Counseling by chatbot? New Jersey legislators act to ban AI in therapy

A new bill would bar companies from using artificial intelligence to act as a licensed mental health professional. 

Members of the Assembly Science, Innovation and Technology Committee unanimously advanced the measure Monday.  

The bill would make the practice unlawful under the state Consumer Fraud Act. Violators would face fines of up to $10,000 for a first offense, and up to $20,000 per subsequent offense. 

The legislation comes amid a rise in people engaging AI chatbots for mental health advice and treatment, a low-cost and insurance-free alternative. One in three people in the U.S. live in an area with a shortage of mental health workers, with low-income areas and communities of color most affected, a report from Mental Health America found. 

AI therapy comes with risks. A Stanford study found that while AI therapy chatbots offer benefits like making therapy more accessible, the chatbots lack effectiveness compared to human therapists and show increased stigma to conditions like alcoholism and schizophrenia compared to depression. 

The bill also signals that state lawmakers will continue taking regulation into their own hands to limit the harms of AI — which could be derailed by President Donald Trump’s “big beautiful bill” that includes a 10-year moratorium on local and state AI laws. 

In April, Gov. Phil Murphy signed a law making the creation and dissemination of AI-generated media known as “deepfakes” a crime punishable by up to five years in prison. At least 20 states enacted laws last year to regulate political deepfakes.