The German government recently passed an amendment to the Federal Data Protection Act in the cabinet in order to strengthen consumers' rights with regard to scoring. Scoring is the use of probability values about the future behavior of individuals to decide on upcoming contractual relationships. This step is a reaction to a landmark ruling by the Court of Justice of the European Union in December 2023, which concerns the current practice of scoring in Germany. The changes aim to create more transparency, improve protection against discrimination and at the same time create a reliable legal framework for scoring.
The following changes were adopted:
- Transparency and protection for consumers: One of the key changes is that consumers must, from now on, be fully informed about which data and categories of data have influenced their individual score. This also includes information on how the respective data was weighted and what the calculated score means.
- Prohibition of discriminatory factors: Another important step is the prohibition of using certain factors for scoring that could potentially have a discriminatory character. These include, for example, the use of postcodes to assess solvency or the consideration of data on political orientation or ethnicity. This measure is intended to help prevent any form of discrimination through scoring and ensure equal treatment of all consumers.
- Legal certainty and improved level of protection: The amendment to the Federal Data Protection Act creates a reliable legal framework for scoring and at the same time establishes an improved level of protection for consumers. This should allow the benefits of scoring and credit checks based on large volumes of data to continue to be utilized, while at the same time strengthening consumer protection.
Federal Consumer Protection Minister Steffi Lemke describes these new rules as a milestone in consumer protection and emphasizes the importance of making scoring transparent and fair. Following the Federal Cabinet's decision, the amendment to the Federal Data Protection Act will now be passed by the German Federal Parliament (Bundestag) and must then pass the parliament of the governments in the federal states (Bundesrat). The Federal Ministry of the Interior and Community (BMI) is in charge of this process.
Source: BMUV