Texas sues OpenAI and Sam Altman over deceptive safety claims

The Texas legal challenge

Texas Attorney General Ken Paxton has officially filed a comprehensive lawsuit against OpenAI and its CEO, Sam Altman. The legal action was submitted to the Collin County State District Court as a direct challenge to how the company manages its flagship chatbot, ChatGPT. The state argues that the company has misled the public regarding the reliability and safety of its technology.

The lawsuit specifically cites violations of the Texas Deceptive Trade Practices Act and the Securing Children Online through Parental Empowerment (SCOPE) Act. These laws are designed to protect consumers from dishonest marketing and to ensure that children are shielded from online risks. By invoking these statutes, Texas is treating AI safety as a matter of consumer protection rather than just a technical issue.

The complaint is 67 pages long and represents one of the most aggressive state-level enforcement actions against a generative AI company to date. It seeks to hold both the corporation and its leadership personally accountable for the way the software is marketed and deployed. This move signals a shift toward using existing state laws to regulate emerging machine learning systems.

Allegations of deceptive marketing

A core component of the state's argument is that OpenAI marketed ChatGPT as a dependable assistant for complex tasks like healthcare management. However, the lawsuit claims the platform frequently produces dangerous errors and hallucinations. Hallucinations occur when an AI generates information that is factually incorrect but presented with confidence.

The state contends that these inaccuracies pose a significant risk to users who rely on the tool for serious information. By presenting the software as a safe and reliable tool for high-stakes tasks, the state argues OpenAI is engaging in deceptive trade practices. The lawsuit suggests a gap between the company's public safety promises and the actual performance of the model.

Furthermore, the petition alleges that under Sam Altman's leadership, the company prioritized market dominance over rigorous testing. The state claims that OpenAI rushed its models to the public to secure a commercial lead. This process supposedly involved cutting corners on internal evaluations and the training required to ensure the AI behaves predictably.

Risks to children and minors

The lawsuit highlights significant concerns regarding how teenagers and children interact with the chatbot. The state claims that OpenAI failed to implement robust parental controls or effective age verification systems. This lack of oversight allows adolescents to have unfettered access to the platform's conversational features.

The complaint notes that ChatGPT can simulate human empathy and encourage compulsive engagement from younger users. Because the AI can mimic human-like interaction, the state argues it can be particularly influential on minors. Without proper safeguards, children may be exposed to interactions that are not age-appropriate or intended for them.

Texas is seeking specific remedies to address these concerns, including a ban on providing services to minors without strict age verification. The state also wants to require verifiable parental consent before a child can use the chatbot. These measures would force OpenAI to create a more gated experience for younger demographics in the state.

Proposed legal remedies

The Attorney General is asking for several structural and financial penalties to resolve these issues. One major request is a pre-release pre-screening requirement for any new AI models. This would mean that OpenAI could not release new technology in Texas until an independent, court-approved evaluator verifies its safety standards.

The state is also seeking significant financial consequences for the company and its leadership. The lawsuit requests civil penalties of up to $10,000 for every statutory violation. Additionally, the state is asking for asset disgorgement, which means the company would have to give up profits that were tied to deceptive trade practices.

The lawsuit explicitly names Sam Altman as a defendant, arguing that his public statements and executive oversight make him personally liable. By naming the CEO individually, the state is attempting to ensure that leadership is held accountable for corporate decisions. This approach could have broader implications for how tech executives are treated in future state lawsuits.

The company's response

OpenAI has responded to the lawsuit by defending its long-standing record on safety and development. A spokesperson for the company stated that governments have an important role to play in setting robust safety standards for AI. They emphasized their commitment to working with Texas and other states to advance pragmatic policies for the entire industry.

The company's response suggests that they view the issue as a broader regulatory challenge rather than a specific failure of their own product. They are positioning themselves as willing partners in creating rules that apply to all generative AI developers. This stance aims to frame the company as a responsible actor seeking a balanced approach to regulation.

The case will now move forward through pre-trial motions in Collin County to determine the next steps. As the litigation proceeds, it will serve as a test case for how state officials apply consumer protection laws to automated chat agents. The outcome could influence how other states choose to regulate the rapid expansion of machine learning systems.