“Compliant Debtors” law is sanctioned by brazilian president Jair Bolsonaro

The Brazilian President, Jair Bolsonaro, sanctioned Law 166/2019 on April 08, which modifies the country’s credit scoring system. The new rules will come into force on July 9, 2019.

The credit scoring system exists since 2011, but consumer adherence was voluntary until now. According to the sanctioned Law, the Brazilian credit scoring system will change from an opt-in to an opt-out format. Therefore, the inclusion of consumers in the list, which used to be made upon their request, will now be made automatically, and the consumer will have to request its exclusion from the list if he does not want to appear in it anymore.

According to the new rules, each Brazilian citizen will have a credit note (score), which will take into account the payment of their bills, such as bank loans, credit cards and public services such as water, electricity, telephone and gas supply. However, information such as bank balances and bank statement details, as well as details of their credit card bill will remain confidential and will not appear in the credit scoring system.

With the new law, the expectation is that the database, that currently contains data for approximately 6 million customers, will receive information from more than 110 million people.

In addition, competition in the supply of credit is expected to increase. Currently, many institutions do not offer credit at competitive costs because they do not have access to customers scores. However, this scenario will change with the new Brazilian credit scoring system.

It is important to point out that, although the new rule waives the need of express consent of the consumer, the creation of a credit history must be previously and clearly informed to the consumer in a 30-day period. The credit bureaus must also make available, upon request, a summary of consumer rights, such as the right of access, of data rectification, of cancellation or exclusion, to object the processing, of information and explanation regarding the use of data and to review automated decisions.

Moreover, it is still forbidden the use of sensitive data (such as data revealing racial or ethnic origin, religious belief, political opinions, health or sexual orientation, genetic or biometric data) and exceeding information (information that is not related to the consumer’s credit risk).

In case of any doubts about this subject, please do not hesitate to contact us.

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