Decision of the court – double Schufa entry – Deutsche Postbank AG loses in the court of second instance as well
On 7 March 2012, the Court of Appeal in Berlin upheld a decision of the lower court in which it was determined that Deutsche Postbank AG is not allowed to register a negative entry under two different names with Schufa Holding AG.
What had happened?
A data subject had objected to the fact that one and the same claim was entered twice in the Schufa Holding AG database under the names ‘Deutsche Postbank AG’ and ‘Postbank AG’.
The Berlin District Court had already made it clear in the first instance that this double entry at Schufa had been made without any possibility of justification. The Court of Appeal also upheld this. During the main oral proceedings, the court also made it clear in the second instance that it is not up to every attentive reader to read the Schufa notices so carefully that the double entry is noticed. The court therefore suggested that Postbank withdraw the appeal. Since Postbank did not comply with this request from the court, the court now dismissed the appeal.
What were the reasons given by the court for dismissing the appeal?
The court justified this primarily on the grounds that the plaintiff, represented by the law firm Dr. Schulte and his team of lawyers, was not only entitled to claim under §§ 823 (1), 1004 (1) BGB and §§ 823 (2) BGB in conjunction with § 28 BDSG, but that there was also a contractual basis for the claim and that the violation of a contractual under Section 280 of the German Civil Code (BGB).
The Court of Appeal confirmed that a double entry under different names is not meaningless, as Deutsche Postbank AG had argued. Rather, there is a risk that less well-trained staff might suspect that the plaintiff is in double debt, which would massively reduce his creditworthiness. It was therefore the defendant Postbank’s responsibility to prevent such a misunderstanding, the court ruled.
What is the significance of the court’s decision?
Commenting on the decision, Dr Thomas Schulte, the attorney who secured the favourable ruling for the affected party, said: ‘This is a clear decision that will serve as a guide for the future. Unfortunately, it happens time and again that claims are entered twice in the Schufa database. This can be the case if a company changes its name or if a collection agency becomes involved and enters the claim either in its own name or in the name of the client as the processor. An important legal question has now been clarified here, but further ambiguities remain, especially in the so-called collection constellation. There will certainly be further legal disputes in the future.’
Schufa – what is that?
Schufa (Schutzgemeinschaft für allgemeine Kreditsicherung) is a private credit reference agency in Germany that collects credit data from individuals and businesses to assess creditworthiness. This data is shared with partners such as banks, mobile phone providers and landlords to help them make their decisions.
TV report on credit law
The basics of how Schufa operates:
- Data collection: Schufa collects data from various sources, mainly from its contractual partners. This includes information about:
- Existing loans
- Payment defaults
- Frequency of credit requests
- Duration of existing business relationships
- Mobile phone contracts
- Mail order companies
- Collection agencies
- Current accounts with overdraft interest
- Number of credit cards
- Positive data such as punctual payments are also
- Scoring: Schufa uses an algorithm to calculate a score from this data that indicates the probability that a person will meet their financial obligations. This score is a probability value for future payment behaviour. However, the exact way in which the algorithm works is a trade secret and will not be disclosed.
- Legal basis: The processing of personal data by Schufa is subject to the General Data Protection Regulation (GDPR) and the Federal Data Protection Act (BDSG). According to Art. 6 para. 1 lit. f) GDPR, data processing is permitted if it is necessary to safeguard legitimate interests and the fundamental rights of the data subjects do not prevail. However, the transmission of negative information to Schufa is subject to strict conditions (§ 31 para. 2 BDSG). A claim may only be reported if the debtor has been reminded twice and has not disputed the claim.
- Consent: Companies often seek ‘Schufa consent’ when concluding contracts. However, Schufa can also collect data without explicit consent if there is a legitimate interest (Art. 6 I lit f) GDPR in conjunction with § 31 BDSG).
- Legitimate interest: Schufa often relies on the legitimate interest of informing its contractual partners about the creditworthiness of potential customers. Case law has recognised this interest.
- Transparency: A major point of criticism is the lack of transparency of the scoring procedure. The exact score formula is not accessible. The Federal Court of Justice (BGH) has ruled that Schufa does not have to disclose this formula as long as the result remains comprehensible to the consumer.
- Right of access: Consumers have the right to request information about the data stored by Schufa once a year free of charge (Art. 15 GDPR, § 34 BDSG). This information must include information about the origin of the data and the recipients.
- Right to rectification: Consumers have the right to have inaccurate or incomplete data corrected (Art. 16 GDPR).
- Right to erasure: Pursuant to Art. 17 GDPR and Section 31 (2) BDSG, consumers can request the erasure of data if it is no longer required or has been unlawfully stored. Entries on settled claims or residual debt discharge must be deleted after a certain period of time. After a residual debt discharge, entries must be deleted after six months at the latest (ECJ, judgment of 7 December 2023, C-634/21).
- Storage periods: Schufa generally stores entries for three years after they have been settled. However, there are exceptions and shorter periods, particularly in the case of residual debt discharge. Why is Schufa allowed to store my data? – Valentin Schulte
Effect of Schufa entries:
- Negative entries can have far-reaching consequences, such as:
- Refusal of credit
- Refusal of rental contracts
- Refusal of mobile phone contracts
- Higher interest rates on loans
- Restrictions on banking services
- An incorrect entry can significantly affect financial freedom and social life.
- ‘Soft’ criteria such as the number of credit cards or current accounts can also influence the score.
Rights of those affected and options for action:
- Regular review: It is advisable to regularly review your own Schufa data.
- Objection: In the case of incorrect entries, those affected should immediately object to Schufa in writing.
- Request for deletion: A request for the deletion of incorrect or unlawful entries can be made.
- Complaint: If the Schufa does not react, a complaint can be submitted to the relevant data protection supervisory authority.
- Legal support: In more complex cases or if there is no reaction, legal support should be sought.
- Compensation: In the event of unlawful data processing, compensation can be claimed (Art. 82 GDPR).
Automated decisions:
- Automated decisions that have significant legal or economic effects are only permissible under certain conditions (Art. 22 (1) GDPR).
- The ECJ has ruled that purely automated scoring procedures may violate the GDPR if no human review is possible.
Conclusion:
Schufa is a central player in the German financial system. Its activity is based on the collection and processing of data to assess the creditworthiness of individuals. The legal basis for this activity is the GDPR and the BDSG. Data subjects have extensive rights to control their data, have inaccurate entries corrected and claim damages if necessary. It is important to know one’s rights and to actively use them when needed.
If you have any questions about your credit rating or a Schufa entry, do not hesitate to seek competent legal advice. Dr Thomas Schulte, an experienced lawyer from Berlin, is at your side with his extensive expertise in banking and capital market law. For years, he has successfully supported clients in clarifying complex facts about creditworthiness data and its effects.
Take advantage of the opportunity to receive individual advice! Make an appointment now with Dr Schulte, either directly at his office at Malteserstraße 170, 12277 Berlin, or by phone at 030 – 22 19 220 20. Alternatively, you can also contact him by email at dr.schulte@dr-schulte.de.
Further information about his services can be found on his website at dr-schulte.de. Dr Schulte also offers advice to Polish-speaking clients through Twój Adwokat w Niemczech.
Act now to protect your rights and get clarity about your credit rating – Dr Schulte is there for you!