Consumer Protection Law

Threatening a negative credit rating entry can be illegal

Many people fear a bad credit rating. With this in mind, a court in Germany has confirmed that businesses must follow strict rules before threatening consumers with a negative credit rating entry.

Threatening negative credit rating entry can be illegal © ferkelraggae-Fotolia

Threatening negative credit rating entry can be illegal © ferkelraggae-Fotolia

Negative credit rating

The Higher Regional Court, Celle, Germany, has ruled that businesses cannot simply threaten consumers with a negative credit rating entry if they fail to pay for products or services. Instead, businesses must follow proper procedure.

Facts of the case

After a consumer failed to pay for a product, despite having received a number of payment reminders, a business engaged a debt collection agency.

The debt collection agency also sent a payment reminder in which the following was written:

“We inform you that in accordance with § 33(1) German Data Protection Act (Bundesdatenschutzgesetz, BDSG), we have saved your data in relation to the debt owed. Should the legal requirements contained in § 28a BDSG be fulfilled, we cannot rule out that we will pass this data to [the credit rating agency] SCHUFA Holding AG.”

The consumer replied to the debt collection agency, stating that the debt was disputed.

The customer then received a second standard warning from the debt collection agency which did not refer to the consumer’s correspondence. The letter contained the following:

“We therefore inform you once again, that should the legal requirements in § 28a BDSG be fulfilled, we are entitled to send your data concerning the unpaid debt to SCHUFA Holding AG. This can worsen your credit rating. We only transfer data concerning unpaid debt to third parties when the debt is undisputed.”

The consumer then brought a claim against the debt collection agency.

Disputed debt

The court in Celle ruled that the company may not pass on the consumer’s personal data to SCHUFA Holding AG. The judges also went further, prohibiting the company from threatening to transfer data to the SCHUFA.

The debt collection agency’s second payment reminder was viewed by the court as an unjustified threat to pass on data to SCHUFA Holding AG. This is because under § 28a BDSG, data may only be transferred to SCHUFA Holding AG if a debt is undisputed, which was not the case here.

The court found that the last sentence in which the consumer is informed that data will only be passed on if the debt is undisputed was insufficient, as most lay people would not notice the sentence.


This judgment is consistent with other court rulings concerning bad credit rating threats. These include a decision of the county court Leipzig (13.01.2010, case ref. 118 C 10105/09) and a judgment by the Higher Regional Court, Düsseldorf (09.07.2013, case ref. I-20 U 102/12).

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Christian Solmecke is a partner at the law firm WILDE BEUGER SOLMECKE. He is the author of numerous legal publications in the area of internet and IT law. He is also an associate lecturer for social media law at the Cologne University of Applied Sciences.

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