The Wild West of AI Therapy Laws

August 23, 2026

AI Summary

5 min read

Tyler Lord was stuck in a Chicago airport with a three-hour layover and decided to fire up Ash, an AI mental health chatbot he relies on for depression. But the app wouldn’t work. Illinois had banned AI therapy. For Lord, that was a deal-breaker. “The fact that I wouldn’t be able to use it if I was in a state like Illinois—that could have profound consequences,” he says. “Why am I gonna make life harder for me by moving to a place where I don’t have it anymore?” The ban in Illinois was brief—Ash came back after a few months—but it’s part of a wave of state laws targeting AI therapy. This episode of WSJ What’s News examines what those laws do, why they were passed, and how the industry is responding.

What the Laws Say—and What They Don’t

Since mid-2024, at least six states—Illinois, Nevada, Tennessee, Maine, Colorado, Vermont, and Rhode Island—have passed laws restricting AI therapy. Illinois’s law is straightforward: it requires that mental health services be delivered by a licensed human. Mario Treado Jr., the state’s secretary of financial and professional regulation, says the goal is to ensure “a licensed individual providing the mental health services” and “a human in the loop.” Other states have followed with similar language, and lawmakers in New York and California are considering their own versions.

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What you'll learn

1 (00:00) **Episode Introduction & The Stakes** - The host sets up the central conflict: a user named Tyler Lord was blocked from his AI therapy chatbot Ash during a layover in Illinois because of a state law.
2 (02:50) **The "Therapy" Label and Industry Pushback** - The episode traces the origin of the legal battle to how companies label their AI products, starting with the launch of Ash in July 2025.
3 (04:52) **The Rise of State-Level Bans on AI Therapy** - The episode explains the primary driver of industry caution: a wave of state laws specifically prohibiting AI from providing therapy.
4 (06:19) **Categorizing the Legal Landscape** - Stanford law professor Michelle Mello provides a framework for understanding the different types of AI and how laws are targeting them.
5 (07:50) **Criticism of State Bans from Researchers** - Not everyone supports the state-level bans, particularly scientists who are developing evidence-based AI therapy tools.
6 (09:42) **How Companies Are Navigating the Patchwork of Laws** - The episode shows how companies are adapting to the new regulations, sometimes by simply changing their language.
7 (11:18) **The "Wild West" of Privacy and Data** - The episode pivots to the unregulated gray area where most wellness apps operate, highlighting privacy as a major concern.

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Show Notes

You’ve heard about how AI tools could help meet demand for mental-health treatment, as well as some of the risks involved. Several U.S. states have passed laws limiting what these chatbots are able to do, leading to some changes in the industry. Meanwhile, federal regulators are taking a look at the AI therapy space. In the third and final episode of our series “The AI Therapist,” What’s News PM host Alex Ossola delves into the changing regulatory landscape and where AI mental-health tools could go from here.

The AI Therapist: A WSJ Podcast Series