On March 24, 2023, the Austrian Supervisory Authority (“Austrian SA”) held that a credit referencing agency (“Agency”) breached the GDPR by unlawfully processing personal data obtained from a third party in order to process it to conduct credit assessments.  It decided that the Agency breached the GDPR’s principle of lawfulness because it did not have a valid legal basis to process the personal data.  This case will be relevant for organizations assessing their lawful basis for processing personal data.

The Austrian SA decided that the Agency could only have processed personal data for performing credit assessments with the data subjects’ consent, which it had not obtained.  The Agency was not able to rely on other GDPR legal bases such as “compliance with a legal obligation” (Article 6(1)(c)) and “performance of a task carried out in the public interest” (Article 6(1)(e)).  The Austrian SA found that although the Agency is subject to the Austrian Industrial Code as a credit referencing agency, this Code does not include a “specific provision” in the sense of GDPR, Article 6(1)(3), such that the Agency could be said to be processing the data to fulfil a legal obligation or carry out a task in the public interest when conducting credit checks.  In addition, the Austrian SA decided that the Agency could not rely on the above-mentioned GDPR legal bases because they do not apply to “purely economic activities,” such as conducting credit assessments (in line with the Advocate General’s opinion in the Court of Justice of the EU’s case C-634/21).

In addition, the Austrian SA decided that the Agency could not rely on its legitimate interest (Article 6(1)(f)) because the Agency’s interests did not override those of the data subjects.  The Austria SA found that the company that disclosed the personal data to the Agency was not authorized to disclose or sell personal data for credit assessment purposes, but rather only for marketing purposes (and had been found in breach of the GDPR by the Austrian SA for disclosing the personal data to the Agency without first obtaining data subjects’ consent).

The Austrian SA also stated that, generally, the unlawfulness of the original data collection (in this case, by the third party selling the data) results in the subsequent data processing by the recipient also being unlawful.  That said, the Austrian SA recognized that a controller’s processing of personal data, which it received from another controller who unlawfully collected it, might be lawful in certain cases where it is processed for compelling interests worthy of protection.  Unfortunately, the Austrian SA did not give examples of such compelling interests.  It did, however, find that the monetization of personal data by the Agency, in using the data to generate credit scores for sale, is an interest that is “not necessarily worthy of protection.”  The Austrian SA also found that the Agency was also not able to demonstrate that it had carefully audited the disclosing third party’s compliance with the GDPR before entering into a contract with the latter, which entailed the disclosure of personal data.

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Covington’s Data Privacy and Cybersecurity Practice monitors CJEU and national data protection cases closely and reports on relevant judgments and Advocate General opinions.  If you have any questions about these cases, please reach out as we are happy to assist.

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Photo of Dan Cooper Dan Cooper

Daniel Cooper is co-chair of Covington’s Data Privacy and Cyber Security Practice, and advises clients on information technology regulatory and policy issues, particularly data protection, consumer protection, AI, and data security matters. He has over 20 years of experience in the field, representing…

Daniel Cooper is co-chair of Covington’s Data Privacy and Cyber Security Practice, and advises clients on information technology regulatory and policy issues, particularly data protection, consumer protection, AI, and data security matters. He has over 20 years of experience in the field, representing clients in regulatory proceedings before privacy authorities in Europe and counseling them on their global compliance and government affairs strategies. Dan regularly lectures on the topic, and was instrumental in drafting the privacy standards applied in professional sport.

According to Chambers UK, his “level of expertise is second to none, but it’s also equally paired with a keen understanding of our business and direction.” It was noted that “he is very good at calibrating and helping to gauge risk.”

Dan is qualified to practice law in the United States, the United Kingdom, Ireland and Belgium. He has also been appointed to the advisory and expert boards of privacy NGOs and agencies, such as Privacy International and the European security agency, ENISA.

Photo of Anna Oberschelp de Meneses Anna Oberschelp de Meneses

Anna Sophia Oberschelp de Meneses is an associate in the Data Privacy and Cybersecurity Practice Group.  Anna is a qualified Portuguese lawyer, but is both a native Portuguese and German speaker.  Anna advises companies on European data protection law and helps clients coordinate…

Anna Sophia Oberschelp de Meneses is an associate in the Data Privacy and Cybersecurity Practice Group.  Anna is a qualified Portuguese lawyer, but is both a native Portuguese and German speaker.  Anna advises companies on European data protection law and helps clients coordinate international data protection law projects.  She has obtained a certificate for “corporate data protection officer” by the German Association for Data Protection and Data Security (“Gesellschaft für Datenschutz und Datensicherheit e.V.”). She is also Certified Information Privacy Professional Europe (CIPPE/EU) by the International Association of Privacy Professionals (IAPP).  Anna also advises companies in the field of EU consumer law and has been closely tracking the developments in this area.  Her extensive language skills allow her to monitor developments and help clients tackle EU Data Privacy, Cybersecurity and Consumer Law issues in various EU and ROW jurisdictions.