Negative entry
with
Consequences.
Negative entry
with
Consequences.
of
To what extent must a debt collection agency verify a claim before reporting it? Why is simply withdrawing consent only a partial solution for the person affected? And does non-pecuniary damage even require a tangible impairment?
False Claim, Real Damage
Anyone who believes an invoice is excessive and makes this clear early on does not have to accept that the disputed amount will be reported to a credit bureau. The Federal Court of Justice ruled in favor of a consumer whose data had been reported to SCHUFA by a debt collection agency and, at the same time, awarded him damages.
The case dates back a long time. An electricity customer purchased energy in 2014, fell behind on his installment payments, and received a final bill for just over 529 euros after his service was terminated. He rejected the claim in writing as excessive and requested a corrected bill. However, the only response was a resubmission of the original, unamended bill. Years later, another collection agency took over the case and reported the debt to SCHUFA as a negative entry in 2021 and 2022. As a result, the customer’s credit score deteriorated.
Why the report was unlawful
In the ruling of the Federal Court of Justice (BGH), May 12, 2026 – Case No. VI ZR 375/24 The core issue was whether the transfer of this data was permissible at all. The decisive factor was a provision in the GDPR that permits processing if it is necessary to safeguard legitimate interests and the interests of the data subject do not override those interests.
In the court’s view, credit reporting agencies generally pursue such legitimate interests because they are intended to enable lenders to make a reliable assessment of a debtor’s ability to pay. However, it was precisely this reliability that was lacking in this case. The reported claim was not enforceable by court order, was disputed by the customer, and was not even presented in a way that made its composition clear. The final invoice mixed electricity charges with unexplained damages for non-performance, reminder and transfer fees, as well as late payment charges, some of which were offset against advance payments that had already been made. In the court’s view, no reliable conclusions regarding solvency could be drawn from such data.
The data transfers at issue thus concerned a claim that had not been established by a court judgment, was disputed, and had not even been substantiated in its entirety; consequently, they were not suitable for enabling an objective and reliable assessment of creditworthiness […].
Consequently, the transmission was not required and was therefore unlawful.
The Dispute Over Compensation for Pain and Suffering
The second part of the ruling is also interesting. Although the appellate court had granted the withdrawal, it denied the claim for non-pecuniary damages. After all, the court reasoned, the low credit score was also based on other circumstances, such as a previous financial disclosure and insolvency proceedings.
The Federal Court of Justice considered this line of reasoning to be legally flawed. Non-pecuniary damages do not require a specific threshold of materiality. It is sufficient that the unlawful report impaired the economic reputation of the affected party, and that was the case here because the credit score was accessed and actually played a role in failed contract negotiations. Whether the report was the sole or the primary cause is now only relevant to the amount of damages. In addition, there is a separate harm resulting from the loss of control over the data, which had already been disclosed to third parties through SCHUFA inquiries. The withdrawal of the report does not compensate for this harm.
Conclusion
Anyone who disputes a claim early on and in a transparent manner is better protected against premature negative credit reports, and withdrawal alone does not eliminate the right to damages.
It remains to be seen how much the damages will amount to in the future, as the Federal Court of Justice (BGH) judges have referred this question back to the lower court. Debt collection agencies must verify the plausibility of a claim before reporting it. The ruling leaves open the question of how thorough this review must be when the underlying documents originate from a third-party business relationship. It also remains unclear whether a loss of control that has no consequences in and of itself constitutes damages, since specific inquiries had already been made in this case.
We are happy to
advise you about
Data protection!
