DNA Testing Provider Settles FTC and California Attorney General Deception Claims
The Federal Trade Commission (FTC) and California Attorney General (the California AG) recently settled their jointly filed complaint against CRI Genetics LLC (CRI), which provides DNA testing and ancestry services. The complaint alleged that the company deceived consumers about the accuracy of its DNA reports and deployed deceptive marketing tactics in violation of Section 5 of the FTC Act and California’s Unfair Competition Law and False Advertising Law. Under the stipulated settlement order (Order), CRI did not admit to the violations but must pay a $700,000 civil penalty and notify any consumer who purchased a DNA information testing product or service from January 2017 through May 2021 about the settlement. In addition, among other things, the Order requires CRI to obtain express consent from consumers before collecting their DNA information.
Allegedly False Assertions as to the Accuracy of DNA Testing Products and Services
In their complaint, the FTC and California AG alleged that CRI made numerous false claims regarding the value of its DNA ancestry testing products and services, particularly in comparison to other similar products on the market. For example, CRI allegedly advertised that:
- “[O]ur results are typically 99.9% accurate, which is a little better than trying to predict the weather.”
- “Simply put, the genetic expertise at CRI Genetics is unmatched anywhere else in the business.”
- “By examining 624,824 relevant markers across your genome using my patented DNA analysis software, I will be able to tell you not only where your ancestors came from, but also exactly when they arrived.” [emphasis in original].
According to the complaint, these statements lacked factual foundation. DNA ancestry tests alone cannot precisely pinpoint when a particular person’s ancestors lived in a specific geographical area because genes do not correspond to exclusive geographical locations. And CRI’s claims regarding the superior accuracy of its products and services allegedly were unsubstantiated because CRI could not have known the composition of its competitors’ proprietary DNA datasets or the margins of error in those companies’ matching algorithms.
Deceptive Marketing Websites
The complaint alleged that CRI misrepresented that certain promotional websites, to which it directed consumers through paid search ads, were independently operated and provided objective product and service ratings. For example, one of these marketing websites, buyerranking.com, which promoted CRI as the top-recommended DNA testing service, allegedly represented that its owner was an organization called “Buyer Ranking” and that it was an independent and unbiased source for reviews and ratings of DNA ancestry testing companies. In fact, according to the complaint, CRI owned and operated these websites.
False or Misleading Endorsement Claims
The complaint also alleged that CRI posted fake consumer endorsements on its website and Facebook page, including a video of an “impartial ordinary user” positively reviewing the company’s DNA testing products. According to the complaint, this “user” was an actor hired by CRI, which the company failed to disclose in the video.
Deceptive Website Billing Practices
The FTC and California AG are actively monitoring business websites for evidence of deceptive marketing techniques known as “dark patterns.” In the complaint against CRI, the agencies claimed the company employed dark patterns by indicating to consumers that, after selecting a product for purchase, they would have an opportunity to view a final confirmation page and modify their selections prior to being charged. Instead, consumers allegedly were not taken to this final confirmation page after clicking through each of these pop-up pages, but instead directed to a page that says “Thank You For Your Order! Your order has been successfully processed, you will receive an email with the details.” The complaint alleged that as a result of these marketing practices, many consumers ended up with unwanted purchases which they had to engage with CRI’s refund process to recoup.
This action underscores the aggressive enforcement posture the FTC and state regulators are taking with respect to deceptive practices, particularly against companies handling personal health information, including genetic information. In its press release announcing the proposed settlement, the FTC alluded to recent cases such as the one it settled with genetic testing company 1Health.io Inc. (d/b/a Vitagene), and warned other companies in the industry: “This isn’t the first case challenging the practices of genetic testing companies, so know that law enforcement eyes are on you.”
© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.