23andMe says ‘independent' person to guide DNA decisions is important in its bankruptcy case
Attorneys general from about 30 states, including Missouri, say the popular DNA testing company 23andMe shouldn't be allowed to decide on its own how to handle the genetic data of its 15 million customers as the company goes through bankruptcy.
The states are asking the court to appoint an independent consumer privacy ombudsman and a security examiner, to help inform the court on privacy issues, review privacy laws and the company's policies and make recommendations on the sale of 23andMe's data, which includes the DNA of millions of people.
And in a federal court hearing Tuesday in St. Louis, the lead attorney for 23andMe said the company concurs, in principle. 'We're in agreement that an independent individual is important,' said Christopher Hopkins, of the firm Paul Weiss.
Last month, San Francisco-based 23andMe filed for Chapter 11 bankruptcy protection in the Eastern Missouri federal court district. It's looking to sell its assets, which the human genetics and biotechnology company reported at over $277 million. The company said it has about $214 million in debt.
The company on Tuesday secured the court's approval to continue operating as it goes through bankruptcy.
Customers of 23andMe, who used the company to analyze their DNA, have expressed worry about what will happen to their sensitive personal data.
'Good intention will not protect this data,' reads a document jointly filed April 15 by multiple states. 'The states are concerned not only about the protection of each and every consumer, but also every person who shares DNA with each consumer — along with their respective future generations'
The states say they don't trust 23andMe's security, especially after hackers breached the data of nearly 7 million of the company's customers in 2023. This event led to multiple government investigations and lawsuits. And last week, the U.S. Attorney's Office filed a motion in the bankruptcy case raising national security concerns. And the bankruptcy is now under congressional investigation.
Bailey's office argues in court filings that the genetic data is protected by Missouri's Genetic Information Privacy Law and 23andMe's assurances to protect consumers' personally identifiable information 'ring hollow.'
'Due to (23andMe's) contradictory representations to consumers, the appointment of a consumer privacy ombudsman is mandatory, necessary and appropriate to assist in determining not only who owns the genetic information, but also whether the sale of such information would violate applicable non-bankruptcy law,' the filings state.
23andMe has said that prospective buyers would be required to comply with 23andMe's consumer privacy practices.
Abigail B. Willie, a visiting assistant professor at St. Louis University School of Law, said appointing an independent third party to safeguard consumer rights is significant.
'Boiled down, this likely is about control — who has the oversight authority regarding critical information that has value to the estate,' she said. 'Who is in charge may determine all sorts of dynamics about how things play out.'
A hearing on the appointment of a customer data representative is scheduled for April 29.
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