Leaks and Open Justice

'Leak-Driven Law' by Shu-Yi Oei and Diane Ring in (2018) 65 UCLA Law Review comments

Over the past decade, a number of well-publicized data leaks have revealed the secret offshore holdings of high-net-worth individuals and multinational taxpayers, leading to a sea change in cross-border tax enforcement. Spurred by leaked data, tax authorities have prosecuted offshore tax cheats, attempted to recoup lost revenues, enacted new laws, and signed international agreements that promote “sunshine” and exchange of financial information between countries. 

The conventional wisdom is that data leaks enable tax authorities to detect and punish offshore tax evasion more effectively, and that leaks are therefore socially and economically beneficial. This Article argues, however, that the conventional wisdom is too simplistic. In addition to its clear benefits, leak-driven lawmaking carries distinctive risks, including the risk of agenda setting by third parties with specific interests and the risk associated with leaks’ capacity to trigger non-rational responses. Even where leak-driven lawmaking is beneficial overall, it is important to appreciate its distinctive downside risks, in order to best design policy responses. 

This Article is the first to thoroughly examine both the important beneficial effects of tax leaks, and their risks. It provides suggestions and cautions for making and enforcing tax law, after a leak, in order to best tap into the benefits of leaks while managing their pitfalls. 

In P Q R v Secretary, Department of Justice and Regulation (No 1) [2017] VSC 513 the Supreme Court of Victoria has considered an application for a suppression order under s 17 of the Open Courts Act 2013 (Vic).

The Court states

 In the primary proceeding under s 148(1)(b) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), the applicant has applied for leave to appeal and, if it is granted, appeals against a decision of the Victorian Civil and Administrative Tribunal. That decision was to refuse to grant him a notice under s 26B(1) of the Working with Children Act 2005 (Vic) assessing him to be a person suitable to undertake child-related work. My judgment in that proceeding is to be found in PQR v Secretary, Department of Justice and Regulation (No 2). This is my determination of the application of the applicant for a suppression order under s 17 of the Open Courts Act 2013 (Vic). 

The applicant was convicted of criminal charges, most recently in 2012 in relation to large-scale drug trafficking. In view of his plea of guilty and excellent prospects for rehabilitation, he was sentenced to imprisonment for six years with a minimum term of two years. He was a model prisoner and released on parole in 2014, which will end in 2018. Since being released, he has made very strong steps towards full rehabilitation. Among other things, he has undertaken study, and is undertaking further study, now at university, to become an exercise physiologist. To complete these studies, he will need to obtain a practical training placement, which will likely place him in contact with children. Thereafter he wishes to have the option of working with children in sporting and related fields. To undertake child-related work, he must apply for a working with children check and obtain an assessment notice under the Working with Children Act. When the Secretary of the Department of Justice and Regulation refused to accept that he was suitable, he applied to VCAT for a review of the Secretary’s decision. When VCAT refused that application, he appealed to this court on grounds of error of law. 

For the purpose of ensuring open justice and freedom of expression, there is a fundamental principle of the common law of great antiquity that, first, proceedings in courts (and now tribunals) are presumptively open to the public and news media organisations, which includes information about the names of parties, witnesses and other persons involved and, second, that information about the proceeding can be freely communicated. Only exceptionally is it ordered otherwise. By way of such exception, both VCAT and this court have made orders that the applicant is to be known in the proceeding in both jurisdictions by a pseudonym, in this court ‘PQR’. The primary basis for the making of these orders was not that the applicant himself needed anonymity. The basis was that the applicant would be reasonably deterred from accessing justice by commencing the proceeding in VCAT and the appeal in this court if his present and former partner and her and their children were to suffer distress and embarrassment by reason of him being identified. 

The Herald and Weekly Times Pty Ltd is legitimately interested in the applicant’s application in VCAT and appeal to this court because his is a case of a person with convictions for serious criminal offences, including drug-related offences, seeking to work with children and while on parole. It has published articles both in print and online about VCAT’s decision and the appeal in this court. 

Although Herald and Weekly Times appears to have independently ascertained the applicant’s identity, it has not yet used his real name (or photograph) in any publication relating to the proceedings. There is dispute between the parties and Herald and Weekly Times about whether, as a matter of law, the pseudonym order in this court prevents it from doing so. The applicant contends that it probably would, and the Secretary contends that it actually would, be contempt of court for Herald and Weekly Times to do so. To the contrary, Herald and Weekly Times contends that it would not be contempt of court to do so, where it has independently discovered the applicant’s real name. To remove any doubt about the scope and effect of the pseudonym order, the applicant has applied for the suppression order. 

The court’s determination of the application for the suppression order raises issues concerning the relationship between pseudonym orders and suppression orders under the Open Courts Act, the balance struck under the common law and that Act between freedom of expression and access to justice, and the obligation of news media organisations under the law of contempt not to frustrate the purpose of orders of the court that preserve the anonymity of parties, witnesses and others involved in legal proceedings. These issues are particularly important because freedom of expression and fair and public hearings before courts and tribunals are human rights under the Charter of Human Rights and Responsibilities Act 2006 (Vic).

The Court referred to Re Savvas, where Hunt J ordered that certain witnesses in a criminal trial would be referred to by pseudonyms and that any matter likely to lead to their identification was not to be reported by those in court. In PQR the Court states -

In the interest of keeping justice as open as possible, his Honour preferred to adopt this course rather than allowing their real names to be used subject to a non-publication order.  He made it quite clear that subsequent publication of the real names would be a contempt:

If the two witnesses are addressed and referred to throughout the trial by pseudonyms, the media will not be entitled to publish their true identities as part of a fair report of court proceedings open to the public. There is no room for the inadvertent or careless use of their names in such a report. If the media wish to go beyond publishing such a report, they will be disclosing the identities of those witnesses only because they have deliberately set out to make such a disclosure. If an order has been made at the commencement of the trial that such identities should not be disclosed (even though not binding on the media), and if the media have already been warned of the reason why those names are being withheld, the inference will be clear that their disclosure was made with the intention of frustrating or interfering with that order. They will in those circumstances be guilty of contempt ...

His Honour went on to explain his purpose in making the order and its legal effect:

The difference between the situation where the real names of the witnesses are used in court and a non-publication order is made and the situation where pseudonyms are used and such an order is made may appear on the surface to be slight, but in practice the difference is significant. In the latter, any disclosure by the media must be very deliberate indeed on its part; there is no room for error. With very few exceptions, the media may be trusted to act with a due sense of responsibility in matters such as this. The courts, having done everything reasonably possible consistently with justice to keep the proceedings open to the public, must proceed upon the basis that deliberate acts designed to frustrate or interfere with the administration of justice will receive condign punishment as contempts.

Notice or knowledge is an element of the potential liability of a person under the law of contempt for engaging in conduct that frustrates the purpose of an order.

Postgrad Complaints

The NSW Ombudsman Discussion Paper Complaints about supervision of postgraduate students suggests steps that could be taken by universities to refine their policies and practices to specifically address conflicts that may arise in postgraduate supervisory arrangements.

The paper comments

The NSW Ombudsman has jurisdiction over all public universities in NSW – ten universities in all. We receive and investigate complaints from students about administrative actions relating to their enrolment, course progress, supervision and termination of their studies. At the Ombudsman’s office, we have worked with universities to develop tailored guidance for dealing with the unique issues that can arise in university complaints. An important stage in this work was in 2015 when we published, together with other Australian Ombudsman offices, Complaint Handling at Universities: Australasian Best Practice Guidelines. As the foreword to those guidelines observed about university complaints, ‘Mishandled complaints have a high potential cost, both financially and in damage to reputations’. For several years, we have been looking into complaints that relate to postgraduate supervision in NSW universities. We have received a steady number of these complaints and they are often complex and time consuming to examine. They are also often accentuated by career and personal concerns reflected in the breakdown of research relationships between postgraduate students and supervisors.

In January 2016, we released a draft discussion paper to university complaint handlers in NSW. There was strong interest in the topic, with submissions from universities and discussions between Ombudsman and university staff and with representatives from postgraduate student organisations.

We have now decided to take the issue a step further by publishing a revised discussion paper that will be made more widely available on our website. This revised paper builds on the consultation that has occurred to date. It includes a number of We invite submissions or comments from any interested parties by 31 January 2018 particularly examples of initiatives that have successfully resolved conflicts in postgraduate supervision. We will then decide if further action is needed to develop best practice guidelines or share practical examples and ideas among universities. ....

This project arose from the steady number of complaints the NSW Ombudsman has received over many years about postgraduate supervision in NSW universities. These complaints can be complex and take time and resources to examine. They often also have a personal aspect which makes them especially challenging to deal with.

In January 2016, we published a draft discussion paper for university complaint handlers and received many helpful submissions in reply. We also reviewed relevant university policies, surveyed all NSW universities, conducted follow-up interviews with university staff at each institution, and spoke with representatives of several postgraduate student organisations. This current discussion paper has resulted from those conversations and the strong interest that we have encountered on this topic.

Universities in NSW have told us that complaints by postgraduate students are not overall more frequent than other kinds of student complaints. Allegations of academic or non-academic misconduct in postgraduate supervision are not sustained after investigation any more often than other student allegations. However, universities generally recognise that there is a potential for postgraduate complaints to be complex and bitterly-contested and significant resources can be spent in dealing with them.

This discussion paper aims to help all those involved share what they feel to be best practice in complaint handling in this field. This will hopefully facilitate a constructive exchange of ideas and experience. There is no implicit suggestion in this project that universities have dealt poorly with these matters in the past, or that some universities have performed poorly compared to others. A number of universities have commented that the conversations leading to this discussion paper have been beneficial. For example, one university found that useful information it had published about dealing with conflicts between supervisors and students on a FAQ page on its website appeared only in the ‘for supervisors’ version of the page.

Universities have also moved of their own accord to address issues in response to the questions raised in our survey and follow-up interviews with interested parties. For example, some universities found that their policies were not as clear as they could be and have undertaken to revise them.

The paper comments that ' Difficulties and conflicts will always arise between postgraduate students and supervisors. The sensible path forward is therefore to develop a structured framework that acknowledges this possibility and implements steps to avoid or deal with it'. It accordingly suggests  ten strategies for inclusion in such a structured framework:

1. Universities should prepare accessible written guidelines for students and supervisors on dealing with conflicts and disputes – including counselling, appointing a new supervisor, and referring disputes for conciliation. These guidelines should advise students and supervisors that problems can arise in all supervisory relationships that are not the fault of either party.

2. Universities should consider developing or continuing a structured training program for supervisors on the skills of supervision. This training should contain practical advice on dealing with problems in the supervisory relationship, such as ‘having difficult conversations’.

3. Members of supervisory panels should be advised when they start their role to take note of signs of deterioration in supervisory relationships, and report these to the conflict resolution officer in postgraduate administration or the ‘mentor’ if one has been appointed to the panel.

4. Students and supervisors should be encouraged to keep a written record of their supervisory arrangements, expectations and mutual responsibilities. Both could be encouraged to co-sign any important records.

5. Universities should implement a procedure whereby a student, after their annual performance review, can submit a confidential report on perceived problems in their supervisory relationship.

6. Universities should nominate a designated officer – a ‘go-to’ person – that a student or supervisor can speak to if they are experiencing significant difficulties in a supervisory relationship. This designated officer (or panel of officers) could be located or administered by the central university office responsible for postgraduate administration. They could be given a recognisable title, such as ‘conflict resolution officer’.

7. A designated student ‘mentor’ could be appointed to the supervisory panel for each student who has changed their principal supervisor more than once – with the exception of changes arising from matters such as the death, illness, resignation or retirement of a supervisor. The mentor’s role would be to monitor the general supervisory relationship, independent of the substance of the research project. It should also be understood that the appointment of a mentor is not seen as a negative or punitive response to the changes in supervisory arrangements.  Universities could also consider, on an individual basis, whether a ‘mentor’ should be appointed to a supervisory panel in other special circumstances. For example, if the principal supervisor is undertaking supervision for the first time – or the principal supervisor was involved previously in a sustained formal grievance process or was the subject of serious allegations of bullying or harassment. Including the mentor on the supervisory panel should be seen as a safeguard measure to minimise potential problems and provide independent feedback to the supervisors – not as a performance management measure that reflects on the supervisor’s suitability.

8. Universities should consider establishing a panel of internal university mediators, conciliators or trained dispute-resolution specialists who are available – with the consent of the parties – to deal with unresolved conflicts between students and supervisors.

9. Universities should consider implementing a structured program for contacting students by email at designated stages of a research project, and inviting them to raise or discuss on a confidential basis any issues they may be experiencing with their supervision. The following is suggested text to include in the email:

The university recognises that postgraduate study can be stressful. The stress will be greater if you feel you have an unsatisfactory academic relationship with your supervisor. You may raise any concerns you have by replying to this email. Other options and procedures for dealing with problems you may be facing with your supervisor are outlined in the university’s guidance on postgraduate supervision, which is available at the following link: [a link to information on the university’s dispute–resolution or conciliation process]. If you believe your supervisor is acting improperly or unethically, you have the right to submit a formal grievance. The procedure for doing this is outlined in the university’s guidance on postgraduate supervision. The university will receive any concerns you raise on a confidential basis. However, it may be necessary to discuss an issue with your supervisor or members of the supervisory panel if we are going to further investigate your complaint. We will discuss this with you before contacting your supervisor.

10. Students should be made aware – both in their induction material and through other accessible policies or guidance material – of the independent complaint and appeal mechanisms that are available to them. This includes the right to complain to the NSW Ombudsman, the Australian Research Integrity Committee, The Anti-Discrimination Board of NSW, the Human Rights and Equal Opportunities Commission, the Tertiary Education Quality and Standards Agency, and the Independent Commission Against Corruption – as well as professional bodies, schools or boards that regulate careers in certain occupations.

Bitcoin

'Beyond Bitcoin – Legal Impurities and Off-Chain Assets' (Queen Mary School of Law Legal Studies Research Paper No. 260/2017) by Chris Reed, Umamahesh, Sathyanarayan, Shuhui Ruan and Justine Collins comments 

Blockchain technology allows the creation of distributed ledgers. These distribute control among the players rather than requiring a centralised database, and so can reduce costs and speed up transactions. However, when it is used for assets which exist outside the blockchain itself, an unmodified adoption of the technology would bypass legal and regulatory requirements which, for these kinds of assets, cannot be bypassed without fundamental change to the law.

Building those requirements into any blockchain-based system introduces features which are not necessary for performing its core functions, and we call these ‘legal impurities’. The most important legal impurities required are those relating to identification of the parties, and introducing the ability of a trusted third party to make modifications to the ledger. Not only does introducing these legal impurities make fundamental changes to the concept behind blockchain, but it is also essential that they are implemented in ways which do not threaten the integrity of the blockchain as evidence.

'Is a ‘smart contract’ really a smart idea? Insights from a legal perspective' by Mark Giancaspro in (2017) 33(6) Computer Law and Security Review 825-835 comments

Swift developments in the emerging field of blockchain technology have facilitated the birth of ‘smart contracts’: computerised transaction protocols which autonomously execute the terms of a contract. Smart contracts are disintermediated and generally transparent in nature, offering the promise of increased commercial efficiency, lower transaction and legal costs, and anonymous transacting. The business world is actively investigating the use of blockchain technology for various commercial purposes. Whilst questions surround the security and reliability of this technology, and the negative impact it may have upon traditional intermediaries, there are equally significant concerns that smart contracts will encounter considerable difficulty adapting to current legal frameworks regulating contracts across jurisdictions. This article considers the potential issues with legal and practical enforceability that arise from the use of smart contracts within both civil and common law jurisdictions.

Drones

'African Drone Stories' by Kristin Sandvik in (2015) 8(2) Behemoth A Journal on Civilization comments

The process of normalizing drones throughout Africa has received little scholarly attention. Discussions of drone proliferation tend to assume that the drone industry is a monolithic, geographically concentrated entity, and that drone use will look the same and engender the same controversies, regardless of geography. The article aims to think through African drone proliferation by analyzing how drones and Africa are being construed as solutions to each other’s problems, and by exploring the interface between images of Africa and the notion of the drone as a game changer for development and security. The article also reads the African drone in the context of the early deployment of surveillance drones in Africa in the 1970s, as well as the legacy of technological imperialism and colonial airpower. The perception of Africa as being in need of external drone intervention dovetails with the drone industry’s efforts to identify and promote good uses for drones — efforts that are central to increasing the legitimacy of drones in the eyes of the Global North. Hence, the article argues that the ‘African drone’ has become a vehicle for the production and distribution of norms, resources, and forms of legitimacy that have implications for drone proliferation, both within and outside Africa.

History of Animal Law

'The Historical Development of Animal Welfare Law in Nineteenth Century Scotland' by Daniel James Carr examines 

the development of animal welfare in Scotland. Whilst the law developed in tandem with developments across nineteenth century Britain, the paper draws attention to the distinctive Scottish situation. By examining the development from disparate common law protections to the statutory interventions of the nineteenth century the paper charts that development, and begins to place it within nascent 'humanist' movements emerging around this time. The piece examines how the Scottish doctrinal law took a distinctive direction in decisions, and in particular considers contemporary opinion. The paper is the first to take a look at the particular Scottish development and opens up new avenues of research into the nineteenth century, and also frames developments in the modern law which I will pursue in future research.

Carr argues

This paper is confined to laying some historical groundwork by starting to look at the historical development of animal welfare law in Scotland. This is not a comprehensive treatment of the history of the legal development in Scotland: much of the paper is tentative, and, it also takes account of developments in England. It is hoped that this contribution might stimulate further research. Hopefully, the chapter will come to be situated within a broader possible research project on animal law in Scotland more generally, which would concentrate particularly on animal welfare law but could also encompass other areas of law dealing with animals. Therefore, this paper considers some of the early history of animal welfare law in Scotland, particularly in the early to mid nineteenth century. The paper demonstrates, I hope, how the law in Scotland has developed by small incremental developments from the common law, or at least it was retrospectively described as such a development, which was then substantially altered by legislative intervention in the mid-nineteenth century. It is possible to trace the changing background to the rules and discern some normative movement from viewing animals as mere property to some form of recognition of the interests of the animals themselves. The explanations given for the creation of legislation to increase the protection accorded to animals qua animals varied from the ownership, divine duty, projections of humanity onto animals, before moving towards thinking about the interests of the animal themselves as some kind of freestanding interest that was worthy of protection.

A secondary dimension of the paper is the interesting way it illustrates how different approaches have been taken by jurisdictions of the British Isles, and it forms a nice case study of different approaches have been taken from the early-19th century all the way through to the post-devolution era. Furthermore, that historical development also shows how these developing interests might be described very loosely as fitting in with other ‘humane’ movements around this period which were based on ideas such as rolling back personal oppression, the infliction of pain, the improvement of social conditions, and occupies a period where the increasing permeation of state intervention and legislation in many areas of law can be observed, and animal protection law becomes embedded within the emerging legislative web of such regulation which emerges within an emerging modern bureaucratic state. In turn, the protection of animals’ welfare comes to be protected not only in specific ‘animal cruelty’ statutes, but can also be seen across other forms of legislation dealing with food production, transportation of livestock, and even mining legislation.

A further and related dimension which I think is important, but which can only be lightly touched upon here, within this context of the increasingly present state and legislative interventions in relation to the management and regulation of that state, is the emergence of non-state actors conducting public duties (not in general, but the specific animal societies inspectors etc.) who become, in effect, quasi-state functionaries. This includes the societies against cruelty to children and animals which emerge as organisations which the state entrusts with certain public powers, and those functions remain considerably later than many other quasi-public entities disappear or at least diminish

Pricing, Bargaining and Big Data

'Big Data and Personalised Price Discrimination in EU Competition Law' (King's College London Law School Research Paper No. 2017-38) by Christopher Townley, Eric Morrison and Karen Yeung comments

The networked digital revolution is ushering in a new data-driven age, powered by the engine of Big Data. We generate a massive volume of digital data in our everyday lives via our on-line interactions, which can now be tracked on a continuous and highly granular basis. Being able to track this data has radically disrupted the retail sector through, amongst other things, digital personalisation. However, this is no longer limited to shopping recommendations and advertising delivered to our smartphones, laptops and other mobile devices, but may extend to the prices at which goods and services are offered to customers in on-line environments, making it possible for two individuals to be offered exactly the same product, at precisely the same time, but at different prices, based on an algorithmic assessment of each shopper’s predicted willingness to pay. This is done by mining consumers’ digital footprints, using machine learning algorithms to enable digital retailers to predict the price that individual consumers (‘final end users’) are willing to pay for particular items, and thus offer them different prices. This phenomenon, which we dub ‘algorithmic consumer price discrimination’ (ACPD) forms the focus of this paper.

The practice of price discrimination, which we define as “… charging different customers or different classes of customers different prices for goods or services whose costs are the same or, conversely, charging a single price to customers for whom supply costs differ…” is hardly a new phenomenon. Familiar forms include loyalty discounts, volume or multi-buy discounts, and the offering of status based discounts for students, old-age pensioners and the unemployed. However, the technological capacities of Big Data substantially enhance the ability of digital retailers to engage in much more precise, targeted and dynamic forms of price discrimination that were not previously possible.

There are many areas of law that might mount a response to rising public anxieties associated with these practices. Our paper examines ACPD from the perspective of competition law through which we seek to evaluate ACPD by reference to two contrasting normative values: economic efficiency, on the one hand, and fairness or equity on the other. Competition law provides a unique lens for interrogating the social implications of ACPD due to its distinctive character as a form of ‘economic law’ that is intended to protect and strengthen the process of rivalry in the marketplace. Although ‘traditional’ forms of price discrimination have long been the subject of economic analysis to evaluate whether they are economically efficient, algorithmic price discrimination has hitherto attracted relatively little critical analysis. As we demonstrate in Section 2, the incentives for firms to engage in ACPD often exist. We find that consumers are in the aggregate often better off, economically, when sellers can price discriminate in this way, thereby enhancing consumer surplus. However, this is not always the case. Furthermore, whether EU competition law is solely and exclusively concerned with economic efficiency, or whether it provides scope for non-efficiency based considerations in the application of its provisions, is a matter of debate.

Accordingly, in Section 3 we evaluate ACPD by reference to its fairness or justice (which we also call equity) understood in three distinct (and sometimes overlapping) ways: (a) the perceived fairness of pricing practices; (b) unfair dealing between online retailers and consumers (corrective justice); and (c) fairness as a requirement of distributive (or collective) justice. For each of these understandings of fairness, we identify points of convergence and conflict with economic evaluations of the effects of ACPD on aggregate consumer welfare. No Article 102 cases have directly considered the legality of ACPD.

Section 4 therefore interrogates existing Article 102 case law to ascertain whether ACPD would likely breach this provision. Because the current legal position is unclear, Section 5 draws together the efficiency and fairness evaluations by considering whether ACPD should be regarded as unlawful under EU competition law. We argue that where ACPD increases both consumer surplus and fairness, it should not breach Article 102. Conversely, where ACPD undermines both consumer welfare and fairness, then such practices should be unlawful under Article 102.

However, because economic and fairness evaluations of ACPD may conflict in specific cases, Section 5 also considers whether, in the light of the underlying justifications for EU competition law and the EU’s foundational principles, ACPD should be considered a violation of Article 102 where it undermines justice or equity, even though it may enhance consumer surplus, and vice versa. We deal with the clashes between these goals in two ways: first, we offer a partial reconciliation between these goals, by supplementing conventional economic analysis with insights from behavioural economics, thus enabling some fairness considerations that affect consumer welfare to be taken into account. Secondly, we suggest that fairness should have a secondary role when Article 102 is applied to ACPD, in the form of a ‘defence’ to an allegation of abuse of market power. On our suggested account, ACPD which reduces consumer surplus may nonetheless avoid falling foul of Article 102 if it can be justified on grounds of fairness. Section 6 concludes, suggesting that EU competition law may have a valuable but limited role to play in redressing some of the adverse impacts of ACPD, primarily by focusing on the consumer welfare effects of ACPD, and in which considerations of fairness and justice play a relevant, but nonetheless subsidiary, role. Competition law cannot, and should not, seek to solve all the social problems associated with market behaviour, including data-driven forms of personalised pricing.

'The End of Bargaining in the Digital Age' by Saul Levmore (Forthcoming) Cornell Law Review comments 

Bargaining is a fundamental characteristic of many markets and legal disputes, but it can be a source of inefficiency. Buyers often waste resources by searching for information about past prices, where a seller already holds that information. A second – and novel – source of social loss is that some buyers will avoid otherwise beneficial bargains because they recognize the seller’s advantage in any haggling match, and avoid sellers with negotiable prices. Similarly, parties might decline to accept settlement offers because they sense some disadvantage. This Article argues for mandated disclosure of past prices, and occasionally settlements, where these have been negotiable. The rule requires uniform or transparent pricing, where uniformity means that customers know that a price offered to them is the same as that offered to others, and transparency refers to the disclosure of past sale, or settlement, prices. The rule is applied to markets where consumers presently haggle with professional sellers, including the sale of medical services to hospital patients, law school merit scholarships offered to prospective students, and legal services sold to non-business clients. We additionally explore its potential in employment relationships, where it might be deployed to reduce male-female pay disparities.

A requirement of uniform or transparent transactions can limit a seller’s ability to price discriminate. There are a few markets in which price discrimination is desirable, sometimes to deliver important goods such as life-saving medicines and clean water. We demonstrate how those markets can be preserved alongside a requirement of transparency. Drawing on a variety of examples, including familiar disclosure rules in contracts, as well as compulsory licensing in copyright and the utmost good faith doctrine in insurance, this Article shows that law is conceptually equipped to address the social loss generated by duplicative search and other inefficiencies, and that pricing disclosure rules can be easily implemented, especially as markets increasingly digitize.

DNA copyright and DTC Genomics Regulation

'DNA Copyright in the Administrative State' by Dan L. Burk in (2018) 51 UC Davis Law Review comments 

For nearly three decades, academics have toyed with the question of copyright protection for recombinant DNA sequences. Recent interest in synthetic biology has prompted a resurgence of such dubious speculation. But current advocates of DNA copyright have gone further than academic conjecture, attempting to register nucleotide sequences with the United States Copyright Office. Not surprisingly, the Register of Copyrights refused the application, setting the stage for a possible appeal to federal court. This scenario raises the general administrative law question as to the degree of deference a court should give to a registration decision of the Copyright Office. The issue is surprisingly complex, and precedents are sparse. In this paper I take up the question of administrative deference as it applies to synthetic biology and other technologies that could be the subjects of questionable copyright registration.

'Regulatory controls for direct-to-consumer genetic tests: a case study on how the FDA exercised its authority' by Margaret Curnutte in (2017) 36(3) New Genetics and Society  209-226 comments

In February 2015, 23andMe received clearance from the United States Food and Drug Administration (FDA) for a carrier status test for a gene linked to Bloom syndrome. This was the first FDA authorization to market a direct-to-consumer (DTC) genetic test. Then, in April 2017, 23andMe obtained marketing clearance for an additional 10 tests that communicate information about individual disease risk. For roughly a decade it had been unclear whether FDA would regulate health-related DTC genetic tests. The recent approvals now provide an opportunity to examine how the Agency, in practice, has exercised its regulatory authority. This paper is the first case study to examine in detail how FDA has set standards for the marketing approval of DTC genetic tests.

'Valley of the unicorns: consumer genomics, venture capital and digital disruption' by Stuart Hogarth at 250-272 in the same issue comments

 Drawing on the sociology of expectations and sociology of conventions, this paper explores issues of worth and value in the bioeconomy, and the promissory character of contemporary capitalism. Arguing that the literature on biocapital has paid insufficient attention to geographical differentiation in capital accumulation strategies, this paper situates the consumer genomics firm 23andme in the entrepreneurial culture of Silicon Valley. The paper suggests that in Silicon Valley the relationship between moral worth and economic value is mediated through the concept of disruptive innovation, which functions as both ideological construct and a set of commercial practices utilized by the founders of start-up firms and the venture capitalists who invest in them. Analyzing 23andme’s status as a “unicorn” firm, the paper describes how the recent increase in private investment capital in Silicon Valley has led to a new model of business development for start-ups and considers its implications for corporate governance.

Hogarth argues

In 2007, the Silicon Valley consumer genomics firm 23andme launched with a bold mission to revolutionize healthcare and biomedical research. From the outset the firm’s ambitions were global in scale: co-founder Anne Wojcicki declared that 23andme aimed to become “the world’s trusted source of personal genetic information” (23andme 2008). These grand ambitions were underpinned by investment funding from leading players in Silicon Valley, each of them global leaders in their respective sectors: the venture capital (VC) firm New Enterprise Associates, the biopharmaceutical firm Genentech, and the Internet search firm Google. Like other start-up firms (including its rivals in the nascent consumer genomics market), 23andme was heavily dependent on continued injections of private capital as it sought to build a market for its products and services, and measured by the amount of private capital the firm has raised, 23andme has been highly successful. It raised $240M in a series of five financing rounds between 2007 and 2015 (see Figure 1), and by 2015 had achieved “unicorn” status, a term used to describe privately held firms valued at over $1 Billion. To put this achievement in perspective, of the 22 diagnostics firms listed on the NASDAQ only two raised more than $100M when they floated as public companies, that is, 23andme has raised more money in the private capital markets than its counterparts have been able to raise by going public. 

This financial success was achieved despite longstanding uncertainty about the firm’s commercial viability, public controversy about the ethics of consumer genomics, professional critique of the scientific validity of genetic risk scores offered by the firm and its rivals (Mihaescu et al. 2009 ), and then regulatory censure by the US Government. The US Food and Drug Administration (FDA) closed down the health-related aspects of 23andme’s business in 2013 (see Curnutte 2017 ). Two years later, when the FDA took regulatory action against Theranos, another high-profile Silicon Valley diagnostics firm, some media commentators suggested that the regulatory problems encountered by the two firms exemplified a broader crisis in the corporate culture of Silicon Valley. These critics pointed to failures in corporate governance, media complicity in promotional hype and a lack of due diligence on the part of investors, all fueling a dangerous new investment bubble underpinned by the ideology of disruptive innovation (McDermid 2016 ). 

How to explain 23andme’s success in attracting financial investment despite the seemingly toxic combination of commercial underperformance and regulatory scandal? Given the importance of personal networks in securing VC finance, it was helpful that 23andme was, from the outset, enmeshed in the Silicon Valley establishment, most notably through co-founder (and current CEO) Anne Wojcicki’s marriage to Sergey Brin, the co-founder of Google. Google invested $3.9M in Series A and then $2.6M in Series B, but in addition Brin provided a start-up loan of $2.6M ahead of the Series A round, and a further $10M ahead of the Series B financing round (Rao 2009 ). However, the power of personal networks is not the focus of this paper, which is concerned instead with issues of worth and value in the bioeconomy, and what Paul Martin (2015 Martin,) has called “the promissory character of contemporary capitalism”. This paper suggests that in Silicon Valley the relationship between moral worth and economic value is mediated through the concept of disruptive innovation, which functions as both ideological construct and a set of commercial practices utilized by the founders of start-up firms and the venture capitalists who invest in them. 

In addressing matters of political economy, this paper takes an approach hitherto neglected in the literature on consumer genomics, a puzzling oversight given that in recent years a growing body of scholarly work has argued that the emergence of commercial biotechnology has generated a new form of capitalism: biocapitalism (for an overview of this literature, see Helmreich 2008 ). Attempts to characterize a distinct form of biocapital are consistent with a long tradition of middle-range theory in political economy that addresses the “specific forms and mediations of capitalist processes, such as the nature of institutions, or new forms of organization such as post-Fordism” (Sayer 1995). This paper offers two original contributions to the scholarship on biocapital. Firstly, by suggesting that as an attempt to understand sectoral differentiation, this literature has been too ready to generalize using data on the biotech therapeutics sector and has failed to understand the distinctive dynamics of the diagnostics sector. However, its more substantive contribution is to argue for a greater focus on geographical rather than sectoral differentiation (Sheppard 2013 ). I locate 23andme in its geographical setting of Silicon Valley, identifying the ways in which firm might be characterized as typical of the distinctive local culture of entrepreneurialism that has developed in the area since the 1980s. 

I begin by situating this paper’s conceptual framework in the broader social science literature about the bioeconomy. By way of descriptive context, I then outline the role of VC in the financing of high-technology start-ups, the growth of Silicon Valley as a geographic cluster for high-tech firms and the key features of Silicon Valley disruption. I then move on to describe how 23andme modeled itself as a disruptive firm and to discuss how that strategy may have helped attract investment funding.'

'Reading the fine print when buying your genetic self online: direct-to-consumer genetic testing terms and conditions' by Andelka M. Phillips at 273-295 notes

Contracts are ubiquitous online. Clickwrap and browsewrap agreements are to be encountered on almost every website a person engages with when accessing services online. Through these documents, people enter into binding contractual relationships, often without reading and sometimes without noticing these documents, when they engage with a wide variety of services online. This article discusses the use of contracts by the direct-to-consumer genetic testing (DTCGT) industry, as the dominant means of industry self-regulation. To date limited attention has been paid to these contracts. This article reviews the contracts of 71 companies that provide a variety of tests for health purposes. It considers these contracts from a consumer protection standpoint and identifies a number of problematic terms that may be challengeable under the UK’s consumer legislation and concludes by discussing the recent work potential for the UK’s Competition and Markets Authority to establish and enforce clear standards for DTCGT contracts.

Phillips argues

We are living in the digital age and we are also living in the age of digital contracts. The Internet has become part of the fabric of everyday life for many people. It is used to document our lives, to access a myriad of services, including now the purchase of genetic testing services. However, almost every website you visit is subject to a contract in some form, often appearing as terms of use, terms and conditions, or terms of service, and these contracts do have important legal implications. They govern relationships between businesses and consumers and they may limit rights to redress if something goes wrong. The average person active online today will enter more contracts in a year than their grandparents did in a life-time (Felten 2011 ; Hoffman 2016 ). This paper discusses the use of contracts online and their role in regulation in a particular context, that of direct-to-consumer genetic testing (DTCGT). It focuses on the contracts of companies that provide tests for health purposes. This paper will address two research questions: from the perspective of consumer protection, what are the problems with these contracts; and how might UK law be used to improve contracts so that they afford better protection for consumers? 

The DTCGT industry can be viewed as an example of disruptive innovation (see paper by Curnutte 2017 in this issue) and also an example of a shift from patient to consumer healthcare, as it allows the purchase of genetic tests online without a medical intermediary, bringing them into the consumer space and also into the domestic space, as people can order tests online from their homes. It should be noted that the consumer space differs significantly from the medical space, but in the context of health-related testing it is also not clear that DTCGT services ought to be viewed as consumer services and not medical services (Offit 2008 ). The term “direct-to-consumer” has primarily developed in the context of advertising and sale of pharmaceutical drugs (Pines 1999  ). DTCGT can either be advertised to the public but only available through an intermediary (normally a medical practitioner), or it can be both advertised directly and available for order directly by a consumer, normally over the Internet, sometimes also with the involvement of a medical practitioner (Hogarth, Javitt, and Melzer 2008, 163–164). The process normally involves the provision of a test kit by the company which the consumer uses to collect a DNA sample, which is in turn sent back to the company, which then carries out some form of genetic analysis service and then ultimately provides the consumer with test results in digital form. A wide range of health tests are available, ranging from predisposition and pre-symptomatic testing for serious diseases to carrier tests, pharmacogenetic tests (concerned with assessing an individual’s responsiveness to particular drugs or therapies) (HGC 2010 ), and also nutrigenetic tests (deals with associations between nutrients and metabolism and genes). Companies that provide testing for health purposes are generally making services available that have previously been offered in a medical setting. There is considerable scientific and clinical skepticism about the accuracy of tests purporting to provide genetic risk assessment for common, complex diseases. 

Fourteen years have passed since the first major UK policy report on the regulation of the DTCGT industry (HGC 2003 ). The HGC also developed A Common Framework of Principles for Direct-to-Consumer Genetic Testing Services (2010 HGC ) and this Framework set out in article 6 that “Clinical utility of a genetic test shall be an essential criterion for deciding to offer this test to a person or a group of persons” (2010 HGC ). (Clinical validity and utility were also stressed by the Association for Molecular Pathology in their 2015 Association for Molecular Pathology Position Statement: Direct Access Genetic Testing ) 

A small number of prominent companies: DeCODE’s DeCODEme; 23andMe; Navigenics; Pathway Genomics; and Knome have been the subject of much of the academic literature. However, there is a greater number and diversity of firms, and the potential now for DTCGT services to be accessible more widely. If there is a corresponding wider consumer uptake of these services, the issues the industry raises are likely to increase in importance over time. 23andMe has been valued at a market cap of $1 billion (Krol 2015  ). Furthermore, a recent study by Research and Markets suggests that the “global predictive genetic testing & consumer/wellness genomics market is anticipated to reach USD 4.6 billion by 2025” (2017 Research and Markets.). Whether or not this estimate will prove to be accurate, if the industry does continue to grow there is likely to be significant consumer uptake of these services and this will include consumers who may be considered vulnerable in some way (see the Unfair Commercial Practices Directive; the Directive on Consumer Rights; and the General Product Safety Directive). The law does make distinctions between ordinary or average consumers and vulnerable consumers. The European Commission’s 2016  Consumer Vulnerability across Key Markets in the European Union.report explores consumer vulnerability and while acknowledging the lack of a universal definition, it identifies five core dimensions to vulnerability (xviii, and 39–40). Vulnerability is a spectrum and a person may become vulnerable due to a change in their circumstances, but “some personal characteristics can imply that vulnerability remains an enduring characteristic for particular groups of consumers” (xviii). 

While DTCGT often involves feedback of results to individuals without any intermediary, in a clinical setting, a UK patient contemplating genetic testing would normally be provided with genetic counseling both prior to the test and after the test. The provision of counseling services assist patients with understanding what genetic test results mean for them and should assist them with understanding the benefits, risks, and limitations of test results. Article 8 of the HGC’s Framework set out information requirements for people undergoing genetic testing and suggested that those undergoing “predictive genetic tests” should receive genetic counseling. Drawing upon this, it would be beneficial if companies did provide genetic counseling to consumers. 

For genetic tests carried out in a clinical setting, patients are normally required to give informed consent and the rights of patients to refuse treatment are also strongly protected. Indeed Article 9(1) of the HGC’s Framework specified that a genetic test should only be carried out “after the person concerned has given free and informed consent to it.” The importance of informed consent has also been stressed in a number of policy guidance documents to date (European Society of Human Genetics 2010 ; OECD 2007  ). However, in the online environment consumers are often deemed to have consented to the terms and conditions of websites through use or viewing of a website and there is a need to improve consent mechanisms for DTCGT health services. It is also important to recognize that informed consent in a medical setting is different to how consent is treated in contract law, but not all DTCGT companies have separate consent documents and consent and agreement or acceptance of terms are often treated synonymously in the DTCGT space. 

This article focuses on the regulation of the industry from a consumer protection perspective, but it should be noted that these services do raise significant issues regarding consumer privacy and data protection. Furthermore, as highlighted by Christofides and O’Doherty’s (2016 Christofides and Doherty) recent study, consumers’ expectations regarding privacy practices of DTCGT providers, may be at odds with actual practices and disclosure policies. In relation to privacy and security risks in this context, an analogy can also be made with wearable fitness monitors. Citizen Lab and Open Effect’s report highlighted a number of vulnerabilities in common wearable devices (2016 Hilts, Parsons, and Knockel.), and given the nature of sequenced genetic data and the difficulties in preventing re-identification of individuals on the basis of such data, the significance of privacy risks in this context should not be underestimated (Ayday et al. 2015; Erlich and Narayanan 2014; Nuffield Council 2015). As companies are often engaging in research on consumers’ data and collecting other forms of personal and potentially sensitive data, more research on the potential for data linkage and re-identification is also needed. 

In the UK, some marketing of DTCGT tests has been permitted and 23andMe has been selling their test kits through Superdrug both via the Superdrug website and in their stores (Meikle 2015 ; Wallace 2015 ). This has been possible, because their test kits have a Conformité Européene (CE) mark meaning that the kit has been approved as safe for the purposes of collecting saliva. This certification though is only an assessment of the test kit’s safety as a collection device. It does not provide an assessment of the quality of the genetic testing service provided or of any accompanying analysis or interpretation services. 

In the US, the Food and Drug Administration (FDA) has recently altered its stance regarding DTCGT services (see paper by Curnutte 2017 in this issue). In April 2017 the FDA approved 23andMe’s Genetic Health Risk tests for 10 conditions to be marketed in the US. This may lead to wider availability of  DTCGT services for health purposes in the US from other DTCGT providers as well, as the FDA intends “to exempt additional 23andMe GHR tests from the FDA’s premarket review, and GHR tests from other makers may be exempt after submitting their first premarket notification” (FDA 2017). Significantly, the FDA will be requiring consumer comprehension tests ( FDA Letter 2017), but this does not require comprehension tests of the online contracts used on DTCGT websites and as contracts do govern the relationship between DTCGT companies and consumers, there is also a need to ensure that consumers understand the content of these contracts. 

Considerable attention has been paid to the potential for consumer harm arising from the profound asymmetries of information between companies and consumers arising in the context of a fast-moving and highly complex field of biomedical science. Policy reports in the USA and Europe have expressed concerns that the public may be misled by promotional hype because they lack the scientific knowledge to assess the veracity of companies’ claims. A number of academic studies have examined the websites of DTCGT genetics companies and identified problems with the quality of information offered to consumers. Hennen, Sauter, and Cruyce (2009) undertook a review of 38 companies, assessing the quality of information provision using 12 criteria established by Datta et al.(2008). They found that 55% of companies complied with four or fewer of the 12 criteria, concluding that such “fundamental information deficits [had] ...possibly far-reaching consequences for consumers.” Surveys by Geransar and Einsiedel (2008) and Sterling (2008) have drawn similar conclusions. 

More recently, there has been growing interest in the issues of privacy, security, and transparency in provision of information in the context of DTCGT services (Christofides and O’Doherty 2016). Laestadius, Rich, and Auer study (2016) analyzed 30 websites offering health and ancestry tests and examined “the extent to which DTCGT-GT companies are complying with international guidance on the transparent provision of information related to confidentiality, privacy, and secondary use of the genetic samples and data they collect” (2). They found that although there have been some improvements in industry practices since earlier studies, such as an increase in the number of DTCGT companies having terms and conditions and privacy policies publicly available there are still weaknesses that need to be addressed. One area where there is particular need for improvement is the provision of information “regarding the risks and benefits of” DTCGT services and they cite Singleton et al.’s work which argued that this “lack of transparency” violates “the ethical principle of informed choice” (2012, 6). The Singleton study used frameworks “based on two core components of an informed choice: (1) the decisionmaker has relevant, high-quality information which presents the various alternatives and outcomes; and (2) it is consistent with the decision-maker’s values” (Singleton et al. 2012, 2). They found that

in the main pages of these websites, consumers are exposed to an average of 6 times as many benefits as risks and limitations. Therefore, consumers who only read the main web pages may be getting a skewed picture of the benefits, risks, and limitations of testing. (2012, 5)

They recommended the need for companies to consider providing more educational information on their websites to assist consumers. There have been a large number of proposals for policy action, but such initiatives have tended to focus on the regulation of health-related tests, and the role of medical device regulators in premarket evaluation of tests. It is important to note though that many types of DTCGT services, such as ancestry, talent identification or nutrigenetic testing will not be covered by these regulations, and even for tests covered by medical device regulation, not all aspects of the contractual relationship between company and consumer would be addressed, so alternative or supplementary mechanisms are required (Kalokairinou, Howard, and Borry 2014). The potential role of consumer legislation has been advocated by some as a preferred mechanism to address “fraudulent, deceptive, and unfair business practice” even for health-related tests (Wright, Hall, and Zimmern 2011) and the Human Genetics Commission (HGC) envisaged a role for consumer protection mechanisms in its 2003 report, along with an increased role for the Medicines and Healthcare Products Regulatory Agency (MHRA) (HGC 2003). In the same year, Martin and  Frost provided an early attempt to map a taxonomy of different types of DTCGT services on to a range of legal and regulatory remedies, including consumer law (2003). In the US, as well as the American College of Medical Genetics and Genomics (ACMG), the American Society for Human Genetics (ASHG) has also been active in this area and released a Statement on Direct-to-Consumer Genetic Testing in the United States(2007).This Statement recommended thatthe Centers for Medicare and Medicaid Services (CMS) “create a genetic-testing specialty under CLIA, to ensure the analytic validity of tests and the quality of genetic testing laboratories” and also that “CMS should ensure that all DTCGT genetic-testing laboratories are certified under CLIA and should maintain a publicly accessible list containing the certification status of laboratories.” It went on to recommend that, “FDA and the FTC should work together to develop guidelines for DTCGT testing companies to follow, to ensure that their claims are truthful and not misleading and that they adequately convey the scientific limitations for particular tests.” It also stressed the importance of the following: transparency in companies’ practices; that they should provide appropriate information regarding the risks and benefits of DTCGT; and also that professional medical organizations should provide further education to their members, so that physicians can adequately interpret and understand DTCGTs ervices and results. However, despite some focus on consumer protection remedies, thus far scholars have paid limited attention to the contracts that bind DTCGT companies to their customers. 

There is a growing literature that examines the consumer contracts used by online businesses more generally (Ayres and Schwartz 2014; Clapperton and Corones 2007; Loos and Luzak 2015). The level of notice and transparency of these contracts to consumers varies: clickwrap contracts typically force a consumer to scroll through a document before clicking on a box labeled I agree or I accept; whereas browsewrap contracts allow for consumers to access the terms via a hyperlink and it is not necessary to click on the link in order to be held to have entered into the contract (Kim 2013, 39–41, 41–43; Manwaring 2011). Although a clickwrap contract does afford more opportunity to read, in reality consumers often do not read either clickwrap or browsewrap agreements or privacy policies and while there may be an opportunity to read, these documents tend to be extremely lengthy. In the versions of contracts examined herein, 23andMe’s Terms of Service is 9081 words, and its Privacy Statement is 32 pages long and 15,807 words long; while Gene By Gene’s DNA DTCGT Terms and Conditions is 3645 words and its consent document is 4718, which can be contrasted with the lengths of the iTunes agreement, which is 19,972 words long and Amazon’s Terms and Conditions which is 36,275 words long (Wigley 2015). 

McDonald and Cranor’s (2008) study “estimated that it would cost the average American Internet user 201 hours or the equivalent of $3534 a year to read the privacy policies of each website that he or she visits” (562). Also, where consumers do choose to read such contracts there is evidence to suggest they will not necessarily understand their content due to the complex nature of the legal language used,  which may require a high level of education to comprehend (Ayres and Schwartz 2014; Loos and Luzak 2015). It also may be difficult for a consumer to locate terms on a website. Another study by Reidenberg, McDonald et al. investigated “the differences in interpretation among expert, knowledgeable, and typical users and explores whether these groups can understand the practices described in privacy policies at a level sufficient to support rational decision-making” (2015, 42). This study found discrepancies in understanding, including among experts, showing

a number of areas where website privacy policies are too ambiguous to be meaningful and reveal a need to clarify specific data practices. The research demonstrates that policies describe websites’ datasharing practices poorly.Experts could not reach consensus on interpretation of data sharing practices generally and agreed even less as to the various nuances of data sharing. (2015, 83) 

While this study focused on the privacy policies of 6 US news and shopping websites (55–56), the study’s findings are relevant to thinking about how consumers interact with contracts and privacy policies in the DTCGT context. Given that the nature of DTCGT services for health can involve the dissemination of quite complex genetic and health information, discrepancies in people’s understanding of privacy policies for less complex services should lend support to a need to improve both contracts and privacy policies in order to enhance consumer understanding and support decision-making. 

Another matter, which needs further consideration is the design of the contracting environment online and the way consumers behave online. It has been suggested that in the online world people are becoming habituated to clicking (Kim 2013, 59–60) and may even be “click-happy” (Kim 2013, 61; Hillman 2005, 4). In Frischmann and Salinger’s recent article they “develop an original argument that the electronic contracting environment should be understood as a techno-social tool for engineering human beings to behave automatically, like simple machines. ...” They

describe the problem in Taylorist terms, as a system of scientific management that’s directed toward consumers. This view emphasizes how consumers, like laborers in Taylorist workplaces, are conditioned (and possibly deskilled) to behave in ways that are largely determined by system designers who optimize environments to meet efficiency standards. (2016, 2) 

They suggest that the electronic contracting environment“conditions human beings to behave like simple stimulus-response machines” and that if this is case there may be a need for significant reform for a number of reasons, but especially in the interests of protecting “human autonomy and sociality” (2016, 3). Frischmann and Salinger’s work is useful when we think about the use of contract to govern the purchase of DTCGT tests for health purposes. If we think about this in a more traditional medical context where protection of patient autonomy is often given significant protection the idea that the way people behave online may be  diminishing their autonomy especially in relation to decision-making in the context of the purchase of DTCGT tests is worthy of further scrutiny. 

This paper details a number of ways in which current industry reliance on standard “wrap” contracts (defined below) falls short of basic requirements for consumer protection. Having described the problem, the paper goes on to offer a regulatory solution, advocating a more active role for consumer protection agencies in governing the DTCGT industry, and in particular, exploring the potential role of the Competition & Markets Authority (CMA) in the UK context. Given the nature of DTCGT services and the importance of privacy and security issues raised by these services, the conclusion notes there is also a potential role in the UK for the Information Commissioner’s Office (ICO) and the Human Tissue Authority (HTA), as well as scope for similar bodies in other countries in improving regulation of the industry. 

'Regulating direct-to-consumer genetic tests: What is all the fuss about?' by Caroline F Wright, Alison Hall and Ron L Zimmern in (2010) 13 Genetics in Medicine 295–300 comments 

The number of genetic tests available direct-to-consumer has burgeoned over the last few years, prompting numerous calls for tighter regulation of these services. However, there is a lack of consensus about the most appropriate and achievable level of regulation, particularly given the global nature of the market. By consideration of potential for direct and indirect harms caused by genetic susceptibility or genomic profiling tests, in this study we offer an overarching framework that we believe to be feasible for the regulation of direct-to-consumer genetic tests and likely to be relevant to other forms of predictive testing. We suggest that just five key requirements would adequately protect the consumer: a proportionate set of consent procedures; formal laboratory accreditation; evidence of a valid gene-disease association; appropriately qualified staff to interpret the test result; and consumer protection legislation to prevent false or misleading claims. 

The authors argue

 Energized by the sudden explosion in genetic profiling services available direct-to-consumer (DTC) through the internet, which purport to assess an individual's risk of numerous diseases and traits, there has been a concomitant rise in calls for tighter regulation of this “consumer genomics” movement. Although the issue of increasing complexity of genetic (and other biomarker) tests has been extensively highlighted by numerous commentators, particularly in cases where interpretation of the results is highly complex and the clinical utility of testing is unproven, the regulatory environment has not developed as quickly as the technology itself. This has left policy makers divided over how to proceed. There is a lack of consensus as to the extent to which regulators should be involved, what minimum standards should and could be required across an international and predominantly internet-based market, and the role of legislation versus self-governance or voluntary guidance within an appropriate regulatory framework. 

Although the market for DTC genetic profiling services is currently fairly small, analysis of the sector suggests that some existing services provided by commercial providers are substandard, indicating that some regulatory oversight of this sector may be needed. A survey on DTC genetic testing commissioned by the European Parliament reported that the majority of these services failed to provide sufficient information to consumers regarding the nature of the genetic test, interpretation of the results, and implications arising from the test itself. Moreover, a systematic review of the evidence supporting the gene-disease association from seven DTC genetic testing companies found that, of those reviewed in meta-analyses (57%), the minority (38%) were found to be statistically significant. 

Numerous organizations including the UK Human Genetics Commission (established by and linked to the UK Department of Health) and the US Personalized Medicine Coalition (funded by private companies) are working in collaboration with commercial stakeholders to devise voluntary standards or codes of practice. However, existing legislation varies widely between countries. In Europe, a number of states within the Council of Europe that are signatories to the Convention on Human Rights and Biomedicine have signed or ratified additional voluntary legislation relating to genetic tests. The Additional Protocol on Genetic Testing requires that genetic tests that are carried out for health purposes satisfy generally accepted criteria of scientific and clinical validity (Article 5) and that an essential criterion of offering a test should be its clinical utility (Article 6). The protocol also states that a genetic test for health purposes “may only be performed under individualized medical supervision” (Article 7) and with the provision of relevant information and nondirective genetic counseling in the case of predictive, susceptibility, or carrier testing (Article 9). If widely adopted within Europe, these provisions “could have significant implications for certain DTC tests.” Although the Convention on Human Rights and Biomedicine and the Additional Protocol have been made in the interests of greater harmonization within the auspices of the Council of Europe, they are open for signature and ratification by a wider group of countries including the United States and Canada. To date, however, it is notable that neither Germany nor the United Kingdom have either signed or ratified the Convention or the Additional Protocol. Moreover, in Germany, access to genetic tests by the consumer has already been banned by law. 

In the United States, there is federal oversight of clinical laboratories through the Clinical Laboratory Improvements Amendment (CLIA), which regulates clinical laboratories to ensure accuracy, reliability, and timeliness of patient test results. However, different states have taken very different approaches toward the regulation of DTC genetic testing, particularly in terms of who can order the test. Most notably, the states of New York and California have tried to directly regulate DTC genetic testing services, and multiple “cease and desist” letters were sent out to companies in both states notifying them that they need to meet the specific requirements of the state to be licensed to receive DNA samples from residents for analysis. In early 2010, the National Institutes of Health announced the creation of a public Genetic Testing Registry, to which laboratories can voluntarily submit information, which aims to improve the levels of information accessible to the public about the availability, validity, and usefulness of genetic tests. 

Within the context of this ongoing international debate, in this study we offer a conceptual analysis of the area leading to an overarching framework for the regulation of DTC genetic tests, which we believe could also be applied more generally to tests for other predictive biomarkers. The term regulation as used in this article encompasses more than the use of legal instruments—which we term statutory regulation—and includes other mechanisms that will influence the extent to which tests are taken up by patients and consumers. The funding of health services when informed by a robust evidence base, whether by commissioners (as with the National Health Science in the United Kingdom), medical insurers (in Europe and elsewhere), or health maintenance organizations (in the United States) may be considered such a tool. Clinical guidelines and the education of physicians and patients can also be considered as a regulatory tool but at the level of the clinical consultation. It is not the purpose of the article to discuss in detail the operation of such tools but to lay a framework and to point to five points of access where our three sets of regulatory tools (statutory, funding, and clinical) might be made to work. 

Our intention is neither to provide a detailed critique of national and international variations in current legislation nor a comprehensive review of the positions held by different professional stakeholders, as these have been covered elsewhere. In addition, this paper does not cover non-consensual testing (including testing of minors, adults who are unable to give consent, or third parties), but confines itself to the issues associated with legal, voluntary and consensual testing of competent adults. We focus on the key issues involved and offer a simple and widely applicable framework to the oversight of DTC genetic tests, which grapples with the competing demands of the need for proper regulation and concerns about an overly paternalistic approach which unnecessarily limits individual choice. Each element of our framework will need more detailed consideration as to how it might be work in practice in different countries, but the crux of our proposal is that appropriate regulation will need to be provided across all the elements of the clinical pathway: from the assay, through the determination of clinical validity and utility, and to the interpretation of the test in a clinical context.