Banking Board of Ecuador

RESOLUTION NO. JB-2015-3509

THE BANKING BOARD

CONSIDERING:

THAT by Resolution No. JB-2015-3396 of May 8, 2015, the Banking Board resolved: "(...) REJECT the claim contained in the administrative 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. IRC-2014-4252 of June 24, 2014, by which the Regional Intendancy of Cuenca ratified the administrative act contained in letter No. IRC-2014-2644 of April 22, 2014, in which it ordered the bank to "(...) return the value of seven hundred seventy (USD 770.00) to Mr. Edgar Rodrigo Morocho Tutillo, a value that was debited from his card in three payments, starting from June 2013; (...) (sic)." (...)", fundamentally for the following considerations:

"(...)

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

THAT by communication received at the Regional Intendancy of Cuenca of this Superintendency on July 18, 2013, Mr. Edgar Rodrigo Morocho Tutillo filed a complaint against Banco Pichincha C.A., related to a consumption of USD 770.00 debited from his credit card, stating:

'I was the victim of a robbery and, for this reason, my credit card No. (...) VISA OF BANCO PICHINCHA was stolen, which was communicated to the indicated Banking Institution (Banco del Pichincha), but it turns out that said Bank has made payments for the amount of seven hundred seventy US dollars, based on a "voucher" (sic) that is not signed by the complainant, a payment that has been received by Comercial González, as evidenced by the attached copies.(...) therefore I requested that the "Banco del Pichincha (...) be compelled and exhorted to (...) return the values that it has incorrectly charged and that I never authorized for payment..."(sic);

THAT the Regional Intendancy of Cuenca, with letter No. IRC-2013-3408 of August 7, 2013, ordered Banco Pichincha C.A. to attend to the complaint in question, send a response directly to Mr. Edgar Morocho Tutillo and a copy to said intendancy; a requirement that was attended to with letter BP - ACEC- 2013 – 0759-I of August 21, 2013, received on the 22nd of the same month and year;

THAT by letter No. IRC-2013-5818 of December 9, 2013, the Regional Intendancy of Cuenca requested Banco Pichincha C.A. to send the pertinent explanations and defenses;

THAT through letter BP – ACEC - 2013 - 1033 of December 30, 2013, received at the Regional Intendancy of Cuenca on January 6, 2014, Banco Pichincha C.A. sent the requested information incompletely, for which reason, said Intendancy, with letter No. IRC-2014-1474 of March 5, 2014, in addition to observing that the documentation sent was not delivered within the period established in the requirement, insisted on the bank sending the information detailed in numbers 4 and 5 of letter No. IRC-2013-5818 of December 9, 2013, and additionally requested additional information. This request was attended to by the banking entity with letter BP – ACEC – 2014 – 0229, received on March 14, 2014;

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THAT with letter No. IRC-2014-2644 of April 22, 2014, the Regional Intendancy of Cuenca, regarding the complaint raised, resolved the following:

"(...) return the value of (...) (USD 770.00) to Mr. Edgar Rodrigo Morocho Tutillo, a value that was debited from his card in three payments, starting from June 2013;..." (sic);

THAT Banco Pichincha C.A., through communication of April 30, 2014, filed an appeal for reconsideration against letter No. IRC-2014-2644 of April 22, 2014, which was rejected by the Regional Intendancy of Cuenca with letter No. IRC-2014-4252 of June 24, 2014, ratifying the administrative act contained in letter No. IRC-2014-2644 of April 22, 2014;

THAT by writing received at the Superintendency of Banks and Insurance on July 4, 2014, Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo and lawyer Andrea García Díaz, filed an administrative review appeal before the Banking Board against letter No. IRC-2014-4252 of June 24, 2014, arguing: that the control body in this case has not evidenced incorrect procedures on the part of the bank, nor has it determined any corrective measures, so it is not appropriate to instruct the refund of values, given that within the legal attributes referred to in articles 180 and 175 of the Organic Law of Institutions of the Financial System, there is none that relates to the power to order the return of values, citing jurisprudence on the matter; that the notification to the client requesting the cancellation of the card was not immediate, that there were "(...) more than 24 hours between the consumption made with the credit card (...), and the telephone notification for its cancellation due to theft.", constituting a breach on his part of clause 6th of the Credit Card Issuance and Use Contract, signed by him, relative to the responsibilities of the parties in case of theft, robbery, or deterioration of the same, he laments the event occurred, but it is not viable nor legal for the entity to be responsible for facts caused by third parties; and, regarding the analysis contained in paragraph b) of the challenged letter, he highlights that the referred contract constitutes the initial and main document of the financial relationship, and the responsibility is contractually assigned to the client;

THAT by letter No. JB-2014-1757 of July 8, 2014, the Secretary of the Banking Board, accepted the administrative review appeal filed for processing, and with letter No. JB-2014-1758, of the same date, informed Mr. Edgar Rodrigo Morocho Tutillo of the matter;

THAT article 1, in concordance with 180, letters b) and o) of the General Law of Institutions of the Financial System, assigns to the Superintendency of Banks and Insurance, within the scope of its competence, the supervision and control of the financial system, in all of which the protection of the public's interests is taken into account, as well as requiring that controlled institutions present and adopt the corresponding corrective measures;

THAT in merit of the foregoing, the Banking Board, with the purpose of achieving effective compliance with the provisions emanating from both the control body and the collegiate body, integrated into chapter IV, of title XX, of book I, of the Compilation of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, the procedure for the attention of claims against institutions of the financial system, always attentive to the protection of the public's interests, as mandated by law, whose article 5 establishes that 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 claim, the Superintendent of Banks and Insurance or his delegate will issue the corresponding order.

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Likewise, if the situation that motivated the claim referred to in the previous paragraph originated in an incorrect procedure of the controlled institution, which caused harm to the claimant, this control body may order the return of the claimed values, granting the legal representative of the entity a period not greater than (15) days from notification, to send under the legal warnings, the proof of compliance with the order issued; therefore, what is affirmed by the appellant that within the legal attributes referred to in articles 180 and 175 of the Organic Law of Institutions of the Financial System, there is none that has to do with the power to order the return of values, lacks foundation;

THAT number 13.9, of chapter V "Constitution, functioning and operations of credit card issuing or administering companies and credit card departments of Financial Institutions"; title I "On Constitution"; book I "General norms for the application of the General Law of Institutions of the Financial System", of the Compilation of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, determines the conditions related to the loss, theft, or deterioration of the credit card. If any of these cases occur, the cardholder, duly identified by full names, identity card number or citizenship, and card number, must notify the issuer of the particular, and the first will not be responsible, from that moment on, for the consumptions made charged to the card reported as lost or stolen. The notification can be made in writing or by telephone, in which case the magnetic message will constitute means of proof, according to what is provided in article 125 of the Civil Procedure Code. The notification made by telephone must be ratified in writing within the term of 48 hours;

THAT on the other hand, the Civil Code that deals with obligations in general and with contracts, in article 1453, says: "Obligations arise, either from the real concurrence of the wills of two or more persons, as in contracts or conventions (...)";

In the file, the "CONTRACT OF ISSUANCE AND USE OF THE VISA BANCO DEL PICHINCHA CREDIT CARD" and/or "MASTERCARD-BANCO DEL PICHINCHA", celebrated between the cardholder and the issuing entity on April 29, 2011, in whose clause 6 stipulates the conditions for cases of robbery, theft, or loss of the card, which contains the regulation issued by the Banking Board, described in the previous paragraph, that is, the cardholder will not be responsible for the consumptions from the date and time of notification to the bank of the event produced.

Likewise, it is recorded in the file that the blocking of the credit card was carried out on May 10, 2013 at 08:45:56 and the transaction of the consumption that is the subject of the present complaint, took place on May 9, 2013 at 08:20:18; that is, once said consumption was made. Regarding this, although Mr. Morocho Tutillo communicated about the theft of his credit card after the consumption was made, the indicated consumption is backed by a charge note in which a signature is recorded that differs from the one recorded in his citizenship card and in the credit card issuance and use contract, according to the documentation sent by the bank;

THAT regarding the signature recorded in the voucher, which has not been assumed by the cardholder as his own, number 15.2 of article 15, chapter V, title I, book I of the Compilation, ibid, the norm in force on the date of the event, points out that institutions authorized to issue or administer credit, payment, or affinity cards, must celebrate written contracts with affiliated establishments, in which the obligatoriness of the establishment to issue the charge note and to verify that the signature and rubric that the cardholder signs is the same that

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is recorded on the back of the card; and, in case of doubt, the establishment will require the identification document and will record on the receipt the identity card number or passport number, that is to say, that the credit card is a means of payment with the sole presentation of the same; nevertheless, affiliated commercial establishments have the contractual obligation to carry out the respective verifications in order to finalize a safe sale. In the disputed voucher, a signature is recorded, which at first glance differs notably from the one recorded by the cardholder in his ID and in the referred contract, followed by a cedula number and a telephone number, in addition to stating that, under the recorded signature, the charge note expresses: "THE ESTABLISHMENT CERTIFIES THAT THE CLIENT'S SIGNATURE IS AUTHENTIC";

THAT although the card was active, to the credit card issuing entity, prior to making the payment to the affiliated establishment, it corresponded to fulfill its obligation to validate that said establishment has complied with what is established in number 15.2 of article 15 of the aforementioned regulation, as well as that it has carried out the actions, verifications, and pertinent precautions in the transaction that is the subject of the present complaint, a situation that has not occurred in the present case;

THAT just as the cardholder assumes contractual responsibilities, in the same way the issuing entity assumes its responsibilities regarding the security measures to prevent establishments with which it in turn celebrates affiliation contracts from having and complying with safe sales policies, in order for the charge notes or vouchers that back the consumptions to reflect legitimate transactions; in such a way, with the argument that the credit card issuance and use contract constitutes the initial and main document of the financial relationship, and that the responsibility is contractually assigned to the client; the appellant has not managed to disprove his responsibility in this case;

THAT the credit card issuing entity has not analyzed that at first glance the signature recorded in the charge note (voucher) sent by the establishment "COMERCIAL GONZALEZ" is notably different from the one recorded by Mr. Edgar Rodrigo Morocho Tutillo, in the "CONTRACT OF ISSUANCE AND USE OF THE VISA BANCO DEL PICHINCHA CREDIT CARD" and/or "MASTERCARD-BANCO DEL PICHINCHA", signed by him; in order that, based on the stipulations of the affiliation contract with the establishment, once the non-compliance by the commerce with what is established in number 15.2 of article 15 of the referred norm is determined, to refrain from paying the consumption of said voucher, the only document that backs the debt assumed with the financial institution issuing the credit card; determining non-compliance on its part to such obligations, for which the controlled entity for the provision of the transaction channel credit card purchases must adjust to what is established in said regulation, based on the contractual link agreed upon both with the cardholders and with the affiliated establishments;

THAT for the foregoing, it has been fulfilled in the present case, the premise of article 5 of chapter IV "Procedure for the attention of claims against institutions of the financial system", title XX "On the Superintendency of Banks and Insurance", book I "General norms for the application of the General Law of Institutions of the Financial System" of the Compilation of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, by having determined an incorrect procedure of the Visa Card issuing entity Banco del Pichincha, for not having carried out the procedures and internal controls that it is obliged to fulfill, for the provision of a safe financial product to its cardholders, tending to establish lack of application and compliance with the regulation issued for this effect by the Banking Board by the affiliated establishment, contractually linked with the issuer, regarding the mechanisms of

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precaution and respective verification for the finalization of a safe sale in the claimed transaction, consequently if it was appropriate for the control body to order the entity to return the value claimed by Mr. Edgar Rodrigo Morocho Tutillo;

(...)

THAT through communication of June 5, 2015, Mr. Antonio Acosta Espinosa, Vice President of Banco Pichincha C.A., filed an appeal for reconsideration against the administrative act contained in resolution No. JB-2015-3396 of May 8, 2015;

THAT the Banking Board, in the session held on July 1, 2015, in accordance with what is established in the second paragraph of article 3, chapter II, title XVI, book I of the Compilation of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, knew the appeal referred to in the preceding paragraph and determined that it does not comply with what is provided in the first paragraph ibid, that is to say, that there are no new elements of fact or law that motivate the elaboration of corresponding reports, for which 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, Vice President of Banco Pichincha C.A. against the administrative act contained in resolution No. JB-2015-3396 of May 8, 2015; and, consequently, CONFIRM said resolution.

NOTIFY.- Given at the Superintendency of Banks, in Quito, Metropolitan District, on July 1, 2015.

Econ. Rodrigo Landeta Parra GENERAL INTENDENT (S) PRESIDENT OF THE BANKING BOARD SESSION (E)

I CERTIFY.- Quito, Metropolitan District, on July 1, 2015.

Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD

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Banking Board of Ecuador