As of: February 20, 2024, 10:17 a.m
By: Amy Walker
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The European Court of Justice ruling on the Schufa score has a major impact on the lives of consumers.
An expert explains the consequences in an interview with Ippen.Media.
Berlin - The European Court of Justice (ECJ) disempowered Schufa on Thursday (December 7th): Companies are not allowed to decide whether to conclude contracts with customers solely on the basis of an automated creditworthiness assessment by Schufa.
What many people don't know: This will change the lives of people in Germany.
“Many people don’t realize how comfortable we actually were with the Schufa score,” explains lawyer Christoph Ritzer from the Norton Rose Fulbright law firm in an interview with
Ippen.Media
.
ECJ ruling on Schufa: “We have a right to humanity”
“The court has decided that Schufa’s current procedure is not permitted under the General Data Protection Regulation.
It essentially says that we have a 'right to humanity', meaning that a human being - not an automatic machine - is significantly involved in important decisions for our lives," says Ritzer.
Schufa provides its contractual partners with an assessment of consumers’ creditworthiness.
© Andreas Arnold/dpa
Schufa collects a lot of data in the background that gives its customers - companies such as banks, cell phone providers, real estate companies, insurance companies - an overview of the creditworthiness of individuals.
This data can be positive or negative, and in the end it leads to a so-called Schufa score, which tells companies whether the person has paid their bills in the past or whether there has ever been an enforcement action against this person.
Until now, companies were able to decide whether a person would get a loan, insurance, a cell phone contract, etc. based solely on this Schufa score.
But that is no longer possible with this ruling.
“Schufa is no longer allowed to simply pass on the score to companies.
“From now on, it must ensure that its customers also use other data to check a consumer’s creditworthiness,” says Christoph Ritzer, explaining the consequences of the ruling.
For example, mobile phone providers may consider requiring consumers to provide other forms of evidence to prove creditworthiness when concluding a cell phone contract in the future, such as proof of income or proof of past bills paid.
“Perhaps similar to what we already know when looking for an apartment,” sums up the lawyer.
This is already common in other countries where there is no Schufa-like system.
Schufa verdict is good for those with bad scores
The ruling has two direct consequences for consumers: On the one hand, it is now suddenly clear to many people where Schufa currently has a hand in everything.
On the other hand, a great deal of comfort is lost that you were not even aware of.
The processing of numerous contracts will now take much longer.
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Christoph Ritzer gives an example: “The Schufa score is also checked when shopping online.
In online shops, payment by invoice is only offered if you have a good score.
Score verification happens in the background while you check out.
If you have a bad score, the purchase on account will not even be shown to you.”
This task, which a machine has previously done, could never be done by a human at this speed.
“For the majority of consumers, the previous system was quite convenient.
It was only stressful for those for whom a less good score was calculated.
They were excluded from some areas of life and the contract world through this automation.”
The ruling gives people with poor scores a new chance: They will be able to prove their creditworthiness in other ways in the future.
For cell phone contracts, loans, insurance, etc.: the same procedure as when looking for an apartment
However, lawyer Ritzer suspects that Schufa will adapt its business model in the future.
Because there is a way in which companies and Schufa can comply with the court ruling and at the same time continue to rely on the Schufa score: by consumers themselves instructing Schufa to present the score.
“I think that in the future Schufa will seek more contact with citizens.
Because if we voluntarily provide our Schufa score, it can also be used to check creditworthiness,” speculates Ritzer.
We already know this from looking for an apartment: Schufa information is requested directly from the citizen themselves.
That's why, in the expert's opinion, the ruling will not bring about any change in the search for accommodation.
Editor's note: This text has already appeared in the past. Many readers were particularly interested in it. That's why we're offering it again.
However, it may take some time for Schufa to adapt to the new reality.
According to Ritzer, Schufa will almost certainly “have plans in the drawer”.
But no one can yet predict how long it will take to implement this.