European Court of Justice
ECJ strengthens transparency in credit rating
How detailed do credit rates like the Schufa disclose how their reviews come about? The ECJ is now strengthening consumers on this question.
In the dispute over the question of how the values of credit information such as Schufa arise, the European Court of Court strengthens the back. According to a judgment, the ECJ clarifies in a message: “The person concerned has the right to find out how the decision relating to them came about”.
The procedure must be described in such a way “that the person concerned can understand which of their personal data in the context of automated decision -making in what type”.
A mere transmission of an algorithm does not constitute a sufficiently precise and understandable explanation, it was said in an ECJ announcement. Among other things, it could be enough to tell the extent to which other data would have led to a different result.
Legal dispute in Austria
The so-called creditworthiness scores are probability values that are intended to predict the payment behavior of consumers. The best known score in Germany is calculated by the Schufa business. Companies such as banks, mail order companies, energy suppliers or mobile phone companies inquire about private creditors such as Schufa about the creditworthiness of their customers. How the score is calculated exactly does not disclose Schufa in all details.
The focus of the negotiation was the question of which content requirements must meet information in order to be sufficient “meaningful” according to the General Data Protection Regulation (GDPR). A dispute before the Vienna Administrative Court was preceded by a cell phone provider of a customer due to insufficient creditworthiness.
Consumer center: “Milestone in Consumer Protection”
Consumer advocates welcomed the judgment. “This achieves an important milestone in consumer protection in credit rating scoring,” said Dorothea Mohn, from the Federal Association of Consumer Center. According to her, consumers could expect a comprehensible explanation with information on the criteria used and their weighting.
However, transparency only helps to a limited extent if certain consumer groups are still structurally disadvantaged in data processing, said Mohn. Therefore, consumer advocates demand that scores are formed based on characteristics that are directly related to the payment behavior.
Schufa sees no need for change for the time being
The Schufa also welcomed the judgment. It helps to make the scoring more transparent and understandable for consumers, it said in a message from the information egg. According to an initial assessment, the requirements are already met.
dpa
Source: Stern
