Banking Board of Ecuador

RESOLUTION No. JB-2015-3412

THE BANKING BOARD

CONSIDERING:

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 Superintendence of Banks and Insurance and the Banking Board, and the norms issued by the control bodies, will remain in force in all that does 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 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 by Resolution No. 054-2015-F, of March 5, 2015, published in the Official Register No. 467, of March 27, 2015, the aforementioned period has been extended by an additional one hundred and eighty days;

THAT from the indicated provisions, it is established that the Banking Board is competent to resolve the present review appeal;

THAT by communication entered in the Regional Intendancy of Guayaquil on January 28, 2013, Mr. Pablo David Redín Suárez, filed a complaint against the National Development Bank (Banco Nacional de Fomento), regarding debits from his savings account held at said bank, made on December 9 and 10, 2013, for USD 332.50, through an automated teller machine (ATM), without his authorization; and, as the complainant stated, the withdrawals occurred in Quito while the debit card remained in his possession;

THAT by letter No. IDG-DAYEU-ISFP-REQ-2013-107, of January 28, 2013, the Director of User Attention and Education of the Regional Intendancy of Guayaquil, requested the Zonal Manager of the National Development Bank Guayaquil to send the explanations and defenses regarding the present complaint; a matter that was communicated to the complainant through the same channel. And, with letter No. IDG-DAYEU-ISFP-REQ-2013-028, of February 20, 2013, a three-day extension was authorized for this purpose;

THAT by letter No. 049-2014, of April 23, 2014, the Zonal Manager Guayaquil of the National Development Bank, presented part of the information required by the control body, offering to send the remaining information as an addendum, in view of the fact that the bank owning the automated teller machines where the questioned withdrawals occurred had not sent the pertinent information;

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THAT by letter No. IRG-DAYEU-V-R-2014-477, of May 20, 2014, the Regional Intendant of Guayaquil, resolved:

"1.- ACCEPT the complaint filed by Mr. PABLO DAVID REDÍN SUÁREZ, with citizenship ID No. 092501742-8, against the controlled financial institution BANCO NACIONAL DE FOMENTO.

2.- ORDER BANCO NACIONAL DE FOMENTO to proceed to restore to Mr. PABLO DAVID REDÍN SUÁREZ the sum of THREE HUNDRED THIRTY-TWO AND 50/100 DOLLARS OF THE UNITED STATES OF AMERICA (US$ 332.50) debited from savings account No. 0080604383, an entity that may seek reimbursement of the aforementioned amount against the bank owning the automated teller machines where the disputed transactions were made, and send to this Office, within eight days, counted from the receipt of this letter, the documentation that accredits the compliance with this resolution. (...)";

THAT by document received in the control body on June 4, 2014, the General Manager of the National Development Bank, Guayaquil Branch, filed an appeal for reconsideration against letter No. IRG-DAYEU-V-R-2014-477, of May 20, 2014;

THAT by letter No. IRG-DAYEU-V-R-2014-672, of June 24, 2014, the Regional Intendant of Guayaquil resolved: "REJECT the appeal for reconsideration filed by BANCO NACIONAL DE FOMENTO; and, consequently, CONFIRM the administrative act contained in Letter No. IRG-DAYEU-V-R-2014-477, of May 20, 2014.";

THAT by document and addendum entered in the Superintendence of Banks and Insurance on July 8 and 17, 2014, respectively, engineer Erika Palma Portilla, Commercial Manager of the National Development Bank – Guayaquil, with the professional sponsorship of lawyer Ma. Angélica Pazmiño M., filed before the Banking Board a review appeal against the administrative act contained in letter No. IRG-DAYEU-V-R-2014-672, of June 24, 2014, and supported her appeal with the following arguments: that the bank has placed special concern in educating the user through talks given and currently given by the staff of the Service Counter and in which security recommendations are indicated as established policies that respond to an awareness of the citizen for the protection of their assets; that the client did not apply basic security recommendations for the handling of the debit card, made known through different media, such as security flexes, ATM messaging, transaction receipts, circulars, etc.; that clients are responsible for the custody of the card and handling of the PIN and the complainant as a former bank employee was obliged to observe the instructions and "knew the warnings about the risks of transacting in said ATMs; that clauses fourth and eighth of the agreement celebrated with the savings account holder stipulate the responsibilities of the client as custodian of the card and the PIN delivered by the bank; that the bank does not have the SMS and email notification service; however, based on Resolution No. 2148, issued by the control body, it is working on the project that allows having this system; that the institution had until December 16, 2013, an insurance contracted through

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BANRED that covered this type of events; that they have been carrying out management before the institutions where the events in question occurred, without having the openness and predisposition for the delivery of the respective information, therefore they request the intervention of the control body; that the Regional Intendant of Guayaquil does not resolve the merits of the matter "this is the alleged commission of the electronic crime (CARD CLONING)", on which he has no competence; that there is no analysis of the abundant evidence provided by the bank in the structural part of the appealed letter; that due process has not been guaranteed in the appealed resolution; that in virtue of the record of successful transactions and carried out normally, it was not possible to find coincidences of compromise of his card based on the reports of the BANRED Security Committee;

THAT by letter No. JB-2014-1948, of July 24, 2014, the Secretary of the Banking Board, communicated to the appellant that the referred review appeal has been accepted for processing; and with letter No. JB-2014-1949 of the same date, communicated the particular to Mr. Pablo David Redín Suárez;

THAT article 1, in concordance with article 180, letters b) and o) of the General Law of Institutions of the Financial System, in force on the date of the event, contemplated among the functions and attributions of the Superintendence of Banks and Insurance, within the orbit of its competence, the supervision and control of the financial system, taking into account the protection of the interests of the public, as well as required that controlled institutions present and adopt the corresponding corrective measures;

THAT 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 Codification of Resolutions of the Superintendence 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 interests of the public as mandated by law, whose article 5 establishes that if the result of the analysis carried out by the Superintendence determines the need for the controlled institution to introduce corrective measures that regularize the situation that motivated the complaint, the Superintendent of Banks and Insurance or his delegate will issue the corresponding disposition. Likewise, 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, granting the legal representative of the entity a period that cannot exceed fifteen (15) days from the notification to send, under the precautions of law, the record of compliance with the order issued;

THAT from letter No. 040-2014, of April 23, 2014, it is appreciated that the National Development Bank, although it sends information required by the control body in January 2013, which should have been delivered at the end of February 2013, does so partially, even though it derives this fact from the lack of sending of data by the banks owning the automated teller machines where the questioned withdrawals were executed;

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THAT from the report of transactions carried out in automated teller machines on the date when the claimed debits occurred, it is observed that on December 9 and 10, 2012, eight transactions were registered, of which six correspond to fund deposits and subsequently withdrawals made up to the limit amount of the quota assigned to the card, in a sequential manner, that is, from 12:06 to 12:10 on the 9th; and, on the following day, two transactions, one of consultation and one of withdrawal at 11:09, which totaled in both cases, the value of USD 330.00, plus the cost of financial services;

THAT in the report of the Risk Management, Information Security, of December 28, 2012, it is noted: "(...) From what is exposed, it is determined that the registration of the transactions were successful and carried out normally; it was not possible to find evidence of compromise of our client's card according to the established coincidence analysis; however the client accessed automated teller machines of other Banks where there could have been a possible compromise of the information of his debit card" (...);

THAT however, despite what is stated, it is observed in the report of withdrawals charged to the client's account that these are registered from ATMs located in the city of Guayaquil, however, withdrawals are registered starting from the questioned dates executed from the city of Quito, with previous failed records that were noted as "incorrect PIN" and "insufficient funds";

THAT the appellant argued that the client did not apply basic security recommendations for the handling of the debit card; however, from the review and analysis of the defenses presented by the bank and the documentation that supported the appeal in question, even though it referred to the content of the agreement signed by the client with the bank, brochures, and others, there is no evidence that the user failed to observe the custody of the assigned card and the PIN; all the more so, when the bank pointed out in its arguments that the bank does not have a system for recording alarms and electronic notifications about the transactions that are carried out, which prevents the savings account holder from being informed of the movements of his account and this does not absolve the bank of its responsibility to monitor the funds delivered to its custody, under article 51 of the General Law of Institutions of the Financial System;

THAT the user and/or client of the financial system, under the Constitution and the Law, has the right to access public and private goods and services of quality, with efficiency, effectiveness, and good treatment, as well as to receive adequate and truthful information about their content and characteristics; the National Development Bank, by offering as a financial service the withdrawal of funds through ATMs, is obliged to ensure that these, whether owned or contracted, provide optimal security, among others, physical, mechanical, or electronic, referred not only to the use of the assigned PIN but also to the inviolability of the debit card delivered to the client, in order to comply with its obligation to reintegrate the deposited funds for its custody to its legitimate owner; consequently, it becomes inappropriate for it to absolve itself of responsibility as custodian of its clients' money;

THAT the preceding analysis evidences that the appealed letter had the due motivation and pertinence of its resolution, for this reason, it is not appropriate for the appellant to argue this lack;

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THAT for the reasons expressed, it is observed an incorrect procedure of the National Development Bank in not providing the respective security for the transactions in dispute, through the network of automated teller machines, placed as a financial service for the use of the client, by not monitoring or implementing alerts on the movements that were occurring in the account entrusted to its custody, allowing the security controls of the debit card delivered by the bank to the client to be violated, which caused him economic harm, for which the premise established in article 5, Section I, chapter IV, title XX, book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board is fulfilled, for the control body to dispose of the reimbursement of the values in dispute;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0019 of January 14, 2015, recommended to the Banking Board to reject the claim contained in the review appeal filed;

AND in exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the review appeal filed by engineer Erika Palma Portilla, Commercial Manager of the National Development Bank Guayaquil; and, consequently, CONFIRM the administrative act contained in letter No. IRG-DAYEU-V-R-2014-672, of June 24, 2014, issued by the Regional Intendant of Guayaquil, in which it resolved: "REJECT the appeal for reconsideration filed by BANCO NACIONAL DE FOMENTO; and, consequently, CONFIRM the administrative act contained in Letter No. IRG-DAYEU-V-R-2014-477, of May 20, 2014. (...)".

NOTIFY.- Given in the Superintendence of Banks, in Quito, Metropolitan District, on the thirteenth of May of two thousand fifteen.

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

I CERTIFY.- Quito, Metropolitan District, on the thirteenth of May of two thousand fifteen.

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD

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Banking Board of Ecuador