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Schufa :

consumer wins compensation for illegal entry

A company in Germany has been ordered to pay compensation after illegally passing on consumer personal data to the German credit rating agency Schufa. A court ruled that the company breached strict legal requirements for transferring personal data by failing to give prior warning to the consumer.

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Background

The case concerned a consumer who ordered a boiler. After it had been installed the consumer refused to pay the invoice amounting to €3,613.19 claiming that the boiler was defect. The company sent one payment reminder and then wasted no time in reporting the consumer’s failure to pay the invoice to the Schufa. It was only after the consumer had paid the invoice some weeks later and reached agreement with the company, that the Schufa was informed that the balance was no longer outstanding.

In the meantime the consumer sued the company for causing the negative Schufa entry and claimed reimbursement of legal costs amounting to €546.69 and damages.

The country court in Halle (Saale) held that the legal requirements for passing information to credit rating agencies had not been fulfilled and as a result the company was not authorised to pass on the consumer’s data (Az. 93 C 3289/12). The company was ordered to pay compensation under § 280 sub-paragraph 1 of the German Civil Code (Bürgerliches Gesetzbuch, BGB).

Schufa entry: permissible only in certain circumstances

The transfer of data from companies to credit rating agencies is regulated by § 28a German Federal Data Protection Act which sets out certain requirements.

Under the paragraph the outstanding debt must be undisputed or the consumer must have acknowledged it. If this is not the case, then the company must have obtained legal judgment permitting enforcement measures to be commenced.

Furthermore, companies must follow a strict procedure before they can pass on personal data to credit rating agencies. This includes sending consumers two payment reminders within a period of four weeks and a warning that personal data will be transferred to credit rating agency.

Illegal Schufa entry: legal costs reimbursed

The court also held that the amount of compensation being sought was justified. It argued that as the legal situation concerning Schufa entries is complicated, consumers were entitled to seek legal advice to challenge negative entries. As a result, legal costs were also recoverable under § 249 BGB.

Negative Schufa entry: severe consequences

Companies should exercise care when passing personal data of consumers to the Schufa or to any other credit rating agency. Failure to do so could result in consumers who suffer loss as a result of a negative entry bringing claims for compensation. This position is supported by a judgment reached by the Regional Court of Bonn in 2009 (Az. 18 O 310/09).

It should be borne in mind that such financial loss can be severe. A consumer may find, for example, that as a result of a negative entry, he is unable to take out a loan on favourable conditions or that his credit card is cancelled.