Sales, Acquisitions, and Mergers of Direct-to-Consumer Genetic Testing Companies

Direct-to-consumer genetic tests have become increasingly popular in the United States within the last few years. However, these tests pose many risks to the consumer, most notably privacy risks. A subset of these privacy risks involves the issue of company mergers, acquisitions, and sales. Many companies in the direct-to-consumer genetic testing market have privacy policies that contain a variation of a “business transfer” clause. These clauses specify that in the event the company goes through a business transition such as a sale, merger, or acquisition, the consumer’s personal information—including the consumer’s DNA—will be among the assets transferred. This Article explores the risks associated with these business transfer clauses as they relate to the consumer, and presents a solution to mitigate said risks. The solution lies in FTC v. Toysmart, wherein a toy company that filed for bankruptcy was restricted in selling its assets—which included its customers’ personal data— only to entities with the same interests as the toy company. This Article urges that the default interpretation standard of business transfer clauses track similarly such that a direct-to-consumer genetic testing company may only be sold to, merged with, or acquired by a company with the same or like interests.