MD HB1261

Prohibits AI toys sold in Maryland from generating sexual, violent, discriminatory, or emotionally manipulative content, or providing advice about criminal activity, self-harm, or substance use to children

Requires manufacturers to obtain verifiable parental consent before collecting child user data, and prohibits selling data to third parties, using it for targeted advertising, or retaining it beyond 12 months without renewed consent

Mandates AI toys include safety features such as age-appropriate conversational filters, automatic "safe mode" when receiving harmful inputs, and mechanisms to disable AI features if parental consent is revoked

Establishes the Artificial Intelligence Toy Safety Review Panel in the Attorney General's Consumer Protection Division to conduct independent audits and report annually to the General Assembly beginning December 1, 2027

Violations constitute unfair or deceptive trade practices subject to civil penalties up to $50,000 per violation and mandatory product recalls; effective July 1, 2026