OpenAI sued over kids data as plaintiffs demand equity for minors
A new class action claims OpenAI illegally trained models on children's data and demands a slice of the $1.4 trillion company as payback.
Policy · Source: Reuters
What happened
A new class action lawsuit in San Francisco federal court accuses OpenAI of illegally collecting sensitive data from millions of underage users. The complaint alleges OpenAI designed ChatGPT to manipulate children into trusting the chatbot. This trust allegedly led minors to divulge highly personal information and sensitive health data. OpenAI then reportedly used this priceless trove of data to train its large language models and build detailed profiles without parental consent.
The lawsuit highlights a twelve year old plaintiff who bypassed the age gate simply by typing an age over thirteen. When she later told the chatbot she had just turned twelve, the system did not end the conversation. She eventually began sending selfies to the AI. She asked the chatbot to rate her looks and discussed her insecurities, diet, and body image. Plaintiffs argue that current default settings for retaining and training on user data are entirely insufficient.
The plaintiffs are making an unprecedented legal demand. They want every child whose data trained OpenAI models to receive a proportionate amount of OpenAI equity or a cash equivalent. The lawsuit notes the company is valued at up to $1.4 trillion. OpenAI strongly denies the allegations. The company claims it has industry-leading protections and warns this lawsuit risks pushing teens toward products with fewer safeguards.
Key facts
- $1.4 trillion — OpenAI valuation cited in the lawsuit
- 13 — Minimum age required by OpenAI terms of service
- 90% — Teens who use ChatGPT for learning and skills according to OpenAI
- 15 minutes — Average weekly time teens spend on ChatGPT per OpenAI
Why it matters
Age verification is becoming a massive liability for AI builders. Relying on a simple checkbox or self-reported birth year is no longer enough to protect your startup from privacy lawsuits. Chatbots are designed to simulate empathy and build trust. When minors interact with these systems, they share deep personal secrets that they would never type into a standard web form. If your model ingests these user inputs by default, you are walking into a legal minefield.
The demand for equity introduces a radical new legal tactic for class actions. Plaintiffs are no longer just asking for standard damages or injunctions. They are targeting the underlying valuation of AI companies. The lawsuit explicitly calls out OpenAI for touting its desire to share wealth created by AI. If courts entertain the idea that unauthorized training data entitles users to company ownership, the financial risk for AI startups multiplies overnight.
For builders
Audit your age verification flows
A self-reported age gate failed to protect OpenAI from this lawsuit. Builders must implement stricter verification or assume minors are using the product. Parents will hold you liable if you get this wrong.
Disable default training on user inputs
The lawsuit specifically attacks OpenAI for defaulting to retaining and training on user data. Make data contribution strictly opt-in for consumer accounts. This simple toggle shields your startup from massive privacy claims.
Implement dynamic age detection guardrails
The chatbot kept talking even after the user stated she was twelve. Your application layer must monitor context and cut the connection if a user reveals they are underage. Do not rely solely on the signup screen.
My take
Relying on a simple age checkbox is lazy engineering and terrible business. OpenAI built a product that talks like a trusted friend but failed to build a system that stops talking when a kid admits they are twelve. Demanding equity is a wild PR stunt, but it proves that plaintiffs are coming for your cap table, not just your cash.
Original reporting: Reuters. This is my rewrite and opinion.