Improper inclusion in Credit Blacklists

Will entities think about including a third partys’ information in a “credit blacklist” or “debtors’ list” twice? Will they finally stop using this method as a debtor pressure measurement? Shall they review in detail the requirements needed to include this information in the mentioned lists?

For some time now, we have noticed the rising number of lawsuits against those who perform this way. It doesn’t matter if you owe 20 or 5.000 euros, because in both cases, you will still be included in this credit blacklists.

However, Law stablishes a number of requirements in order to include someone in this kind of lists. Until recently, the breaching of these legal requirements didn’t have any relevant consequences. Rather, the people and entities whose information was being included in this credit blacklists weren’t fighting against this misconduct in our Courts.

However, nowadays we can see how our Courts are punishing this unacceptable practices. This way, they give the fundamental right to honour a greater protection, which is a right that’s clearly attacked in most of these situations. This includes not only the cases in which a disputed debt has been included, but also in cases in which the debts inclusion has failed to comply with a legal requirement. One of the most common cases of not-compliance with a legal requirement is not sending the debtor a payment request. If the debtor has not been properly summoned, he cannot be included in this kind of lists.

In this article we are going to analyze to situations in which two entities were forced to pay a great amount of money to compensate the debtors. We are referring to the Supreme Court Rulings (STS) 174/2008 and 245/2019. We are going to see what criteria our Supreme Court followed in order to determine the compensation:

1. STS Nº 174/2018, March 23d

In this Ruling, an individual files a lawsuit against a company for wrongly including him in two credit blacklists: Asnef and Badexcug. He requests the data removal and a 10.000 euros compensation due to the fundamental right to honour infringement.

• Background and reasons of the appealing.

The First Instance Court granted the lawsuit by considering the debt included in the credit blacklist was disputed. However, when appealed, the lawsuit ended up being dismissed. The argument used to reject the lawsuit was that all the emerging controversies were produced while the contract was still effective, while the disputed invoice was produced when they proceeded to cancel the contract. Also, the disagreement about that exact invoice was never mentioned, which means the debt was truthful, exact and demandable.

The AP also considers that the payment request made included the necessary warning about the possibility of the debtor’s information entering this kind of lists. That’s why they don’t consider the defendants actions as unlawful actions.

The cassation appeal is based on the fundamental right to honors (exhibited in article 18.2. of our Spanish Constitution) violation. The debtor thinks the debt was not truthful, exact and demandable. He doesn’t consider it truthful because he doesn’t even know why it exists and where it comes from, as a contract with the mentioned debt as a term has never been shown. Also, he considers amounts that weren’t planned in the contract and don’t fit in the required proportionality principle listed in article 74.4. LGDCU can’t be included.

Meanwhile, the defendant still considers the debt as a truthful debt and argues that the debtor made payments that verify its existence. Also, he argues that the company that signed the contract with the debtor ensured its veracity.

• Supreme Court Decision.

One of the fundamental elements in terms of automated data processing is the “data quality” principle. Information must be exact, accurate, relevant and proportionate with the target they have been created to accomplish. It’s also necessary that the payment request has been properly made, and that includes informing the debtor about the possibility of his information entering one of this credit blacklists.

Quality data principle not only requires the debt to be truthful. There’s information or data that can be truthful but not relevant. Mostly, data that doesn’t help determine the debtors’ financial solvency. That’s why the debt may be truthful, but that doesn’t necessarily means it’s in proportion with the credit blacklists’ purpose. The credit blacklists’ purpose is to show the debtors financial solvency and not just to show the existing debts. That’s the reason why is only justified to include debts that can’t be paid or that the debtors don’t want to pay in this kind of lists.

Including debtors information in this blacklists can’t be done just to put an unlawful pressure on the mentioned debtor so he pays the disputed invoice. This pressure comes in the shape of personal and professional smear and disrepute, along with not being able to enter the credits system for being in one of this blacklists. So in this particular cases, the pressure method stands effective.

Partial payment of the disputed debt doesn’t mean that the debt is being accepted or recognized. In fact, it’s quite the opposite, because it means the debtor is paying the part of the debt he considers to be correct, but not the disputed part of it. This implies the earnest of his views. With all that’s been said, it’s clear that this attitude can’t imply any harm to him, nor can it be interpreted as recognizing the debt.

Customers can’t be required to have an exhaustive conduct (which would be how professionals are required to act) when claiming or complaning to the creditor company. It will only be necessary to show their disagreement reasonably. That’s why it isn’t necessary to show disagreement or to complain for every invoice they receive.

The fact that the defendant is not the original creditor and that the mentioned original creditor assured him that the credit was truthful is not relevant either. The defendants obligation is to assure the quality data principle, and to check the situations that resulted in the debt being created before including the debtors information in the credit blacklist.

 STS Nº 245/2019, April 25th, 2019.

Background and reasons of the appealing.

In this Ruling, another consumer (debtor) files a lawsuit against a Banking entity. He claims the Bank should pay him an amount of 200.000 euros for including him in a credit blacklist when he didn’t got any payment request.

First Instance Ruling partially granted the lawsuit. The Court accepted the debt was truthful, exact and demandable, but the creditor didn’t comply with the payment request requirement. That non-compliance meant the violation of the fundamental right to honour.

The compensation amount was determined by valorating the time the debtor’s information was in the credit blacklist, as well as the information consultations produced in that period of time. The Court finally set the compensation on a 40.000 euros amount, given that the information stayed in the blacklist for 4 years, which affected the debtor’s reputation in a relevant way.

In the appealing filed by the Bank, the Appealing Court rejected the lawsuit. It considers that although the request was nota de, the debt being truthful, exact and demandable was enough to not consider the fundamental right to honour violated.

The most important reason of the appealing is the necessity of the payment request. The debtor claims that the non-compliance of this requirement does violate the mentioned fundamental right.

• Supreme Court Decision.
• The accusation of being a “defaulter” damages the person’s dignity, undermines his reputation and hurts his own esteem. That’s why the requirements can’t and shouldn’t be lowered down in terms of data quality. Also, there can’t be any additional restrictions made to the opposition, cancellation and rectification rights that are ir the LOPD.
• Thus, it’s a wrong point of view the one that made the Appealing Court state that the payment request non-compliance was irrelevant. It’s also a mistake to say that such violation only happens when the information inserted in the credit blacklist is due to a non existent debt.
• The payment request is not just a formal requirement, which means its non-compliance does not only means an administrative penalty. With this request, situations like including debtors’ information in a blacklist just because of his forgetfulness can be avoided.
• In the end, our Supreme Court thinks that the information was in the credit blacklist for 3 years and not 4. So, in relation with that time and the usual compensations granted by this Court, the final compensation granted to the debtor was an amount of 10.000 euros.

Conclusions

• Until recently, individuals whose information was inserted in this credit blacklist didn’t usually file any kind of lawsuits. Thus, the compensations that were given for the harm done to the debtor’s reputation were really low.
• However, our Supreme Court has been constantly creating jurisprudence that was increasingly giving total protection to the fundamental right to honour and punishing those who didn’t comply with the requirements needed.
• Credit blacklists are not a debt showcase. Information must be exact, relevant and proportionate to the purpose they have been obtained and treated. The debt may be truthful and exact but not relevant and in proportion to this lists’ purpose.
• Including debtors in this credit blacklists can’t add any more pressure to debtors so they pay disputed debts.
• Partial payment of disputed invoices does not mean the debtor is actknowledging or admitting the thruthfulness of the debt. The debtor does not have to behave in a exhaustive way (how professionals are required to act) when they complain to the creditors.
• If the debt has been assigned, the new creditor is equally obligated to assure that the quality data principles are complied.
• The payment request requirement is not just a “formal requirement” whose non-compliance just means an administrative penalty. It’s essential so the opposition, cancellation and rectification rights can be used.
• Our Supreme Court grants, as an average, 10.000 euros for improper inclusions. To determine the amount, they have in mind not only the time the information has spent in the blacklist, but also the number of times thtat information has been communicated to consulting companies and visitors.