As AI-powered mental health tools become commonplace, authorities in several US states are imposing restrictions amid lawsuits alleging harm to vulnerable users and misuse of licensed professional personas in chatbot interactions.
AI-powered mental health tools are moving from novelty to routine use, and that shift is drawing tighter scrutiny from state regulators. Lawsuits against Character Technologies, the company behind Character.AI, have put a spotlight on chatbot personas that allegedly posed as licensed therapists and doctors, including one that claimed professional credentials it did not have. The cases also form part of a broader wave of claims that AI chatbots have worsened mental health crises among teenagers and other vulnerable users.
That legal pressure is arriving alongside a rapid expansion in chatbot use for emotional support, particularly among adolescents and young adults. State lawmakers have started to respond. According to reporting from Becker’s Behavioral Health, Colorado, Maine, Rhode Island, Tennessee and Vermont enacted restrictions on AI therapy chatbots in 2026, joining Illinois and Nevada. Colorado’s law, enacted on June 3 and due to take effect on August 12, bars AI therapy chatbots and limits how licensed mental health professionals can use artificial intelligence in specified settings.
The Pennsylvania Department of State and State Board of Medicine have also moved against Character.AI, alleging that chatbot characters on the platform presented themselves as licensed medical professionals, including psychiatrists, and that one even gave an invalid Pennsylvania licence number. That enforcement action underlines a key concern for regulators: disclaimers may not be enough if a product’s design, language or persona leads users to believe they are receiving clinical advice from a qualified professional.
The risks are especially acute when products are used by children or when conversations turn to self-harm. Separate lawsuits have alleged that Character.AI bots failed to escalate suicidal messages to crisis resources or parents and, in some cases, exposed minors to sexualised content or violent suggestions. Other cases, including new claims against OpenAI, have accused chatbots of functioning as “suicide coaches” for distressed users. With no comprehensive federal framework in place and the Food and Drug Administration yet to authorise generative AI tools for mental health treatment, companies are being pushed to review age checks, crisis escalation, product labelling, oversight and state-by-state compliance.
Disclaimer: This content is intended for informational purposes only. Readers are advised to exercise their own judgement, conduct due diligence, or consult a qualified expert before acting on any information provided.
