23andMe Navigates Bankruptcy: Key Information for Customers
Overview of Bankruptcy Proceedings
23andMe, a prominent player in genetic testing, has recently filed for Chapter 11 bankruptcy, a move that took place on March 23 in the Eastern District of Missouri. The filing encompasses the company along with 11 subsidiaries, including Lemonaid Health and LPRXOne. As part of the restructuring process, it has begun notifying millions of past and present customers about their potential eligibility to submit claims.
Background and Troubles Leading to Bankruptcy
The firm’s decline has hastened over the past 18 months, characterized by declining sales, executive exits, and a severe data breach exposing sensitive information of nearly 7 million users. This breach, made public in October 2023, compromised names, birth years, DNA-related data, and locations of affected customers. The aftermath included multiple class action lawsuits and a significant trust deficit among customers.
Claim Filing Process
Those impacted by the data breach are eligible to file a Cyber Security Incident Claim. Customers who were notified about their data compromise between May and October 2023 can report any financial losses or other damages stemming from the breach. Additionally, grievances not related to the cyberattack, such as concerns about DNA test results or telehealth services, can be filed separately under the General Bar Date Package. Importantly, customers must submit claims by July 14.
Concerns Regarding Privacy and Settlement Issues
Congress has voiced apprehensions regarding the privacy consequences associated with the bankruptcy. Meanwhile, a proposed $30 million settlement regarding the class action lawsuit is currently on hold due to the ongoing bankruptcy process, as 23andMe’s legal team disputes the terms of the arrangement. Customers wishing to secure their potential right to compensation must file a formal proof of claim, regardless of their status in the class action.
Future Implications for 23andMe
The downfall of 23andMe can be attributed to its aggressive but financially burdensome expansion attempts into digital health and telemedicine, most notably highlighted by its $400 million acquisition of Lemonaid Health in 2021. These initiatives did not achieve the anticipated growth, further straining the company’s financial situation.
