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Lawmakers consider whether bankruptcy code must explicitly protect genetic data amid 23andMe filing
Summary
Members and witnesses told the House subcommittee that current bankruptcy practice treats data-breach victims as unsecured creditors and that genetic information raises distinct concerns; witnesses urged Congress to clarify how privacy harms and genetic data transfers are handled in bankruptcy sales.
Representative Tom Malinowski and other members raised privacy concerns tied to mass data breaches during the hearing, citing recent consumer genetic-data litigation and a high-profile bankruptcy filing by a consumer genetics company.
Professor Melissa Jacoby explained that victims of data breaches are typically treated as unsecured tort creditors in bankruptcy, meaning their claims share pro rata with other general creditors in any distribution after higher-priority claims are paid. She told the subcommittee that reputational and identity-related harms from genetic data breaches are difficult to quantify and that Congress and the courts could reconsider how to account for those harms in bankruptcy proceedings.
Witnesses and members discussed proposals to amend the Bankruptcy Code to treat genetic information as a distinct category of personally identifiable information, impose consent requirements before a debtor can sell such data, and mandate secure deletion of unsold genetic data. Representative Raskin and others expressed support for legislative fixes that would ensure applicable nonbankruptcy privacy protections remain enforceable in bankruptcy contexts.
No statutory text was adopted at the hearing. Witnesses recommended Congress clarify the interplay between privacy law and bankruptcy law and consider whether additional classification or valuation rules are needed when consumer genetic data is at issue in a sale or acquisition of a debtor’s assets.
