17.01.2019

Rigth to honor and credit blacklists

Right to honor and credit blacklist

The credit blacklists are records that include people, that have incurred in default of a debt. For better or worse, this is a well-known concept, right?

We all have heard about this kind of lists, very common among telecommunications companies and financial entities. If you are an entrepreneur, you may have used them to analyze the creditworthiness of a provider. You also may know people included in these kinds of lists, even when they have opposed the debt claimed.

The processing of personal data, with the purpose of monitoring the impact of defaulted payments, is legal. But attention because this process, must complain with certain requirements.

The inclusion of inaccurate data in files of defaulters, may imply a violation of the right to honor. That is the conclusion included in the case law of the Supreme Court, when data protection regulations are not observed.

Let’s see, what is the law and judicial criteria about this. How data protection is linked to the right to honor, and the regulations that currently regulate files of defaulters.

Right to the Personal Data Protection as a Fundamental Right. Violation of the right to honor, by files containing inaccurate data.

The data protection right, is a fundamental right included in article 18 of the Spanish Constitution:

Article 18.4: The law shall limit the use of data processing in order to guarantee the honor and personal and family privacy of citizens and the full exercise of their rights.

It is also included in article 8.1 of the Charter of Fundamental Rights of the European Union:

8.1. Everyone has the right to the protection of personal data concerning him or her.

The data protection legislation has been developed as a consequence of this fundamental right. The Principle of Accuracy of the personal data files, is included in the Data Protection Legislation. Depending on whether the files are accurately complied, the courts may consider that your rights have been violated.

The Principle of Accuracy implies, the faithful reality of the data, that must be observed in all personal data file. We find the principle of accuracy, developed in article 5.1.d of the General Data Protection Regulation (RGPD), which states:

Article 5: Principles relating to the processing of personal data.

Personal data shall be:

accurate and, where necessary, kept up to date; every reasonable step must be taken to ensure that personal data that are inaccurate, having regard to the purposes for which they are processed, are erased or rectified without delay (‘accuracy’);

As the principle of accuracy is a consequence of a fundamental right, it applies to all kind of automated data processing. The failure complying this principle, implies a violation of the right to honor. So consequently, it has a special significance with respect to “Credit Blacklists”.

Take a current example. Publishing someone’s debts with a telephone company, can be the cause of the denial of a credit card: If a debtor has been included in a “Blacklist”, and the bank issuing the card, does consult that list. But, what if that debt, was objected by the debtor? Is that a real debt? Is this information (data) included in the defaulters list accurate, in terms of the debtor’s solvency?

The credit card’s example, is the case solved by the Spanish Supreme Court’s case 174/2018, March 23rd. In this case, the Supreme Court (SC), in application of previous jurisprudence, resolved, in favor of the plaintiff. The SC considered that the right to the honor of the plaintiff, was violated. And it was violated because the debt was published, even when the debtor constantly refuted it. The SC, also recognized the damages compensation asked by the plaintiff.

Principles of Credit Information included in “Credit Blacklists”.

As explained before, our case law doctrine requires that the records of defaulters must include only accurate information.

Monetary obligations included in Blacklists, must be due and payable, and its payment must be previously required. The doubtful, non-pacific or litigious debts, cannot be included in defaulters lists.

Examples of this case law criteria are included in the following Supreme Court resolutions:

STS 13/2013, January 29th,
672/2014, November 19th,
740/2015, December 22nd, and
114/2016, March 1st.

The inclusion of clients in registers of defaulters, to pressure them paying controversial debts, is also expressly forbidden. That practice may cost you the payment of a compensation, as the SC resolved in its case 176/2013, March 6th:

(…) The inclusion in records of defaulters cannot be used by large companies to seek debt collection, based on the fear of personal discredit and impairment of their professional prestige, and the denial of access to the credit system, as a consequence of appearing in a file of defaulters, avoiding with such practice, the expenses that would entail the initiation of the corresponding judicial procedure, many times, superior to the amount of the debts claimed (…).

Article 20 of the Spanish Data Protection Act (LO 3/2018 December 5th)

This fundamental right to data protection, is currently regulated in article 20, 3/20018 Data Protection Act. This Act entered into force on 12/07/2018, and regulates the principles of credit databases as follows:

a) The data included in a list, must have been provided by the creditor, or someone acting on the creditor’s behalf/interest.
b) The data must refer to correct, due and payable debts. The debt must not have been claimed by the debtor. (By any kind of administrative, judicial or alternative dispute resolution procedures).
c) The creditor, when signing the contract or when requesting the payment, must inform the debtor about:

(i) The possibility of inclusion of her personal details and debts, in a debt management information system,

(ii) The creditor must inform about the credit databases that she does manage, or in which she include credit information, and

(iii) If the data is finally registered in a defaulters file, the creditor must notify to the debtor about its inclusion. The notification must inform to the debtor about all her rights (Right to access, modify, change, remove, limitation of treatment, portability and opposition as indicated in arts 15 to 22 GRDP). The debtor may exercise any of these rights, within 30 days since the notification date.

d) The data can only remain in the debt management systems, while the debt exists. And only for five years since the deadline of the monetary, financial or credit obligation.
e) The data referred to a determined debtor, can only be consulted when:

(i) The consultant of the debt management system, shall maintain a contractual relationship with the debtor, which involves the payment of a monetary amount or

(ii) When the debtor had requested to the consultant, some kind of financing agreement.

When a Blacklist is consulted, the consultant must be informed, about the possible objections regarding the accuracy of the debt.

f) The debtor must be informed about a blacklist consultation, if that is the reason because her deal proposal was denied.

Article 20 covers our case law regarding credit management information systems. The Law clearly establishes the obligations that must be observed by those ones managing this kind of files.

So, be aware of the publication of disputed debts. They imply non-accuracy of the published data, and imply the possibility of claims to the debtor.

If this article has been of your interest, we also suggest you to read this publication from our website: “Global Transfer of Assets and Liabilities”:

https://www.ilpabogados.com/en/global-transfer-of-assets-and-liabilities/