Dispute over Schufa data: NOYB announces injunction

Is Schufa allowed to store old credit data and use it for its models? Data protection advocates are calling for the data to be deleted, but Schufa is against this. Now the dispute is likely to end up in court.

Wiesbaden. The dispute over historical Schufa data will most likely end up in court. The credit agency Schufa “decisively rejected” the allegations made by the European data protection organization NOYB and, according to its own information, refused to issue cease-and-desist declarations until September 9th.

The NGO based in Vienna reacted immediately: "This makes it certain: NOYB will file an injunction. Interested parties can also continue to register for a possible class action lawsuit."

NOYB formally warned Schufa at the end of August and announced the preparation of further legal steps. Now NOYB chairman Max Schrems explained: "Schufa's arguments are completely grotesque. Apparently Schufa believes that it is some kind of semi-divine institution that is above European laws. We look forward to putting an end to this."

The conflict was triggered by reports about a “shadow database” run by Schufa in mid-July, according to research by NDR and “Süddeutscher Zeitung”. Accordingly, Schufa stores historical data, such as information about old loans, seizures or even personal bankruptcies. Claims and debts that those affected would often have paid years ago.

According to data protection rules and the deletion deadlines set by the industry itself, such data would have to be deleted after a certain period of time. However, Schufa says it will continue to store these for up to ten years.

Schufa boss Tanja Birkholz recently emphasized at the “Handelsblatt Banking Summit”: “We don’t have a shadow database. Schufa has a data archive like other companies.”

Schufa Holding AG argues that it stores historical data “precisely in order to meet legal and regulatory requirements”. The data would be stored “in accordance with the legal requirements and the storage periods agreed with the data protection authorities”. Historical data is required in order to develop scientifically reliable credit ratings (scores) and to check their quality.

In a 26-page letter to the NOYB, Schufa had its lawyers reject the demand for cease-and-desist declarations. The credit agency had already emphasized at the end of August: “We will defend the storage of historical data in court – even if we go to the Federal Court of Justice again.”

If the data protection officers are proven right in court, this could have massive financial consequences for the credit agency. Since Schufa claims to have stored credit-related information on around 68 million people, even a small compensation amount per capita could result in total claims of astronomical amounts.