A teddy bear that remembers your child's secrets and talks back sounded like a charming holiday gift a year ago. In September, California decided it was a product kids should not have, at least for now. The state passed a temporary ban on toys with built-in companion chatbots. It is a rare case of a state stopping a category of AI consumer device before it went mainstream, and anyone who sells toys, gifts or kids' gadgets should take note.
What happened
On September 10, Governor Newsom signed a package of child safety laws. The governor's office says it includes a ban on toys containing AI companion chatbots, alongside Adam's Law (SB 1119), which requires companion chatbots used by minors to have crisis protocols, parental controls, a notice to parents if a child turns safety settings off, and independent child-safety audits before release. The governor's announcement.
CalMatters reported that the toy law, SB 867, temporarily bans the manufacture and sale of toys with companion chatbots for children under 16, and quoted child advocates who said enforcement will decide whether the new laws work. Reports differ on how long the toy ban lasts and when it starts, so check the final bill text before planning around a date. CalMatters on the new laws.
The ban builds on SB 243, which TechCrunch reported in October 2025 made California the first state to require safety protocols for companion chatbots, and which lets people who believe they were harmed by violations sue. TechCrunch on SB 243.
The backdrop is how fast companionship became a mainstream use of AI. MIT Technology Review named AI companions one of its breakthrough technologies of 2026, citing a Common Sense Media finding that 72% of US teens have used AI for companionship, and describing both real emotional support for some users and serious harms for others. MIT Technology Review on AI companions.
Why it matters for your business
The companionship debate is human first. A lonely adult finding comfort in a chatbot is making a choice. A young child bonding with a talking toy that never says no is a different situation, and lawmakers drew the line there.
For businesses, the effects are concrete.
Inventory risk. If you sell toys, gifts or kids' electronics, some products on the market now may become unsellable in California. Small retailers buying from overseas suppliers or online wholesalers often do not know what software runs inside a toy.
Marketing words matter. The law turns on whether a toy contains what California defines as a companion chatbot. A toy marketed as your child's "best friend who remembers everything" invites scrutiny that a toy described as answering trivia questions may not. Retailers should read listings the way a regulator would.
Other states watch California. Rules written in Sacramento often become templates elsewhere, and national brands tend to design for the strictest market. Makers of kids' devices may simply drop companion features nationwide.
The other side deserves a hearing. Some critics of rules like these argue that broad definitions can sweep in harmless educational products and that age checks create privacy problems of their own. Parents can also decide what goes in their own homes. Those are fair points, and courts or later amendments may narrow the law.
What we'd do
- Audit your kids' catalog. List every toy or gadget that talks, listens or connects to the internet, and ask suppliers in writing whether it includes a chatbot designed for ongoing companionship.
- Read the bill text. Get the definitions and dates from the enrolled law, not from headlines, and talk to counsel if AI toys are a meaningful part of sales.
- Fix your product copy. Remove "friend," "remembers your secrets" and similar language unless you are sure the product is outside the law.
- Plan holiday buying carefully. Avoid deep inventory of AI companion toys that you may not be able to sell in California next year.
- Favor products with clear controls. Where you do sell connected toys, choose ones with parental controls, no open-ended chat and clear privacy terms.
Our view: banning a category outright is a blunt tool, but for small children it is a defensible one while the evidence comes in. Adults will keep making their own choices about AI companions. For toy sellers, the sensible move is to stop treating "AI friend" as a selling point and start treating it as a compliance question.
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