-ended chat is not for minors. The same questions are now being asked of other companion apps, and each app's timeline on this site lists any case filed against it.