Banking Board of Ecuador

RESOLUTION No. JB-2015-3505

THE BANKING BOARD

CONSIDERING:

THAT by Resolution No. JB-2015-3375 of April 22, 2015, the Banking Board resolved: "REJECT the claim contained in the review appeal filed by Mr. Simón Acosta Espinosa, Vice President of Banco Pichincha C.A.; and, consequently CONFIRM the letter No. DNAE-SAU-2014-05179 of August 18, 2014, which ratified the letter No. DNAE-SAU-2014-03559 of June 9, 2014, through which the User Attention Subdirectorate partially accepted the claimant's request, resolving to order BANCO PICHINCHA C.A. that "(...) within seventy-two (72) hours, (...) effect the partial refund of the values claimed by your client, which correspond to the purchases made at the commercial establishments: 'Creaciones Yoli' and 'La Cigarra' on December 14 and 15, 2013, respectively. The value to be credited to the claimant, Mr. Fausto Amilcar Acosta Arellano, is USD $1,998.40 (...)"; 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 contained in the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, and the norms issued by the 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 claims, appeals, and other administrative procedures that it was hearing as of 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 on April 7, 2014, Mr. FAUSTO AMILCAR ACOSTA ARELLANO, filed a complaint before this control body against BANCO PICHINCHA C.A., through which he requested that the aforementioned banking institution be ordered to return unrecognized values debited from his checking account No. 3050191504 in the amount of USD $3,319.65, basing his complaint on the fact that:

• "On Friday, December 13, 2013, at 8:00 p.m. (sic), I withdrew 100.00 USD from the Banco Pichincha ATM of the Villaflores agency, without realizing that I was being followed by some criminals. After this, I drove to my workplace, Pasteurized Quito. On Av. Napo in front of the eco-way stop (sic), this is where I am intercepted in a vehicle by two supposed agents who show me a police ID and ask for documents, claiming that a vehicle similar to mine was stolen from the daughter of a Colonel, to which, due to pressure, I agreed to hand over my wallet and one of the supposed agents went with them to the vehicle parked behind mine, which I

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could not observe the review of the same, subsequently they return them to me and leave the place.";

• "On Monday, December 16 (sic), I am contacted by phone by the bank to notify me that strange withdrawals and purchases have been made with my card and immediately the card is blocked (...)";

THAT by letter No. DNAE-SAU-2014-02477 of April 22, 2014, the bank was requested to present the pertinent explanations and defenses; requirement attended through letters No. AUD-C-R-063-2014 and No. BP-ACEC-2014-0439, received by this control body on May 12 and 14, 2014, in which it states the following:

"Once the corresponding verifications were made in our ATM files, it was established that the transactions that are the subject of the complaint were carried out in checking account No. 3050191504 with debit card No. 4381081079318508 issued in the name of Mr. FAUSTO AMILCAR ACOSTA ARELLANO, holder of the aforementioned account (...)

The card was blocked on 15/12/2013 at 06:12:26, that is, when the transactions had already been carried out (...)

The debit card and personal key generated by Mr. FAUSTO AMILCAR ACOSTA ARELLANO constitute the only mechanism to access ATM services and Xperta debit payments at different commercial establishments, so the strict custody and care taken with the card, as well as keeping the personal key secret, are specific responsibilities of the client. It is important to indicate that Banco Pichincha is technologically prevented from knowing the client's key. (...)

c. The transaction that is the subject of the complaint was carried out at an ATM registered as non-exposed. (...)";

THAT by letter No. DNAE-SAU-2014-03559 of June 9, 2014, the User Attention Subdirectorate partially accepted the claimant's request, resolving to order BANCO PICHINCHA C.A. that "(...) within seventy-two (72) hours, (...) effect the partial refund of the values claimed by your client, which correspond to the purchases made at the commercial establishments: 'Creaciones Yoli' and 'La Cigarra' on December 14 and 15, 2013, respectively. The value to be credited to the claimant, Mr. Fausto Amilcar Acosta Arellano, is USD $1,998.40 (...)"; a letter to which, through communication received by this control body on June 17, 2014, BANCO PICHINCHA C.A. filed an appeal for reconsideration, which through letter No. DNAE-SAU-2014-05179 of August 18, 2014, was rejected;

THAT by writing entered into the Superintendency on August 29, 2014, Mr. Simón Acosta Espinosa, Vice President of Banco Pichincha C.A., with the professional sponsorship of lawyer María José Araujo Álvarez, filed an appeal for review before the Banking Board against the administrative act contained in letter No. DNAE-SAU-2014-05179 of August 18, 2014, which was accepted for processing by Lic. Pablo Cobo Luna, Secretary of the Banking Board, through letter No. JB-2014-2374 of September 4, 2014; and in which it argues:

• That "(...) the case we are dealing with is subject to ordinary justice, we respectfully insist that the Control Body abstain from hearing it."

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• That "(...) taking into account that the client's personal key has the character of secret and non-transferable, that is, that the key should only be known and handled by its holder, who is the sole custodian of the debit card, and that said key and debit card constitute the only mechanism to access payment services via debit at different commercial establishments, it is clear that the Institution has no responsibility regarding the transactions subject to complaint."; and,

• Requests "(...) that the Control Body hold responsible whoever corresponds for the events that occurred. We regret that a respectable client has been the object of a criminal act; however (sic) it is not viable, fair, nor legal that the Bank should respond for events caused by third parties, over which it has no influence.";

THAT article 2 of chapter XII "Norms for the issuance of debit and ATM cards", title VI "Of operations", book I "General norms for Institutions of the Financial System", of the Codification of Resolutions of the Superintendency of Banks and the Banking Board, states that the debit card allows making transactions through ATMs charged to a checking or savings account of the client, likewise, it allows making payments at establishments charged to the card account; that is, that the debit card can be used for ATM withdrawals and as a means of payment at commercial institutions charged to a bank account; service coming from an issuer, instrumented in a contract containing rights and obligations;

THAT regarding the argument of the appellant determined in letter a, it must be indicated that according to article 215 of the Code of Criminal Procedure, the preliminary investigation constitutes a pre-procedural moment, consequently, the bank's argument is not appropriate in the sense that the Superintendency of Banks should abstain from hearing and resolving the case that is the subject of this appeal since it is subject to the knowledge and resolution of ordinary justice;

THAT paragraphs 15.1 and 15.2 of article 15, of chapter V "Constitution, Functioning and Operations of Issuing or Administering Credit Card Companies and Credit Card Departments of Financial Institutions", title I "Of the Constitution", book I "General Norms for Institutions of the Financial System", of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, establish:

ARTICLE 15.- Institutions authorized to issue or administer credit, payment, or affinity cards, must sign written contracts with affiliated establishments, in which at least the following clauses will be stipulated:

15.1 Obligation of the affiliated establishment to receive the card as a means of payment;

15.2 Obligation of the establishment to issue the charge slip and to verify that the signature and rubric signed by the cardholder is the same as that recorded on the back of the card and in the identification document, for which the establishment will require the presentation of the identification document and will note on the receipt the number of the citizen ID, identity, or passport;

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THAT the banking entity, based on the above, is obliged to subscribe contracts with affiliated establishments, in which it must be stated as an obligation of the commercial establishment to verify the identity of the cardholder and request the presentation of an identification document, to verify that the signature and rubric signed by the cardholder is the same as that recorded on the back of the card, a fact that should have occurred for the claimed transactions to be carried out, detailed below:

TRANSACTION DATE AND TIME	ACCOUNTING DATE	CONCEPT	MERCHANT	OPERATION NO.	AMOUNT
14/12/2013 14:31:41	16/12/2013	POS PURCHASE (ATM)	"Creaciones Yoli"	2989423	1,000.00
15/12/2013 00:40:45	16/12/2013	POS PURCHASE (ATM)	"La Cigarra"	4531882	998.40
				TOTAL	1,998.40

THAT from the review and analysis carried out on the documents that make up the file, it emerges that, with respect to the signatures on the vouchers backing the transactions carried out, they were not duly verified, as it is evident that there is a notable difference between the signature and rubric on the vouchers, compared to that registered at the bank and that on the citizen ID of Mr. Fausto Amilcar Acosta Arellano, holder of debit card No. 4381081079318508;

THAT in virtue thereof, the affiliated establishments "Creaciones Yoli" and "La Cigarra" failed to comply with what is established in paragraph 15.2 of article 15 cited above, which in order establishes the obligation of the affiliated establishment to verify the identity of the cardholder, confronting the signature appearing there with the signature stamped on the charge slip (voucher) at the time of the transaction; and that the signature and rubric signed by the cardholder is the same as that on the back of the card, in addition to requiring that the identification document noted on the receipt be the number of the identity card or passport of the cardholder, since it is observed in the photocopy of the charge slips, the only document backing the debt assumed with the financial institution issuing the credit card, the statement appears: "THE ESTABLISHMENT CERTIFIES THAT THE CLIENT'S SIGNATURE IS AUTHENTIC";

THAT based on the obligation of banking entities or authorized to subscribe affiliation contracts with establishments, it emerges that there is a clear contractual non-compliance by the bank and the establishment regarding the validation and verification of the cardholder's identity. It is pointed out that the financial institution in its defenses has not demonstrated the existence of the contract signed with the aforementioned commercial establishments, a contract that according to what is established in the Civil Code article 1561 constitutes law for the parties, and which among its clauses contemplates the mandatory action for the application of the "Safe Sale" procedure in which the procedures described above must be applied;

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THAT paragraph 12.2 of article 12, of chapter III "Code of rights of the user of the financial system", title XIV "Code of Transparency and User Rights", book I of the aforementioned Codification, states that the user has the right to have entities of the financial system proceed to "Reject and not pay products that have not been expressly requested by the user of the financial system...". Normative provision that Banco Pichincha C.A. failed to observe by accepting the vouchers that were not processed observing the applicable regulation;

THAT the transactions analyzed above, which are the subject of the complaint, are detailed below:

[Image 1: Voucher of "Creaciones Yoli"] [Image 2: Voucher of "La Cigarra"] [Image 3: Photocopy of citizen ID]

THAT article 3 of chapter I "Of integral management and risk control"; title X "Of risk management and administration" of the aforementioned Codification, refers to integral risk management as one of the responsibilities attributed to institutions that are part of the Financial System, by virtue of that, they must have formal integral risk management processes that allow identifying, measuring, controlling, mitigating, and monitoring the risk exposures they are assuming;

THAT it is necessary to clarify that the order to restitute the claimed values does not constitute a sanction, but the faculty derived from article 5, chapter IV "Procedure for the attention of complaints against institutions of the financial system", title XX "Of the Superintendency of Banks and Insurance", book I "General norms for Institutions of the Financial System", of the Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board;

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THAT for the above, it is evident that in the present case there was an incorrect procedure since the banking entity paid the vouchers, without observing the evident disagreement of signatures;";

THAT through communication of May 27, 2015, received by the Superintendency of Banks on the 28th of the same month and year, Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo and lawyer Andrea E. García D., filed an appeal for reconsideration against the administrative act contained in resolution No. JB-2015-3375 of April 22, 2015;

THAT the Banking Board, in the session held on June 24, 2015, in accordance with 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 thereof, that is, that there are no new elements of fact or law that motivate the elaboration of corresponding reports, therefore it decided to deny it outright; and,

IN exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- DENY the appeal for reconsideration filed by Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A., against the administrative act contained in resolution No. JB-2015-3375 of April 22, 2015; and, consequently, CONFIRM said resolution.

NOTIFY.- Given at the Superintendency 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.

Lic. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD