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.