Illinois, Nevada, Rhode Island, and Maine Ban AI Therapy Amid Growing Scrutiny
Illinois, Nevada, Rhode Island, and Maine have banned AI-powered therapy as of July 2026.
Why it matters: Legal professionals managing healthcare AI must navigate evolving state bans and regulations impacting compliance. These rules affect risks tied to deploying AI in sensitive mental health services.
- Illinois, Nevada, Rhode Island, and Maine banned AI therapy effective July 20, 2026.
- Utah, New York, California, and Nebraska regulate mental health or companion chatbots without banning.
- The Federal Trade Commission launched a consumer protection inquiry about companion chatbots in September 2025.
- Studies highlight privacy, ethical, and safety concerns, including AI chatbots operating without clinical oversight.
Four U.S. states—Illinois, Nevada, Rhode Island, and Maine—have enacted bans on AI-powered mental health therapy, effective July 20, 2026. These laws prohibit the use of automated systems to deliver therapeutic services, reflecting concerns over AI's ability to safely replace human clinicians. Meanwhile, Utah, New York, California, and Nebraska have introduced regulations focusing on mental health or so-called "companion chatbots," which provide conversational support but do not perform formal therapy. These frameworks reflect a growing patchwork in state laws addressing AI in mental healthcare on psychology.com’s overview.
At the federal level, the Federal Trade Commission (FTC) opened an inquiry in September 2025 targeting companion chatbots due to concerns over consumer protection, transparency, and data privacy (psychology.com).
"Companion chatbots" are AI tools designed to provide empathetic conversation and support but do not claim to provide clinical mental health therapy. Their increasing use raises questions about safety and data handling, especially when users disclose sensitive information.
Research published in the National Library of Medicine finds that many AI mental health chatbots operate without clinical supervision, increasing risks in managing conditions such as depression or suicidal thoughts. The report cites significant ethical challenges, including the limited evidence supporting chatbot efficacy and diverse user safety risks.
Privacy concerns are prominent. Users frequently share personal and sensitive data without clear information on storage or use. Some AI tools have faced scrutiny for sharing data with third parties, such as advertisers. There is one reported incident where a suicide was potentially linked to interaction with an AI chatbot, as noted in an OECD AI Policy Observatory incident report. However, experts caution this link is associative and under investigation.
Mental health and AI ethics experts highlight a "perfect storm" scenario. Psychologist Ashleigh Golden warns technology may unintentionally reinforce harmful coping behaviors. Yvonne Doyle from telehealth.org highlights that despite the promise of AI, these systems can mislead users and raise data security concerns (telehealth.org analysis).
Legal professionals advising healthcare and privacy compliance teams should track these evolving regulations closely, as patchwork bans and rules create liability and operational risks for companies deploying AI mental health tools.
By the numbers:
- 4 states banned AI therapy — Illinois, Nevada, Rhode Island, and Maine as of July 20, 2026
- 4 states regulate companion chatbots — Utah, New York, California, and Nebraska
- September 2025 — FTC inquiry into AI companion chatbots launched
Yes, but: While a suicide has been reported in connection to chatbot use, authorities have not confirmed causation, underscoring the need for cautious interpretation of such incidents.
What's next: Watch for further federal guidance from the FTC and anticipated state legislative updates in 2026 reflecting ongoing AI regulatory concerns in mental health.