Texas Attorney General Ken Paxton issued a press release on Monday announcing an investigation into Meta AI Studio and Character.AI on the grounds that the two companies "may have engaged in deceptive trade practices and misleadingly promoted themselves as mental health tools."
"In today's digital age, we must continue to work to protect Texas children from deceptive and exploitative technologies," the press release quoted Paxton as saying. "By masquerading as a source of emotional support, artificial intelligence platforms can mislead vulnerable users, especially children, into thinking they are receiving legitimate mental health services. But in fact, these platforms often provide recycled and generic responses that are designed based on collected personal data and disguised as treatment recommendations."
The investigation comes just days after Senator Josh Hawley announced an investigation into Meta. Previous reports found that Meta's artificial intelligence chatbot had inappropriate interactions with children, including flirting.
The Texas Attorney General's Office accused Meta and Character.AI of creating artificial intelligence characters that "passed off as professional therapeutic tools despite lacking formal medical qualifications or oversight."
Among the millions of AI characters on the Character.AI platform, a user-created bot called Psychologist is in high demand among the startup’s younger users. Meta, meanwhile, does not offer therapeutic bots for children, but it does not prevent children from using Meta AI chatbots or characters created by third parties for therapeutic purposes.
"We clearly label AI, and to help people better understand its limitations, we've added a disclaimer stating that responses are generated by AI, not humans," Meta spokesman Ryan Daniels said. "These AIs are not licensed professionals, and our models will direct users to seek help from qualified medical or safety professionals when appropriate."
However, the media noted that many children may not understand such disclaimers or simply ignore them. We asked Meta what additional safeguards it has in place to protect minors using chatbots.
Paxton also noted in the statement that while AI chatbots claim to be confidential, their "terms of service indicate that user interactions are recorded, tracked, and used for targeted advertising and algorithm development, raising serious concerns about privacy violations, data misuse, and false advertising."
According to Meta's privacy policy, Meta does collect interaction tips with AI chatbots, feedback, and other interactions across Meta services to "improve artificial intelligence and related technologies." The policy does not explicitly mention advertising, but notes that information may be shared with third parties such as search engines to provide "more personalized output." Given Meta’s ad-based business model, this effectively equates to targeted advertising.
Character.AI’s privacy policy also highlights that the startup records user identifiers, demographic data, location information, and more user-related information, including browsing behavior and app usage platforms. It tracks users across ads on platforms such as TikTok, YouTube, Reddit, Facebook, Instagram and Discord, and may associate that tracking data with user accounts. This information is used to train artificial intelligence, tailor services to individual preferences, and deliver targeted advertising, including sharing the data with advertisers and analytics providers.
Both Meta and Character say their services are not designed for children under 13. Still, Meta has been criticized for failing to police accounts created by children under 13, while Character's kid-friendly persona is clearly designed to appeal to younger users. The startup’s CEO Karandip Anand even said his 6-year-old daughter is using the platform’s chatbot.
This type of data collection, targeted advertising, and algorithmic exploitation is exactly what legislation like the Children’s Online Safety Act (KOSA) is designed to prevent. The Children's Online Safety Act was on track to pass last year with strong bipartisan support but stalled after fierce opposition from tech industry lobbyists. Meta in particular has used its powerful lobbying muscle to warn lawmakers that the bill's broad mandate would undermine its business model.
In May 2025, Republican Senator Marsha Blackburn of Tennessee and Democratic Senator Richard Blumenthal of Connecticut re-submitted the Children's Online Safety Act to the Senate.
Paxton has issued civil investigative warrants — legal orders that require companies to provide documents, data or testimony during a government investigation — to both companies to determine whether they violated Texas consumer protection laws.