Debt Recovery: Inaccurate Information About a Debtor Can Be Costly

Imagine the scene: you are a shopkeeper in Falaise, Calvados. One morning, you receive a letter from a colleague refusing to deliver goods, claiming you are 'blacklisted' as a bad payer. Yet you have only one outstanding debt, which you are seriously disputing. What happened? A commercial information company included on a list circulated to its subscribers that you were subject to multiple payment orders, when there was only one. Result: your reputation is tarnished, your business relations compromised.

This situation, experienced by a shopkeeper in Strasbourg in the 1970s, gave rise to a judgment of the Court of Cassation on 7 February 1977 (No. 75-13.463) which remains authoritative today. The question is simple: can a debt recovery company disseminate inaccurate information about a debtor without bearing the consequences? The answer, unsurprisingly, is no.

In this article, I analyse this landmark decision. You will discover why a simple error in mentioning payment orders led to the information company being ordered to pay damages. And above all, what this means for you, whether you are a landlord, tenant, property professional, or an individual faced with a debt recovery procedure.

The Facts: A Story That Happens Every Day

Let us return to the case. A shopkeeper – let us call him Mr Dupont – owed a debt to a company. That company entrusted the recovery of the debt to a company specialising in commercial information. The latter, in the course of its business, drew up a list of debtors 'subject to payment orders', circulated to its subscribers (other traders, suppliers, etc.).

The problem? The list indicated that Mr Dupont was subject to several payment orders, when there was only one. Furthermore, he was seriously disputing the debt: he considered that he did not owe this sum, and the matter had not yet been decided by a court. By disseminating inaccurate and premature information, the information company caused damage to Mr Dupont: loss of credibility, difficulties in obtaining supplies, harm to his commercial reputation.

Mr Dupont therefore sued the company before the Tribunal de Grande Instance of Strasbourg, seeking damages. The court granted his claim, ordering the company to pay him damages. The company appealed to the Court of Cassation. However, the Court of Cassation dismissed its appeal, upholding the decision of the lower courts.

The Reasoning of the Court – Analysed

The Court of Cassation relied on Article 1382 of the Civil Code (now Article 1240) which provides: 'Any act of man, which causes damage to another, obliges the person by whose fault it occurred to make reparation.' In simple terms, if you commit a fault and someone suffers harm as a result, you must compensate them.

In this case, the fault was twofold. First, the company mentioned 'recovery orders' in the plural, when there was only one. This is a material inaccuracy. Second, and this is the essential point, the debt was the subject of serious disputes that had not yet been adjudicated. Disseminating negative information about a debtor before the dispute has been resolved is imprudent: the company should have verified the validity of the debt or, at the very least, mentioned that it was disputed.

The judges therefore found fault on the part of the company. The Court of Cassation upheld this reasoning, holding that the lower courts could, without error, order the company to pay damages. This decision illustrates a fundamental principle: debt recovery and commercial information companies have a duty of prudence and accuracy. They cannot simply transmit raw information, especially when it is likely to harm a person's reputation.

Note that this decision does not create new case law but confirms a classic application of the law of civil liability. It could have been decided the same way today, especially given the development of credit files and commercial databases, which makes this type of dispute more frequent.

What This Means for You – Practically

Whether you are a landlord, tenant, buyer, or professional, this decision has practical implications.

If you are a landlord: you sometimes entrust the recovery of unpaid rent to a specialised company. Ensure that it does not disseminate inaccurate information about your tenant to credit agencies. If it does, you could be held jointly liable? No, but you may be exposed to a claim by the tenant. Example: a tenant in Vire disputes rent arrears of €2,000. You entrust recovery to a company that reports him as a bad payer. If the tenant proves the debt was disputed and the information was inaccurate, he can obtain damages, and you could be called upon to indemnify.

If you are a tenant: you may be listed in a bad payer file (such as the FICP of the Banque de France, or a private file). If the information is wrong, you can demand its rectification and claim damages. The 1977 decision gives you a strong argument: the mere dissemination of inaccurate information constitutes a fault.

If you are a property professional: estate agents, property managers, syndics… you sometimes use information services to check the solvency of prospective tenants. Ensure that this information is up to date and accurate. Do not rely blindly on a database: if it contains an error and you use it to reject an application, you could be sued for discrimination or moral damage.

In practice, the amounts awarded in such cases vary. In the 1977 decision, the Strasbourg court awarded a modest sum (a few thousand francs). Today, with the rise of digital files and the impact on reputation, damages can reach several thousand euros, or even more if the harm is significant (loss of a contract, inability to obtain a loan, etc.).

Four Tips to Avoid This Type of Dispute

• Always verify the accuracy of information before transmitting it: whether you are a creditor or a recovery company, do not disseminate negative data without verifying its truth. A simple review can avoid an inaccuracy (changing 'several' to 'one' order).
• Only report a debt if it is certain, liquid, and due: if the debtor disputes, wait for the court decision. Always mention the disputed nature of the debt if it is subject to ongoing litigation.
• Respect limitation periods and formal notice procedures: before registering a debtor in a file, ensure that all amicable steps have been taken and that the debtor has been informed beforehand.
• Contractualise your duty of care obligations with service providers: if you entrust recovery to a third party, require a guarantee clause in case of error on its part. This will allow you to seek recourse against it if you are held jointly liable.

Further Reading: Related Case Law and Developments

This decision is part of a consistent line: the Court of Cassation has always sanctioned inaccurate information disseminated by third parties. Thus, in a judgment of 10 January 1995 (No. 92-20.822), it ordered a recovery company to pay damages for sending a debtor a formal notice for an incorrect amount. More recently, with the development of big data and scoring algorithms, the issue of data accuracy has become crucial. The CNIL (National Commission for Information Technology and Civil Liberties) regularly reminds that commercial files must respect the principles of fairness and accuracy.

The trend is therefore towards increased liability for information companies. Courts do not hesitate to award substantial damages when moral or economic harm is demonstrated. For landlords and property professionals, this means extra vigilance in choosing your recovery service providers.

What You Absolutely Must Remember

FAQ:

• Can I be listed on a bad payer file for a disputed debt? No, if the debt is seriously disputed and not yet adjudicated, the listing is abusive. You can demand removal and damages.
• What are my remedies if inaccurate information has been disseminated about me? You can bring a civil action before the judicial court (tribunal judiciaire) to obtain compensation. Remember to keep all evidence (letters, file extracts).
• What is the time limit to act? The civil liability claim is subject to a 5-year limitation period from the discovery of the harm (Article 2224 of the Civil Code).
• Can a landlord be held liable for errors of his recovery service provider? Yes, if the service provider is considered his agent. It is better to choose a reliable professional and check their practices.
• Does this decision apply to banking files like the FICP? Indirectly, yes. The principle is the same: any inaccurate information gives rise to liability. Banks and financial institutions are subject to strict obligations to update data.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings – and often much more. Book an appointment →