German Federal Court of Justice confirms lawful handling of customer data by PAYBACK loyalty programme

Legal action by the vzbv consumer protection organisation dismissed on all three counts

  • Legal action by the vzbv consumer protection organisation dismissed on all three counts
  • Declaration of consent to data usage, request for date of birth and communication of information on goods permissible
  • Customers declaration of consent to electronic mail (sms and email) needs to be changed

The German Federal Court of Justice (Bundesgerichtshof) today dismissed the legal action by the Federation of German Consumer Organisations (vzbv - Verbraucherzentrale Bundesverband e.V.) against PAYBACK on all three counts. The legal action related to the validity of three clauses in the registration form of Germany's largest loyalty programme. PAYBACK only has to change the format of the consent to electronic mail. "We are delighted that the highest court has today upheld our legal opinion on all three counts and has therefore confirmed that PAYBACK has handled its customers' data flawlessly," said Claus-Peter Schrack, spokesman for Loyalty Partner GmbH, the company that operates the PAYBACK programme.

"Independently of the outcome of the proceedings, we shall continue our constructive dialogue with consumer and data protection organisations aimed at gearing our programme even more closely to the wishes of our customers", he added.

The court ruled on the way in which a customer is to give his consent to the use of his data for market research and advertising. The consumer protection organisation called for active consent by the customer, known as opt-in. PAYBACK uses a common international process, whereby the customer consents to the use of his data with his signature (Opt-in) and he can explicitly deny the use of his data by crossing the option (Opt-out). The court agreed that this type of consent is acceptable and safeguards the interests of the customer with regard to both transparency and comprehensibility.

With regard to electronic post only, this type of consent can not be used. “The court unfortunately did not agree with our argument, that giving explicit details of mobile number and email address for these additional services represents a clear opt in.” added Schrack.

On the second point, the Federal Court of Justice also agreed with PAYBACK's argument and declared the request for the complete date of birth in the registration form to be lawful. On the third point in dispute, the court confirmed that PAYBACK partners are entitled to supply PAYBACK with information on goods and services, since this is necessary to ensure that the points are accurately credited to the customer accounts.