EA reform of the Federal Data Protection Act is intended to strengthen the rights of consumers against credit reporting agencies such as Schufa. The federal government is reacting to a ruling by the European Court of Justice (ECJ) with a corresponding draft law, which was passed by the cabinet on Wednesday.
The highest European court had ruled that checking consumers' creditworthiness was only permitted within narrow limits. The data that, according to the draft, may not be used in the future so that companies can assess a person's ability and willingness to pay includes, among other things, the home address, name or personal data from the use of social networks. Information about incoming and outgoing payments to and from bank accounts is also taboo.
The background to the ECJ decision in December were two cases from Germany. In one case, a woman sued who had been denied a loan. She asked Schufa to delete an entry and grant access to the data. Schufa then only provided the score value and general information about the calculation, but not the exact calculation method. Schufa information also often plays a role in assessing the solvency of prospective tenants.
Zip code should not determine creditworthiness
“In the future, consumers will have to find out straight away which data and categories of data affected their score, how they were weighted and what significance the score has,” said Steffi Lemke (Greens), Federal Minister for the Environment and Consumer protection. Possible discrimination through scoring is now being put a stop to. For example, the planned law, which still has to pass the Bundestag and Bundesrat, excludes the possibility that the postal code decides whether someone is classified as solvent or not.
Federal Interior Minister Nancy Faeser (SPD) said that the draft clearly stipulates that data on ethnic origin and health data may not be included in the automated calculation of solvency. The reform of the Federal Data Protection Act is also intended to make research projects easier. According to the Ministry of the Interior, companies and institutions that process data for historical, scientific or statistical purposes will in future only have to contact one supervisory authority as a contact person for cross-border projects for which there is a shared data protection responsibility.
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