German Federal Court of Justice upholds mass claim collection (Sammelklage-Inkasso)

In a ground-breaking ruling of July 13, 2021, the German Federal Court of Justice (Bundesgerichtshof, BGH) upheld a mass debt collection model that is primarily directed at enforcing claims in court, instead of out-of-court (judgment of July 13, 2021, II ZR 84/20).

The BGH held that a debt collector who plans to go to court right away to enforce mass claims, acts within the boundaries of the collection permit under the German Legal Services Act (Rechtsdienstleistungsgesetz, RDG).

Noting that this issue has been highly debated in German jurisprudence, the BGH rejected the prevailing view to date among German first-instance courts and followed the more liberal stance. The BGH went on to clarify that the mass debt collection model (where hundreds or thousands of similar claims are bundled together and where the collector receives a share of the successfully enforced amount as remuneration) does not involve a forbidden conflict of interests. The BGH’s ruling is not only a victory for legal services providers (namely debt collectors), but moreover significantly strengthens the chances of enforcement for consumers or companies that would otherwise abstain from enforcing their rights altogether.

Congratulations to our lawyers in our German team, Alex Petrasincu and Christopher Unseld, whose article on the issue was quoted several times by the BGH.