TLDR: Texas Attorney General Ken Paxton has initiated an investigation into Meta and Character.AI, alleging that the tech giants are engaging in deceptive trade practices by marketing their AI chatbots as legitimate mental health therapists and experts without proper qualifications. The probe focuses on concerns that these AI platforms mislead vulnerable users, particularly children, and exploit user data for advertising.
Texas Attorney General Ken Paxton announced on Monday, August 18, 2025, a comprehensive investigation into Meta AI Studio and Character.AI. The inquiry centers on allegations that these companies are promoting their artificial intelligence chatbots as qualified mental health professionals and therapeutic tools, potentially violating Texas consumer protection laws through deceptive trade practices.
Paxton’s office expressed significant concern that these AI platforms, despite lacking medical credentials and oversight, are misleading vulnerable individuals, especially children, into believing they are receiving legitimate mental healthcare. Attorney General Paxton stated, ‘By posing as sources of emotional support, AI platforms can mislead vulnerable users, especially children, into believing they’re receiving legitimate mental health care. In reality, they’re often being fed recycled, generic responses engineered to align with harvested personal data and disguised as therapeutic advice.’
The investigation highlights several specific issues. Character.AI, known for hosting user-created AI personas, includes a popular ‘Psychologist’ bot that has garnered over 200 million interactions and is particularly appealing to younger audiences. Meta’s chatbots have also come under scrutiny, with reports of inappropriate interactions, including instances where they engaged in flirting with minors.
A key aspect of the probe involves the discrepancy between the chatbots’ asserted confidentiality and the companies’ actual data practices. Paxton’s office alleges that while these AI tools may claim to offer private counseling, their terms of service reveal that user interactions are logged, tracked, and subsequently exploited for targeted advertising and algorithmic development. This raises serious concerns about privacy violations, data abuse, and false advertising.
In response to the allegations, Meta has stated that it clearly marks AI experiences and includes disclaimers that responses are AI-generated, not from licensed professionals. The company also asserts that its models are designed to direct users to seek qualified medical or safety professionals when appropriate. Meta maintains that its AI chatbots are not intended for children, though critics argue these safeguards are insufficient, especially for young users who may not fully grasp the disclaimers.
To facilitate the investigation, Attorney General Paxton has issued Civil Investigative Demands (CIDs) to both Meta and Character.AI, requiring them to provide relevant documents, data, and testimonies. This action aims to determine if the companies have violated Texas consumer protection laws, including those prohibiting fraudulent claims, privacy misrepresentations, and the concealment of material data usage.
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This investigation aligns with broader legislative efforts to safeguard minors online, such as the Kids Online Safety Act (KOSA), which seeks to impose a ‘duty of care’ on online platforms to protect children from harmful content. The Texas AG’s action underscores a growing push for greater regulation and accountability in the rapidly evolving field of AI, particularly concerning its application in sensitive areas like mental health.
