Der Todesstoß für Schufa & Creditreform! Neues Urteil!

This is the death knell for Schufa and Creditreform. Just for all the companies that make money by giving ratings to people in Germany: ratings based on their creditworthiness, their creditworthiness or if maybe they have one or two financial corpses in the closet, maybe a bankruptcy, a personal bankruptcy. This note from Schufa, from Creditreform, decides if you get a rental contract, if you get a mobile phone contract or a loan contract at the bank, if you want to buy a house. But is Schufa really allowed to do this in the same way as Creditreform? Are they allowed to make money by using your data and using it to calculate a score that may be crucial to their existence?

Whether you get the house, for example, or the apartment. That is exactly what a trial before the European Court of Justice is about, and the Advocate General has already given his word. Today I tell you what the verdict in this process means for all the people who were given a rating by Schufa and have to live with it, or not. Hello and welcome! I am Patricia Lederer, a lawyer at the tax law firm TaxPro in Frankfurt am Main. We'll jump right in and see what kind of court case this is that came to the European Court of Justice.

This is a man who sued Schufa because he had a negative report from Schufa and therefore could not get a loan. He argued: "Guys, Schufa gave me this very bad grade and I want to know how it came about. I want to have access to the data and I also want it deleted." Furthermore, he also had his personal bankruptcy registered in the Schufa and said that the thing should also be erased. This has been there for too long. SCHUFA keeps it for years. She's not allowed to do that. With these arguments, the man filed a lawsuit against Schufa.

It all started in the first instance here in Hesse, at the administrative court in Wiesbaden. The administrative court examined the arguments very closely and said: "Wait a minute, European law is affected, more precisely our General Data Protection Regulation. If Schufa does something with this man's data and gives him a certain rating for "The negative note of the case is that EU legislation is affected and that is why we asked the European Court of Justice in advance." This is how the Wiesbaden matter ended before the European Court of Justice. in Luxembourg. In the European Court of Justice the procedure is simply the following: the man presents his arguments or his lawyer and there is the Advocate General.

This Advocate General essentially prescribes the sentence. First he presents his arguments and then the court can see if he accepts them. What does he usually do? Let's go directly to the Advocate General. What do you think he wrote? He said the man is right. Schufa is not allowed to do that. Schufa is not allowed to process the man's data. What it does with all our data as soon as we check this famous Schufa clause, it is also not allowed to calculate this famous Schufa score from it. That is the grade that Schufa and, by the way, Creditreform and other information agencies give us all.

Because the crux of this qualification, of this Schufa score, is that Schufa calculates exactly whether you are creditworthy or not. This is a Schufa trade secret and they do not have to reveal it. This was decided some time ago by the German Federal Court of Justice. This means that they cannot access the determination of the data and the solvency, solvency, solvency, because that is a trade secret. But with the General Data Protection Regulation yes. Because our Advocate General maintains: The General Data Protection Regulation does not in itself prohibit data collection, but what it clearly prohibits is the automatic, software-based evaluation of data supported by AI.

Because let's be honest: Schufa, like other information agencies like Creditreform or whatever they are called, follow a similar principle. They collect the data and with the secret and protected idea they analyze the data, and in the end this note comes out. And then our attorney general says: It doesn't work that way. Because everything happens with the support of AI, software and without human intervention. And so we have a clear case: "A machine decides the existence of people", and that is exactly what the Advocate General believes is not allowed. Because in the end what comes out at the end is this famous Schufa note, this score, which is nothing other than a profile of the people he deals with.

And this cannot happen completely automatically, but a person has to process it and this person has to go through an understandable process, so in the end it has to be classified and evaluated so that the result is a negative Schufa rating. That is why the Attorney General's announcement is very clear: Schufa punctuation is prohibited. Violates EU law. And this also applies to credit reform and all the companies that make money by giving ratings to people in Germany. This is prohibited because it is powered by AI and without human intervention, which violates the European General Data Protection Regulation.

Before getting to the second point, I will briefly show you the source. Here you can see this, we have the press release from the European Court of Justice. As always in the description of the video, I have it there too, after the chapter markers you will find it and the statement of the Advocate General. This is the case with the file number. We publish everything online. And the second statement, which I will now move on to. Because the Attorney General also clearly expresses his opinion on what I said at the beginning: How long can Schufa keep this data?

Our plaintiff specifically argued: "I received this negative promissory note from Schufa and that's why I couldn't get a loan because my Schufa report still contained this old insolvency and Schufa should have removed it a long time ago." The Schufa did the following: it used a so-called public source. That's what we lawyers call it. Schufa went to insolvenznachrichten.de. This is a website where you can find all insolvencies in Germany, but with the subtle difference that the data is deleted after six months. And that's exactly what Schufa didn't do. They kept data on our plaintiff's insolvency for three years.

And then he defended himself and argued: "If these insolvency declarations remove it after six months, then you will also have to remove it from Schufa after six months." What do you think our General Counsel says about this? In this case too, a clear message: he agreed with the plaintiff, also arguing that the disposal periods in Schufa should in no case be longer than in a public place. This means that this official six-month deadline at insolvenznachrichten.de is extended to three years. And that is simply unacceptable. Clear announcement also from our Attorney General. And what happens now?

The Advocate General has already given his opinion. He put it in writing and said clearly: Schufa can keep the data for a maximum of six months, after six months he must delete it, and in no case should it be kept for three years. And you are not allowed to give these ratings to people based on your fully automated system and protected trade secrets. She's not allowed to do that. So what is the current verdict of the European Court of Justice? I promised you that I would tell you how often judges follow this general counsel and basically take over and copy what he writes in his statements on the subject at trial.

That is a whopping 75 percent of court cases in which the European Court of Justice follows the Advocate General. And that's what I would call the death knell for this industry. Because it doesn't matter whether it's Schufa or credit reform, the fact is simple: these credit reporting companies make a living and money using your data, which is already legally problematic. Then analyze them and ultimately use them against you. Because you don't know how the Schufa score, that grade you get, is obtained. But you have to live with the result of getting a good or a bad grade in the Schufa.

That you can buy your house, rent your apartment, lease the car. It depends on the outcome of the Schufa score and also on the credit reform. If you are a company, a lot in terms of the existence of people and companies. And that is why we now have a clear outcome after the Attorney General's announcement. Because, honestly, the European Court of Justice has no option not to follow the Advocate General's example. If you look at the Advocate General's opinions on the Internet, everything is argued in detail in writing and there is no argument that he has not addressed.

Therefore, passing judgment against this (I'm going out on a limb here) is at least very, very difficult for the European Court of Justice. Yes, I hope it made you smarter today. If you like, we'll see you here on the channel, as always, Monday to Friday, from 6:30 p.m. to 8:30 p.m. Until then, take care of yourself. Hello.