Definition and significance of collection authorization
Die Collection authorization is a term from German civil and debt law. It describes a legal relationship in which the holder of a claim (creditor) grants another person (third party) the authority to collect a specific claim in their own name, but for the account of the creditor. This legal institution is particularly relevant in connection with assignment (cession), account authorizations, trusts, and in the area of debt collection activities. The collection authorization is an instrument that serves claims management and the flexible structuring of economic processes.
Legal basis of the collection authorization
Statutory foundations
The collection authorization is not explicitly regulated in the German Civil Code (BGB), but is instead based on the general provisions of the law of obligations and the regulations governing representation (§§ 164 et seq. BGB). It constitutes a contractual mandate or service contract (§§ 662 et seq. BGB) with specific adaptations regarding collection authority.
Distinction from assignment and power of attorney
Collection authorization vs. assignment
While in the case of assignment (§ 398 BGB) the claim with all rights and obligations is transferred to the assignee, in the case of a collection authorization the creditor remains the holder of the claim. The authorized person is merely entitled to collect the claim in their own name but for the account of the creditor.
Collection authorization vs. collection power of attorney
Die Collection power of attorney provides the authorized representative (e.g. collection service provider) with the legal capacity to act in the name of the creditor. In the case of a collection authorization, however, the authorized person acts in their own name. This distinction particularly affects judicial enforcement and legitimacy in dunning proceedings.
Practical areas of application
Banking law and direct debit procedure
One of the best-known applications is the direct debit collection procedure in German banking. The direct debit collection (today: SEPA Core Direct Debit) allowed the payee, with the consent of the account holder, to collect amounts from the payer’s account. Although the procedure was reformed with the introduction of SEPA, the legal concept remains relevant.
Debt collection activities
In the debt collection sector, a creditor authorizes a third party to collect an outstanding claim in their own name. Especially collection agencies use the collection authorization within the framework of service contracts—for example, for managing and collecting receivables for various clients.
Trust relationships
The collection authorization is also used in the context of trust relationships. The trustee is instructed to collect claims and to forward or manage them according to specific instructions.
Legal effects and consequences
Authority of representation and legitimacy
The authorized person does not acquire legal ownership of the claim, but only a power of representation limited to collection. The authority expires upon fulfillment of the mandate, revocation, death of the creditor or the authorized person, or at the end of the underlying legal relationship.
Pursuit of claims and legal proceedings
The authorized person may assert the claim in their own name in court (“authorized person with right of action”). However, after collection, the collected amount must be forwarded to the creditor. In the case of payment handling, payment to the authorized person releases the debtor from the obligation in accordance with § 362 (2) BGB.
Liability issues
If the authorized person is responsible for damage in the context of the collection authorization, they are liable to the principal under the provisions of mandate law (§§ 280 et seq., 662 et seq. BGB). Liability towards the debtor also exists, especially if collection is made improperly or despite the expiry of authorization.
Termination of the collection authorization
The collection authorization may be revoked at any time by the creditor unless irrevocability has been agreed upon by supplementary contractual agreement. It also ends upon fulfillment of the claim, its extinction, or in the event of insolvency of the creditor or authorized person, provided that insolvency proceedings affect the underlying legal relationship.
Collection authorization in an international context
Comparable legal concepts exist outside Germany, such as in Austrian and Swiss law, although the details may differ. In particular, the basic idea of collection authorization is found in European payment transactions (SEPA), now adapted to EU law requirements.
Conclusion
Collection authorization is an important legal instrument for flexible claim enforcement. It allows creditors to commission third parties to collect claims in their own name without transferring the claim itself. Its legal framework is defined by general contract and representation law provisions. In practice, it plays a key role especially in banking and debt collection as well as in various trust relationships. Careful drafting and knowledge of the legal requirements and consequences are essential for proper execution and for the protection of all parties’ rights.
Frequently asked questions
What are the formal requirements for granting a collection authorization?
There are generally no statutory formal requirements for the collection authorization. It may be granted orally or in writing. In practice—especially in mass payment transactions—collection authorizations are regularly granted in writing or in text form (e.g. by email or online form) for evidentiary reasons. According to the provisions of the German Civil Code (§ 675f BGB), however, information obligations and certain minimum details must be observed for payment services, particularly for SEPA direct debits. In specific situations—such as consumer protection or distance selling—additional information obligations may apply. Banks and payment service providers regularly require written consent for liability reasons in order to demonstrate the legitimacy of the collection in case of dispute.
Can a collection authorization, once granted, be revoked, and what are the legal consequences of such revocation?
A collection authorization can be revoked at any time by the debtor with future effect. Such revocation generally does not affect direct debits that have already been executed, unless a loss arises due to a late credit. Once the revocation is received by the payee or the bank, the authorization for collection ceases, so that amounts collected after that time are considered unauthorized. If the account is debited despite a valid revocation, the account holder has a right to reversal (refund), and the payee may be liable for damages. For SEPA direct debits, the German Payment Services Supervision Act (ZAG) specifies special rights of return.
What rights does the account holder have in the event of unauthorized collection?
If a collection is made without a valid authorization (e.g. after revocation or without a mandate), the account holder can request reversal (cancellation) of the booking from their institution. In cashless payment transactions, this is regulated by the so-called return procedure within the statutory time limits (for SEPA direct debits, generally eight weeks, for unauthorized debits even up to 13 months from the debit date). Within this period, the debit can be reversed without giving reasons, provided there was no valid authorization. In the case of restitution under enrichment law, the amount collected in error is refunded.
What obligations does the payee have when using collection authorization?
The payee is obliged to obtain effective consent from the debtor before collection. If the payee disregards this obligation and collects without a mandate, the result is an unauthorized account debit, which gives rise to civil law repayment claims and, if applicable, claims for damages. Furthermore, the payee must be able to prove authorization if a dispute arises over the legality of the debit. For SEPA direct debits, the payee is also obliged to inform the debtor of the upcoming collection in advance (pre-notification according to SEPA rules) to ensure legal certainty.
How does the death of the account holder affect the collection authorization?
Upon the death of the account holder, rights and obligations arising from the collection authorization are generally transferred to the heirs. The collection authorization therefore initially remains valid unless the heirs object or revoke it. However, banks and collecting parties are obliged, upon learning of the account holder’s death, to check whether the conditions for continued debiting of the account are met, particularly whether the heirs wish the collection authorization to remain in force. An express revocation by the heirs terminates the authorization with immediate effect.
What special significance does collection authorization have in the context of SEPA direct debits?
In the SEPA payments area, the traditional collection authorization has been replaced in its function by what is known as the SEPA direct debit mandate. This mandate is an essential prerequisite for the legitimacy of the direct debit. The SEPA mandate must include certain formal elements, in particular the name of the debtor, the creditor identifier, the mandate reference, and the account holder’s authorization for collection. Without a valid mandate, a SEPA direct debit is not legally effective, so the account holder has a comprehensive right of return. Additional arrangements apply to companies, including the so-called “B2B mandate,” which cannot be used by consumers.
What liability rules apply in the event of incorrect execution of the collection authorization?
If an error occurs in execution—such as lack of a mandate, delayed collection, incorrect amounts, or failure to comply with formal requirements—the payee is generally liable for any resulting damages. The bank is also liable if it generally fails in its duties, such as proper verification of the mandate. In cases of dispute, the account holder can claim compensation from both the payee and, under certain conditions, the bank. If the bank customer is negligent, contributory negligence under § 254 BGB may be considered. In cases of implicit or mistaken collections, claims for unjust enrichment under §§ 812 et seq. BGB may also arise.
