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Schufa entry threats – are they legal?

It has emerged that businesses are permitted to threaten customers who fail to pay for products or services with a negative credit rating agency entry. However, threatening or drawing consumers’ attention to the possibility of a so-called Schufa entry may only occur under strict circumstances.

Schufa entry threats – are they legal? © ferkelraggae-Fotolia
Schufa entry threats – are they legal? © ferkelraggae-Fotolia

Schufa entries

Some would argue that when customers are unwilling to pay for products or services, businesses are too hasty in threatening to pass on personal data to the credit rating agency Schufa AG. This tactic is supposed to persuade consumers to pay outstanding bills and so avoid the grave consequences of a negative credit rating.

Threatening a Schufa entry

Many consumers quickly buckle under the pressure of the threat of passing on personal data to the Schufa. This is true even when business simply draw consumers’ attention to the possibility of their data being passed on.

Consumers feel under pressure as they are often unaware that such action cannot be taken without further steps being taken first.

Moreover, personal data can only be transferred to the Schufa if the outstanding amount is not in dispute (see § 28(1) of the Federal Data Protection Act). In other words, if a consumer disputes the validity of an invoice, businesses may not pass on personal data to the Schufa.

Drawing attention to the possibility of a Schufa entry

In a recent case a consumer who was unable to pay an invoice received the following letter:

“You are required to pay the outstanding amount by …. If you do not pay, we will commence steps to pass your case to a debt collection agency. We also draw your attention to § 28a(1)(4c) of the Federal Data Protection Act under which we are entitled to transfer data concerning the failure to perform contractual obligations with regard to outstanding and undisputed debts to Schufa Holding AG…”

Only legal experts notice that the transfer of personal data to the Schufa is only permissible if the debt is undisputed. However, to many lay persons, the letter appears to be a threat of a negative Schufa entry if immediate payment is not made. Due to this confusion the county court of Berlin-Charlottenburg issued an injunction preventing the company concerned from issuing such threats in the future (Az. 218 C 1001/13). The injunction has since been upheld by the regional court in Berlin (judgment from 17.07.2013).

A similar decision was reached by the county court in Leipzig (decision from 13.01.2010 Az. 118 C 10105/09). In this case a consumer received the following: “Please be advised that in the interests of bringing about the commercial performance of our contractual relations, we reserve the right to engage a debt collecting company or lawyer. If this occurs, you may incur additional costs or other consequences such as a negative Schufa entry.”

In a recent judgment the Düsseldorf Higher Regional Court came to the same conclusion (judgment from 09.07.2013 Az. I-20 U 102/12).

The case concerned Vodafone customers who complained about the incorrect calculation of their phone bills and who refused to pay. Vodafone informed the customers that they were obliged to pay the outstanding amounts. The customers also received the following message: “Vodafone D2 GmbH is obliged to forward details of unpaid undisputed invoices to the Schufa…A Schufa entry can severely restrict your financial affairs.”

According to the consumer association this letter was received even though the dispute about the sum had already been settled.

No Schufa threat if sum is disputed

The Düsseldorf court reached the conclusion that Vodafone was incorrect to use such threats and prohibited the company from doing so in the future. Even payment reminders are not to include Schufa threats.

The court took the view that such threats are unfair under § 4 no. 1 of Germany’s Unfair Competition Act which labels commercial practices which use pressure to negatively affect consumers’ free decision making powers are unfair.

According to the court, consumers were given the impression, despite the chosen expressions, that their details were going to be passed on to the Schufa in the near future. This placed consumers under immense pressure due to the negative consequence of a negative credit rating entry.

The court clarified that as lay persons does not necessarily know what is meant by the term “undisputed”, businesses should expressly inform customers that a negative Schufa entry can be avoided by complaining about the correctness of an invoice.


If you receive a letter containing a Schufa entry threat but you have valid objections to an invoice, do not panic. The best thing to do is seek legal advice or ask your nearest consumer association for help.

Do not forget that the Schufa is obliged to provide you with a copy your negative entries once a year for free (see § 34 Federal Data Protection Act). Also, if a company is unjustified in transferring your personal data to the Schufa, you may be entitled to compensation.

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