Banking Board of Ecuador

RESOLUTION No. JB-2015-3365

THE BANKING BOARD

CONSIDERING:

THAT by Resolution No. JB-2015-3250 of February 4, 2015, the Banking Board resolved: "REJECT the claim contained in the review appeal filed by Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A.; and, consequently, CONFIRM the letter No. IRG-DAYEU-V-R-2014-306 of April 14, 2014, by which the lawyer Humberto Moya González, Regional Superintendent of Guayaquil, resolved to confirm the administrative act contained in letter No. IRG-DAYEU-V-R-2014-0131 of February 25, 2014, in which the Regional Superintendent of Guayaquil ordered Banco Pichincha C.A. to proceed to restore to Mr. Medardo Bienvenido García Macías the sum of USD $90.50 (ninety and 50/100 United States dollars), a value corresponding to the withdrawal challenged by the user debited from savings account No. 4979020100, which he holds in the aforementioned bank," fundamentally based on the following considerations:

"(...)

THAT the second paragraph of the Third Transitional Provision of the Organic Code of Monetary and Financial Law determines that the Banking Board will continue to act until it resolves all complaints, appeals, and other administrative procedures it was handling on the date of entry into force of that Code, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT on July 24, 2013, Mr. Medardo García Macías filed a complaint with the Regional Superintendent of Guayaquil against Banco Pichincha C.A., regarding the unauthorized withdrawal of USD $90.50 from his savings account No. 4979020100 on July 2, 2013;

THAT the Regional Superintendent of Guayaquil, through letter No. DAYEU-ISFP-REQ-2013-0914 of August 7, 2013, accepted the complaint for processing and requested explanations and defenses from Banco Pichincha C.A. regarding the aforementioned complaint;

THAT through letter No. BP-ACEC-2013-0765, received by this control body on August 26, 2013; Banco Pichincha C.A. presented the explanations and defenses related to the complaint of Mr. Medardo Bienvenido García Macías, stating that:

"(...)

Once the corresponding verifications were made in our files, it was established that the transaction subject of the complaint was carried out on savings account No. 4979020100 with debit card No. 4381082094945515 issued in the name of Mr. MEDARDO BIENVENIDO GARCÍA MACÍAS, holder of the aforementioned account. (...)

In relation to this event, confirmation of the ATM audit tape was requested from Bolivariano Bank, who indicated to us that according to their system, the transaction was reported as successful.

---

Resolution No. JB-2015-3365

Page 2

In relation to the documentation required in your letter No. DAYEU-ISFP-REQ-2013-914, we indicate the following:

The card was not reported as stolen or compromised; it is in an active state.

(...)

THAT by letter No. IRG-DAYEU-V-R-2014-0131 of February 25, 2014, the administrative resolution regarding the claim presented by Mr. Medardo Bienvenido García Macías was issued, where the Regional Superintendent of Guayaquil accepted the claimant's request, resolving to order Banco Pichincha C.A. to proceed to restore to him the sum of USD $90.50 (ninety and 50/100 United States dollars), corresponding to the withdrawal challenged by the user made on July 1, 2013, debited from his savings account No. 4979020100, which he holds in the aforementioned bank;

THAT through communication received at the Regional Superintendent of Guayaquil on March 13, 2014, the lawyer María Elena Franco San Lucas, Judicial Attorney of Banco Pichincha C.A., filed a motion for reconsideration against the administrative act contained in letter No. IRG-DAYEU-V-R-2014-0131 of February 25, 2014;

THAT through letter No. IRG-DAYEU-V-R-2014-306 of April 14, 2014, the Regional Superintendent of Guayaquil, after analyzing the arguments presented by the financial institution, resolved to reject the motion for reconsideration filed and ratified the administrative act contained in letter No. IRG-DAYEU-V-R-2014-0131 of February 25, 2014;

THAT through letter entered in this Superintendency on April 24, 2014, Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., filed a review appeal before the Banking Board against the administrative act contained in letter No. IRG-DAYEU-V-R-2014-306 of April 14, 2014;

THAT the review appeal was accepted for processing by Licentiate Pablo Cobo Luna, Secretary of the Banking Board, through letter No. JB-2014-1037 of April 30, 2014;

THAT Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., bases his review appeal on the following:

• That the control body must analyze the case, in light of determining whether the use of electronic channels by the client was done in the manner contractually agreed upon by the Bank and observing the required security parameters. The client's personal key has the character of secret and non-transferable, that is, the key should only be known and handled by its holder, who is the sole custodian of the debit card, and said key and debit card constitute the only mechanism to access ATM services.

• That the fact that Banco Pichincha C.A. did not submit videos from an ATM of another financial institution does not negate the client's responsibility regarding the use of ATMs and the transactions that can be carried out through them.

---

Resolution No. JB-2015-3365

Page 3

• That the videos could constitute an element of proof that would be part of the various ones that might have been presented in this case, which would only help to evidence what the bank has demonstrated unequivocally throughout the process. The lack of a video, however, cannot be cited as a cause for a resolution, because all the evidence presented by the bank and what it affirmed is being left out of consideration. There is a series of facts and acts that are valid and irrefutable evidence that the control body surprisingly has not taken into account.

• That the letter subject of the present challenge mentions that Banco Pichincha C.A. has not incurred in incorrect procedures that originated the complaint; and, in that sense, the Superintendency of Banks and Insurance also did not see it necessary in its analysis to expressly determine the introduction of any type of corrective measure, for which reason, under no point of view can it be said that it instructed the restitution of values.

• That the handling of the card and key is the exclusive responsibility of the client, and Banco Pichincha C.A. cannot be held responsible for the damage that might be caused to him for not properly safeguarding his debit card and personal key;

THAT the file does not show that Mr. Medardo Bienvenido García Macías compromised his debit card, which was issued by Banco Pichincha C.A., at any time;

THAT paragraph a) of Article 51 of the General Law of Institutions of the Financial System states that banks are authorized to receive public resources in demand deposits, which are banking obligations, comprising monetary deposits payable upon presentation of checks or other payment mechanisms and registration;

THAT the aforementioned regulation determines that Banco Pichincha C.A. assumes the obligation to keep or safeguard deposited values with diligence and professional care, and is also responsible for other services offered to its clients, such as the ATM service; therefore, it is obligated to evaluate and demand the necessary security measures as a depositary of the money its clients have entrusted to it;

THAT Article 3, Chapter I, Title X "On the management and administration of risks," Book I of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, states that:

"Article 3.- Financial system institutions have the responsibility to manage their risks, for which effect they must have formal processes of comprehensive risk management that allow them to identify, measure, control, mitigate, and monitor the risk exposures they are assuming";

THAT it is inferred that financial institutions have the responsibility to manage their risks with formal management processes that allow them to identify, measure, control, mitigate, and monitor the risk exposures they are assuming;

THAT the appellant did not submit the videos that would allow identifying who made the withdrawal, constituting a violation of every consumer's right to the security of the money entrusted to the banking entity;

---

Resolution No. JB-2015-3365

Page 4

THAT numeral 39.12 of Article 39, Section VIII "On security measures," Chapter I, Title II, Book I of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, refers specifically to video and security systems that financial institutions must have and that are applicable to ATMs;

THAT the third paragraph of Article 5 of Chapter IV, Title XX, Book I, of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, states the following:

"Article 5.- If the result of the analysis carried out by the Superintendency determines the need for the controlled institution to introduce corrective measures to regularize the situation that motivated the complaint, the Superintendent of Banks and Insurance or the official who holds the delegation of said authority will issue the corresponding order.

For complaints regarding unauthorized withdrawals due to evidence of attempts or frauds produced in ATMs, the Superintendency of Banks and Insurance will order the return of the claimed values to the issuing institution of the credit card or where the client holds his account, if said withdrawals originated from an incorrect procedure of the controlled institution, which may repeat against the institution owning or operating the ATM due to whose defects or lack of security measures the fraud occurred".

THAT in relation to the appellant's insistence that the handling of the card and key is the exclusive responsibility of the client and that therefore the Bank cannot be held responsible for the damage that his negligence might cause, it is necessary to state that the appellant has only dedicated himself to blaming the client but at no time is there evidence of correct conduct on the part of the bank that allows him to disprove the accusations, for which it is not appropriate to place the responsibility of the challenged transaction on the claimant, since it has not been demonstrated that the user failed to observe his obligations to safeguard the debit card and keep the key confidential;

THAT based on the above, it is concluded that the bank, when offering its products and services, must implement and promote the incorporation of computer and technological security measures, so that transactions carried out both in its own ATMs and in those of the BANRED network have the necessary security to prevent fraud, which in the analyzed case did not happen, in virtue of which what is required in Article 5, Chapter IV, Title XX, Book I of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, cited above, has been configured;

THAT through communication of February 25, 2015, Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., with the professional sponsorship of Doctor Pablo Cadena Merlo and lawyer María José Araujo Álvarez, filed a motion for reconsideration against the administrative act contained in Resolution No. JB-2015-3250 of February 4, 2015;

THAT the Banking Board, in the session held on April 15, 2015, as established in the second paragraph of Article 3, Chapter II, Title XVI, Book I of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, heard the appeal referred to in the preceding paragraph and determined that it does not comply with what is provided in the first paragraph ibidem, that is, that there are no new elements of fact or law that motivate the

---

Resolution No. JB-2015-3365

Page 5

preparation of corresponding reports, for which it decided to deny it outright; and,

IN exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- DENY the motion for reconsideration filed by Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., against the administrative act contained in Resolution No. JB-2015-3250 of February 4, 2015; and, consequently, CONFIRM said resolution.

NOTIFY.- Given in the Superintendency of Banks, in Quito, Metropolitan District, on the fifteenth of April of two thousand fifteen.

Econ. Rodrigo Landeta Parra GENERAL SUPERINTENDENT, S PRESIDENT OF THE BANKING BOARD, E

I CERTIFY.- Quito, Metropolitan District, on the fifteenth of April of two thousand fifteen.

Lic. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD