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Key point: Kentucky attorney general files a lawsuit against an artificial intelligence chatbot company, eight days after the Kentucky Consumer Data Protection Act went into effect.

On January 8, the Kentucky attorney general (AG) announced its first lawsuit for violations of the Kentucky Consumer Data Protection Act (KCDPA) against an artificial intelligence (AI) chatbot company. The complaint alleges that the defendant violated the KCDPA with unfair, false, misleading, or deceptive acts and practices, and through unfair collection and exploitation of children’s data. Among other claims, the complaint also states claims under the state’s consumer protection law and data breach law.

The complaint is the latest in a growing trend of states regulating AI chatbots, including companion chatbots. As we recently discussed, New York and California passed laws last year specifically regulating companion chatbots. Lawmakers in other states have already proposed numerous bills this year. This comes notwithstanding the recent executive order, which seeks to preempt “onerous” state AI laws. As we foreshadowed in our analysis of that order, the instant complaint also reinforces the difficulty in defining what constitutes a state AI law, as the complaint is brought under existing state laws that are not specifically written to cover AI.

In the article below, we provide a summary of the allegations in the complaint.

Waving flag of NEW JERSEY

Key point: With a new governor taking office in New Jersey later this month, the fate of rules proposed last year to implement the New Jersey Data Privacy Act (NJDPA) will be decided by the incoming administration.

On January 20, 2026, New Jersey’s governorship will pass from Governor Phil Murphy to Governor-elect Mikie Sherrill. Under the state’s rulemaking publication schedule, January 8 was the final deadline for the Murphy administration to adopt rules and transmit them for publication. The next biweekly deadline, January 23, occurs after the transition of the governorship.

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Key point: Businesses operating companion chatbots in California or New York are subject to new legal obligations, including providing notices to users and ensuring protocols are in place to prevent self-harm.

On January 1, 2026, California’s companion chatbot law (SB 243) took effect after being signed into law on October 13, 2025 by Governor Gavin Newsom. The law imposes certain obligations on companion chatbot operators to implement “critical, reasonable, and attainable” safeguards surrounding the use of and interaction with “companion chatbots” with a focus on protecting minors. SB 243 follows New York’s AI Companion Models statute, N.Y. Gen. Business Law § 1700, et seq., a similar companion chatbot bill that went into effect November 5, 2025.

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Key point: In this post: (1) “Broken banner” claims proceed past pleading stage; (2) Courts continue to reject arguments that pen registers are limited to telephones but hope remains; (3) Offering movie trailers on websites does not transform movie theaters into “video tape service providers” under the VPPA; (4) “In transit” defense remains viable against wiretapping claims; (5) SDNY court suggests use of non-Meta social media pixel could impose VPPA liability.

Welcome to our monthly update on how courts across the nation have handled privacy litigation involving website tools such as cookies, pixels, session replay, and similar technologies. In this post, we cover decisions from December 2025.

Many courts are currently handling data privacy cases across the U.S. Although illustrative, this update is not intended to be exhaustive. If there is another area of data privacy litigation you would like to know more about, please reach out. The contents provided below are time-sensitive and subject to change. If you are not already subscribed to our blog, consider doing so to stay updated. If you are interested in tracking developments between blog posts, consider following us on LinkedIn.

Key point: Businesses subject to the CCPA now must conduct risk assessments for certain types of processing activities and, starting in 2028, must certify to California regulators that they completed the assessments.

The California Consumer Privacy Act’s (CCPA) new regulations went into effect on January 1, 2026. Although the new regulations bring many changes for businesses subject to the CCPA, one of the biggest changes is a new requirement to conduct risk assessments for processing activities that present “significant risk to consumers’ privacy.” This can encompass many types of common data processing activities such as the use of third-party cookies and tracking technologies, processing of sensitive personal information (e.g., biometric data), and the use of AI for certain employment-related activities. Like the CCPA, the risk assessment requirement applies to consumer, employee, and commercial personal information.

Importantly, on April 1, 2028, businesses subject to the CCPA must file a certification with the California Privacy Protection Agency (CalPrivacy) attesting — under penalty of perjury — that they conducted the required risk assessments. The certification must be signed by a member of the business’s executive management team.

In the below article, we provide an overview of this new risk assessment requirement.

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In today’s rapidly evolving digital landscape and expanded threat landscape, financial institutions feel at war and are under increasing pressure to balance innovation, data privacy, and regulatory demands. AI is accelerating that complexity, reshaping how organizations manage sensitive information and comply with a rapidly shifting legal environment.

The Texas state flag waving along with the national flag of the United States of America

Key point: Set to take effect on January 1, 2026, court blocks the Texas App Store Accountability Act on constitutional grounds.

A Texas federal district court granted a preliminary injunction enjoining the Texas App Store Accountability Act today, stating that the law likely violates the First Amendment and is unconstitutionally vague. In October, an internet trade association sued the state of Texas over the act, and this month the case was consolidated with another case stating similar claims. The law was scheduled to take effect January 1, 2026, and imposed obligations on both app stores and developers providing mobile applications to Texas users. Texas will be unable to implement or enforce the act while the litigation is ongoing.

Key point: New York becomes the second state — after California — to enact an AI frontier model law, while the governor’s veto of the New York Health Information Privacy Act will be a welcome result for organizations that criticized the bill as unworkable.

In the last two weeks, New York Governor Kathy Hochul took action on numerous bills the New York legislature passed before it closed in June. Among those actions, Hochul signed four AI-related bills — including a bill regulating AI frontier models — and vetoed a controversial health data privacy bill. We discuss each of those bills in the article below.

In addition to these bills, earlier this year, New York lawmakers enacted three other AI-related laws — the Algorithmic Pricing Disclosure Act, a companion chatbot law, and a law regulating the use of algorithmic pricing by landlords.

AI Webinar

On December 10, attorneys from Troutman Pepper Locke’s Privacy + Cyber + AI team hosted a webinar providing an overview of existing state AI laws and regulations. To drive understanding and comprehension, the webinar used a use-case-based approach, breaking the laws down across topics, including consumer-facing applications, pricing algorithms, employee-specific…

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Key point: Courts are split over whether use of the Meta Pixel to share URLs of videos users watch qualifies as disclosure of PII under the VPPA, even when they apply the same “ordinary person” test to nearly identical allegations.

Earlier this year, the Second Circuit joined the Third and Ninth Circuits in adopting an “ordinary person” standard to determine whether a defendant’s disclosure of information constitutes disclosure of personally identifiable information (PII) prohibited by the Video Privacy Protection Act (VPPA). Although this standard initially appeared more restrictive — and thus more favorable to defendants — than the “reasonable foreseeability” standard the First Circuit adopted in 2016, recent decisions by courts within the Second and Ninth Circuits have instead revealed a split in how district courts apply this test to nearly identical allegations, resulting in different outcomes on motions to dismiss.