AZ HB2737

Requires chatbot providers to obtain affirmative consent before processing personal data, using chat logs for advertising purposes, or training AI models on user data, with heightened protections for minors requiring parental consent.

Prohibits chatbot providers from selling user chat logs, retaining chat logs for more than 10 years, and engaging in user profiling beyond what is necessary to fulfill express user requests.

Mandates clear disclosure to users that they are interacting with a chatbot rather than a human at the start of each communication, hourly thereafter, and whenever asked, with specific font and language requirements.

Classifies chatbots as products for liability purposes and holds providers liable for user injuries, while granting users a private right of action with civil penalties up to $5,000 per violation plus punitive damages and attorney fees.

Directs the Attorney General to adopt implementing rules, including templates for required notices and requirements for monthly risk-of-harm evaluations that chatbot providers must conduct and publicly disclose.