CJEU issues ruling on credit reference agencies and scrutinising DPAs

Two landmark judgments have been issued by the European Court of Justice (CJEU) in a case involving the German credit reference agency SCHUFA. The judgments are expected to have significant implications for credit reference agencies, which collect large amounts of personal data to determine an individual's creditworthiness. The CJEU confirmed that national courts have extensive powers to scrutinise data protection authorities (DPAs), which will improve the rights of data subjects. In addition, the court ruled that automatically calculated credit scores do not comply with the GDPR. This decision could have far-reaching consequences for banks and businesses that rely on credit scores to determine loan eligibility and other financial transactions.

The background involves two joined cases (C-26/22 and C-64/22) and a further case (C-634/21). 

In a post welcoming the ruling, Austrian privacy campaign group NOYB provides a full breakdown of the history of the cases. 

In a statement about holding DPAs to account, Marco Blocher, data protection lawyer at NOYB, said: "The CJEU has made clear that the European data protection authorities are subject to strict court scrutiny. Data subjects can demand a full review of an authority's decision." 

Blocher went on to say about credit referencing companies in Europe: "Simply assigning citizens an incomprehensible credit score and then automatically refusing contracts is a thing of the past thanks to the CJEU judgment."

UPDATE: 191223 - In a legal analysis for the IAPP, Bird & Bird's Ruth Boardman and Nils Lölfing highlight that the two CJEU rulings will impact credit rating agencies' ability to use automated decision-making and retain consumer insolvency data.