Natalie Wallace was lying in bed one night more than a month ago when she glanced at her Cocoon Cam baby monitor. She noticed splotches of pink and purple all around the baby’s bassinet. The colors are supposed to indicate motion, but her baby was in a deep sleep.

A few days later, Ms. Wallace, who helps run a leadership development company in Los Angeles, came home to find her husband at the kitchen table looking distraught. He showed her a screenshot he’d taken of a humanlike figure on the baby monitor, floating above the…

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