ANBC warns of the impact of the “clean name” industry on the Brazilian credit market
Misuse of the judicial system causes distortions in the credit market and increased costs for consumers
The National Association of Credit Bureaus (ANBC) is attentive to the negative effects of abusive litigation on the country's credit market. The inappropriate use of the Judiciary, through repetitive and procrastinatory actions, has generated distortions that affect both the supply of credit and the interest rates charged in Brazil, directly impacting consumers and financial institutions.
“One manifestation of abusive litigation is the “name clearing” industry, which directly interferes with the information system that underpins the credit decisions of thousands of institutions, both inside and outside the financial system. When there is an excess of illegitimate lawsuits, everyone suffers: from the plaintiff himself, who can fall into over-indebtedness, to other consumers, who face higher rates and less credit on offer,” says ANBC's executive president, Elias Sfeir.
The practice, which is often aimed at removing names from blacklists, has created a kind of “industry” that benefits the few to the detriment of the many. In addition, the growing volume of lawsuits overloads the judicial system, consuming time and public resources. Data from the National Council of Justice (CNJ) reveals that, in 2023 alone, Brazil registered 83.8 million pending lawsuits, and of this total it is possible to estimate that no less than 30% of the civil lawsuits in progress in the state courts involve abusive litigation.[AA1]
A study by the Central Bank of Brazil, carried out between 2013 and 2018, also illustrates the seriousness of the problem: an increase of 10% in the proportion of decisions favorable to debtors reduced the growth of new credit agreements by 23 percentage points. “This evidence reinforces the importance of legal certainty for a healthy credit market. Clear laws and less discretionary interpretation of disputes are essential to avoid distortions,” added Elias Sfeir.
Despite the challenges, Brazil has made progress in combating abusive litigation. Measures such as Recommendations No. 127 and 159 of the National Council of Justice (CNJ) have been fundamental in curbing excessive judicialization and promoting a more balanced environment. “We have a robust credit information system that is well evaluated internationally. The abusive and illegitimate litigation of the Clean Name industry is a threat to this vital mechanism, but the dialog between the Judiciary and the private sector has generated positive results,” said Sfeir.
The organization stresses that the availability of reliable credit information and compliance with contracts are essential pillars for economic and social development.
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