Federal government strengthens transparency and consumer protection in scoring

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Summary:

The German government has passed a bill to strengthen consumer rights in the context of scoring, a practice widely used by companies to evaluate the creditworthiness of customers. The scoring system is based on large amounts of customer data and is increasingly being automated, which poses risks to consumers. The new regulations aim to increase transparency and prevent discrimination by requiring companies to disclose the data and categories used to calculate a consumer's score, as well as the weight given to each factor and the predictive value of the score. The changes also prohibit the use of scoring based on political orientation, ethnicity, or other sensitive personal data. The new rules are a response to a European Court of Justice ruling that deemed scoring as an "automatic decision-making"" process and will improve the protection of consumers.