Banking Board of Ecuador

RESOLUTION No. JB-2015-3502

THE BANKING BOARD

CONSIDERING:

THAT by Resolution No. JB-2015-3372 of April 22, 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 administrative act contained in letter No. IRG-DAYEU-V-R-2014-775 of July 14, 2014, which ratifies letter No. IRG-DAYEU-V-R-2014-393 of May 9, 2014, through which the Regional Intendancy of Guayaquil ordered Banco Pichincha C.A. to refund Mrs. Mónica Evelyn Sánchez Zalamea the amount of USD $80.50, fundamentally for the following considerations:

"(...)

THAT this appeal is resolved in accordance with the First Transitional Provision of the Organic Monetary and Financial Code, published in the Official Register Second Supplement No. 332 of September 12, 2014, whose text states that resolutions recorded in the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, and norms issued by control bodies, will remain in force insofar as they do not oppose what is provided in the Organic Monetary and Financial Code, until the Monetary and Financial Policy and Regulation Board resolves what corresponds, according to the case; and with the second paragraph of the Third Transitional Provision, which states 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 the same, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT through the "Free Complaint Form for Users of Entities Controlled by the Superintendence of Banks and Insurance" of October 22, 2013, Mrs. Mónica Evelyn Sánchez Zalamea brought to the attention of this control body that a value of USD $80.50 had been stolen from her savings account No. 6358200500, which she maintains at Banco Pichincha C.A., via withdrawal at automated teller machines (ATMs);

THAT by letter No. DAYEU-ISFP-REQ-2013-1456 of November 14, 2013, the Director of User Attention and Education of the Regional Intendancy of Guayaquil, admitted the complaint mentioned in the preceding paragraph for processing, requested the aforementioned financial institution to provide substantiated and documented information with respective physical backups regarding the aforementioned complaint, and informed the complainant about the matter;

THAT through letter No. BP-ACEC-2013-0974 of December 3, 2013, received by the Regional Intendancy of Guayaquil on the same day, month, and year, Mrs. Glenda Icaza Aguirre, authorized signatory of Banco Pichincha C.A., responded to the control body's letter, attaching several documents related to the complaint;

THAT by letter No. IRG-DAYEU-V-R-2014-393 of May 9, 2014, the Regional Intendant of Guayaquil, resolved the complaint in question, in the following terms:

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"(...)

As a result of this operation, the client delivers money to a financial institution, with the option to withdraw it, in part or in total, at the time it is required, while the depositary entity assumes the obligation to keep or safeguard the deposited values and satisfactorily attend to all withdrawal operations requested by the holder, with diligence and professional care.

c) The withdrawal challenged by the complainant, carried out through an ATM, charged to savings account No. 12180058180, is within the limits authorized by the financial institution, that is, US$ 500.00.

d) As observed from the movements of savings account No. 6358200500 sent by the entity, the existing balance before carrying out the transaction was US$ 82.93 and after them, a available amount of US$ 2.43 is reflected, which, after five inquiries, was reduced to US$ 0.08.

e) It is impossible to establish whether the withdrawal of the amount of US$ 80.50 was indeed dispensed to the user, since the security camera video of the moment the transaction was made was not sent. Although Banco Pichincha C.A. claims to have requested it from the institution owning the ATM where the withdrawal was made, it did not attach proof of this, which demonstrates the management it claims to have carried out.

In merit of the above (...), this Office resolves:

1. ACCEPT the complaint filed by Mrs. Mónica Evelyn Sánchez Zalamea, with citizen ID No. 0925963860, against the controlled financial institution BANCO PICHINCHA C.A. for the reasons indicated in the sixth consideration of this letter.

2. ORDER the controlled financial institution BANCO PICHINCHA C.A. to proceed to restore to Mrs. Mónica Evelyn Sánchez Zalamea the sum of US$ 80.50 (EIGHTY 50/100 DOLLARS OF THE UNITED STATES OF AMERICA), debited from her savings account No. 6358200500, and send to this Office, within a term of eight days, counted from the receipt of this letter, the documentation that accredits the compliance with this resolution.

(...)" (sic);

THAT through communication received at the Regional Intendancy of Guayaquil on June 3, 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-2014-393 of May 9, 2014, which was rejected by letter No. IRG-DAYEU-V-R-2014-775 of July 14, 2014, in which the Regional Intendancy of Guayaquil ratified the appealed administrative act;

THAT through a document received at the Superintendence of Banks on July 28, 2014, Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo, and the lawyer María José Araujo Álvarez, filed a review appeal against letter No. IRG-DAYEU-V-R-2014-775 of July 14, 2014;

THAT the arguments raised by the appellant are limited to the following:

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• That the withdrawal subject of the complaint was made at an ATM that does not belong to Banco Pichincha C.A., therefore the verification of the withdrawal was requested from Banco Bolivariano, so it is important to indicate that by confirmation from said financial institution, it was informed that the ATM successfully dispensed the money, so this constitutes irrefutable proof that the withdrawal was carried out correctly, for which reason the refund of the claimed value should not have been ordered;

• That it is important to mention that because the ATM where the transaction subject of the complaint was made corresponds to Banco Bolivariano, it proceeded to request that said institution send the corresponding video; however, they indicated that the videos would only be delivered when the control body addressed them directly with such information request;

• That in the clear impossibility of sending the requested video, this is not an argument for instructing the refund of values, so the foregoing does not weaken the client's responsibility regarding the use of ATMs and the transactions that can be carried out through them;

• That the control body has not determined that the bank must introduce any corrective measures to regularize the situation that motivated the client's complaint, so no incorrect procedures regarding withdrawals through ATMs that may have caused harm to the complainant have been evidenced, for which reason the return of values should not be ordered.

THAT by letter No. JB-2014-2070 of August 4, 2014, the Secretary of the Banking Board accepted the aforementioned review appeal for processing;

THAT Article 52 of the Constitution of the Republic establishes that people have the right to dispose of goods and services of optimal quality and to choose them freely, as well as to precise and non-misleading information about their content and characteristics, for which the law will establish quality control mechanisms and procedures for the defense of consumers, and sanctions for the violation of these rights, in addition to contemplating repair and indemnification for deficiencies, damages, or poor quality of goods and services;

THAT Article 1 of the General Law of Institutions of the Financial System, in force at the date of presentation of the appeal, determined that the Superintendence of Banks was the entity in charge of supervising and controlling the financial system, in all matters regarding the protection of public interests, as well as ensuring the stability, solidity, and correct functioning of institutions subject to its control; monitoring that they comply with the legal norms that govern them; and at the same time, requiring that said institutions present and adopt the corresponding corrective measures when necessary;

THAT paragraph 4 of Article 4 of the Organic Law for Consumer Defense determines:

"Art. 4.- Consumer Rights.- Consumer rights, in addition to those established in the Constitution of the Republic, international treaties or conventions, internal legislation, general principles of law, and commercial custom, are the following:

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(...)

4. Right to adequate, truthful, clear, timely, and complete information about the goods and services offered in the market, as well as their prices, characteristics, quality, contracting conditions, and other relevant aspects of them, including the risks they may present";

THAT from the aforementioned transcribed norm, it is inferred that financial institutions, when offering their financial products to their clients, are obligated to put at their service policies for disseminating the conditions surrounding said products, including the security measures implemented and their possible risks when accessing said services through electronic channels other than their own;

THAT from the documentation that forms part of the file formed around this review appeal, and from the administrative acts issued by the Regional Intendancy of Guayaquil, it is appreciated that the disputed transaction was carried out on October 3, 2013, at an ATM of Banco Bolivariano C.A. located at Farmacia Victoria del Guasmo Sur, in the city of Guayaquil, for a value of US $ 80.50, and that said banking entity did not provide the videos where the images of the withdrawal made are recorded;

THAT it is necessary to mention that, when the bank receives resources from the public, it has the obligation to safeguard the funds delivered to its custody, in order to return to the depositor the monetary equivalent deposited at the moment it is requested, from which it follows that the client's responsibility for the transactions they carry out through ATMs must be surrounded in parallel with physical and computer security measures;

THAT Banco Pichincha C.A. agreed with the client to use ATMs of other financial institutions, which were equipped with an interconnection system between themselves, such as "BANRED", or other electronic channels to return the funds entrusted to its custody, therefore, said bank had to evaluate and require that the ATMs enabled to dispense money from the ATM cards of its savings or current accounts issued to its clients, have the respective security measures in order to be able to comply with its obligations as depositary of the monies that its users have entrusted to it;

THAT among the controls and security measures that Banco Pichincha C.A. must take into account when offering services through electronic channels, is the issuing of timely alerts to avoid the possible commission of cybercrimes, therefore, financial institutions are obligated to put at the service of users policies for disseminating the conditions surrounding their use, including the security measures implemented and their possible risks when accessing said services, in this sense, the aforementioned bank cannot disclaim its responsibility for the integral control that minimizes the risk of exposure of its clients, nor the co-responsibility in the service offered by companies associated with the interbank payment network "BANRED";

THAT regarding the argument in which the bank mentions that in the clear impossibility of sending the requested video, and that this is not an argument for instructing the refund of values, it must be pointed out that the file does not contain a document evidencing that the appellant financial institution had requested the ATM video from Banco Bolivariano C.A.;

THAT Article 5, Chapter IV "Procedure for the attention of complaints against

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financial system institutions", Title XX "Of the Superintendence of Banks and Insurance", Book I "General Norms for the application of the General Law of Institutions of the Financial System", of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, states:

"ARTICLE 5.- If the result of the analysis carried out by the Superintendence 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 has the delegation of said authority, will issue the corresponding disposition.

If the situation that motivated the complaint referred to in the previous paragraph originated in an incorrect procedure of the controlled institution, which caused harm to the complainant, the Superintendence of Banks and Insurance may order the return of the claimed values, in exercise of the functions and attributions contemplated in letters b) and o) of Article 180 of the General Law of Institutions of the Financial System, granting the legal representative of the entity a term that may not exceed fifteen (15) days from the notification to send, under the legal warnings, the record of compliance with the order issued.

For complaints of unauthorized withdrawals due to evidence of attempts or frauds produced in ATMs, the Superintendence of Banks and Insurance will order the return of the claimed values to the institution issuing the credit card or where the client maintains their account, if said withdrawals originated in 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 from the legal norms transcribed in the previous paragraphs, it is inferred that the State guarantees citizens the right to dispose of goods and services of optimal quality and that the Superintendence of Banks, as the competent authority, has the function and attribution to ensure the stability, solidity, and correct functioning of institutions subject to its control; monitor that they comply with the norms that govern them; and, require that said institutions present and adopt the corresponding corrective measures when necessary, likewise, if the control body determines incorrect procedures on the part of the controlled financial institutions, which caused harm to a complainant, it must act as ordered for those effects;

THAT it is evident that Banco Pichincha C.A. is subject to Article 5 of Chapter IV "Procedure for the attention of complaints against financial system institutions", Title XX "Of the Superintendence of Banks and Insurance", Book I "General Norms for the application of the General Law of Institutions of the Financial System" of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, since the situation that motivated the complaint originated in an incorrect procedure, by not monitoring client funds and providing the respective security measures through the ATMs made available to its service, without the bank having evidenced the client's responsibility in said transaction;

THAT through communication of May 27, 2015, received by the Superintendence of Banks on the 28th of the same month and year, Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo, filed a motion for reconsideration against the

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administrative act contained in Resolution No. JB-2015-3372 of April 22, 2015;

THAT the Banking Board, in the session held on June 24, 2015, as established in the second paragraph of Article 3, Chapter II, Title XVI, Book I of the Codification of Resolutions of the Superintendence 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 thereof, that is, that there are no new elements of fact or law that motivate the preparation of corresponding reports, so it decided to deny it outright; and,

IN exercise of its legal attributions,

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-2015-3372 of April 22, 2015; and, consequently, CONFIRM said resolution.

NOTIFY.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on the twenty-fourth of June of two thousand fifteen.

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

I CERTIFY.- Quito, Metropolitan District, on the twenty-fourth of June of two thousand fifteen.

Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD