DOJ Seeks Privacy Safeguards as Character.AI Considers Sale of User Chat Data
What Happened — The U.S. Department of Justice’s Executive Office for U.S. Trustees has filed a court‑level request that a consumer‑privacy ombudsman be appointed to oversee the potential sale of millions of Character.AI chat logs. The filing notes that the company’s privacy policy is “ambiguous” and permits the transfer of personally identifiable information (including minors’ data) in a bankruptcy‑driven asset sale. Character.AI, which reports 12 million active monthly users, tells users their conversations are private, yet the policy allows disclosure of PII without explicit consent. The DOJ is asking the court to restrict any sale that would expose sensitive personal content, and to require a record of prior policy versions, notice to users, and opt‑out mechanisms. Source: The Record
Why It Matters for Trust & Control Assurance — This case spotlights the need for robust privacy‑governance controls and transparent consent mechanisms—exactly the area covered by Verisq’s CookiePLUS privacy capability.
Who Is Affected — Consumer‑facing AI SaaS platforms, chatbot providers, and any service that monetises user‑generated content.
Recommended Actions —
- Conduct a privacy impact assessment (PIA) focused on data‑transfer scenarios.
- Align consent dialogs and policy language with explicit opt‑in/opt‑out requirements.
- Document all policy revisions, user notices, and consent records to provide defensible evidence in regulatory reviews.
Technical Notes — No technical exploit is reported; the risk stems from contractual and policy‑level data handling practices that could enable the sale of sensitive PII without user permission. Source: The Record