Resolution No. JB-2015-3395 of the Banking Board of Ecuador

Banking Board of Ecuador

RESOLUTION No. JB-2015-3395

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 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 a communication entered into this Superintendence of Banks and Insurance on March 9, 2012, Mr. David Segovia Naranjo, filed a complaint against Banco Pichincha C.A. stating the following:

"(...)

In October of the year 2010, I went to the aforementioned Banking Entity with the purpose of opening an Account called e-generation, which corresponded to a promotion by the Bank in which, as an incentive, they gave me a VISA PREMIUM Card with an authorized limit of FIVE HUNDRED DOLLARS (...)

I was greatly surprised when, by notification from the Bank, I learned that I had an overdraft in my account, and the most serious part was that I had not requested nor authorized this situation with my signature, and when I approached to complain about such an anomaly, they told me that because I was a good payer, the Collections Department authorized these payments (...).

In light of the situation I expose and feeling the serious harm being caused to my economy on November 8, 2010 (...), I filed my formal complaint to the Bank for having overdrawn my account by 400% because, in my opinion, it was an ILLEGAL procedure since I was in a way being required to pay the Bank a debt that was not mine and even more so, where was I going to get the nearly 3,500 dollars that had to be covered due to the IRRESPONSIBILITY of certain officials and employees of the Banking Entity...

(...)" (sic)

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THAT the National Directorate of User Attention and Education, through letter No. DNAE-SAU-2012-1167, of April 4, 2012, brought to the knowledge of Banco Pichincha C.A. the complaint filed by Mr. David Segovia Naranjo, and requested explanations and defenses regarding the case;

THAT through letter No. BP-ACEC-2012-0321, of May 3, 2012, Banco Pichincha C.A. responded to what was required by this control body and informed the following:

"(...) regarding the complaint filed by Mr. DAVID SEGOVIA NARANJO with identity card No. 1719730234, due to disagreement with the consumption recorded in the statement of his credit card No. 4514320001020034, we allow ourselves to inform that our Institution, complying with what is provided by the International Franchise, requested from the establishment the support for the billed consumptions and, due to not having received from the commerce the documents that support the transaction, on December 15, 2011, the value of USD $ 4,017.00 was credited to the referred card, charged to the establishment, this value was reflected in the statement issued in the month of December 2010.

(...)"

THAT through letter No. DNAE-SAU-2012-5937, of October 9, 2012, the User Attention Subdirectorate resolved the following:

"(...)

From the information in the case file, it is clear that although values for unrecognized consumptions were charged, the financial institution subsequently proceeded with the reversal of the same, a situation reflected in the corresponding statements.

For the above, and having no evidence determining that Banco Pichincha C.A. has incurred omissions in the application of its manuals, policies, and procedures, the complaint filed is declared inadmissible and the present administrative process is declared concluded.

(...).";

THAT through a communication received by this control body on October 23, 2012, Mr. David Ricardo Segovia Naranjo, with the legal sponsorship of Dr. José Adolfo Morales Quirós, filed an appeal for review against the administrative act contained in letter No. DNAE-SAU-2012-5937, of October 9, 2012, arguing mainly that:

"(...)

After several months, I was called by Mr. Fabián Miranda, from the company Interdin, a subsidiary of Banco del Pichincha C.A., who indicated that because I was a good client, and given the inconvenience I had of not being able to cover the installments, they gave me a new card with a higher balance and with a

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refinancing for 60 months (5 years) so that I could proceed to cancel the value of a debt that was never authorized. This situation is clearly reflected in the statement with an issue date of March 15, 2011, in which the new Visa World Card credit card No. 4500810000165273, which is only to maintain a pending debt with a limit of USD 7,550 and has a block to not make any additional charges, starts with a balance of USD 0.00, and in the part of other charges, a value of USD 4,927.62 is placed, which corresponds according to the detail for an N/C for refinancing and other debit notes.

(...)"

THAT with resolution No. JB-2014-2861 dated April 3, 2014, the Banking Board resolved:

"SINGLE ARTICLE.- ACCEPT the claim contained in the appeal for review filed by Mr. David Segovia Naranjo; and, consequently, LEAVE WITHOUT EFFECT letter No. DNAE-SAU-2012-5937, of October 9, 2012, through which the User Attention Subdirectorate resolved the following: "(...) From the information in the case file, it is clear that although values for unrecognized consumptions were charged, the financial institution subsequently proceeded with the reversal of the same, a situation reflected in the corresponding statements.(...) For the above, and having no evidence determining that Banco Pichincha C.A. has incurred omissions in the application of its manuals, policies, and procedures, the complaint filed is declared inadmissible and the present administrative process is declared concluded."; and, consequently, order Banco Pichincha C.A. to return in full the values paid by Mr. David Segovia Naranjo reported on the Visa World Card credit card No. 4500810000165273, of which he is the holder."

THAT through a communication entered into this Superintendence on April 29, 2014, Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo and lawyer María José Araujo Álvarez, filed before the Banking Board an appeal for reconsideration against resolution No. JB-2014-2861 issued by the Banking Board on April 3, 2014, arguing mainly:

"(...)

We fully agree with this accurate resolution of the Control Body issued through letter DNAE-SAU-2012-5938, highlighting even the criterion that Banco Pichincha has not incurred in non-observance of its manuals, policies, and procedures.

2. It is striking that the Banking Board, based on the appeal for review presented by Mr. David Segovia Naranjo, against the content of letter No. DNAE-SAU-2012-5937, does not take into account

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the express resolution issued previously by the User Attention Subdirectorate

(...)

It must be taken into account, even, that among the attributions of the Superintendent of Banks and those of the Banking Board, referred to in articles 180 and 175 of the Organic Law of Institutions of the Financial System, there is none that has reference to the power to order the return of values.

(...)"

THAT through letter No. JB-2014-1100, of May 6, 2014, the Secretary of the Banking Board, accepted for processing the appeal for reconsideration filed; and, with letter No. JB-2014-1101 of the same date, notified Mr. David Ricardo Segovia Naranjo, regarding the acceptance of said appeal,

THAT according to the main and repeated argument exposed in the appeal for reconsideration filed by Banco Pichincha C.A., regarding the fact that the Banking Board did not take into account letter No. DNAE-SAU-2012-5937 of October 9, 2012, which indicated:

"From the information in the case file, it is clear that although values for unrecognized consumptions were charged, the financial institution subsequently proceeded with the reversal of the same, a situation reflected in the corresponding statements.

For the above, and having no evidence determining that Banco Pichincha C.A., has incurred omissions in the application of its manuals, policies, and procedures, the administrative complaint is declared inadmissible and the present administrative process is declared concluded."

THAT from what has been stated, it is important to mention that Mr. David Segovia Naranjo filed an appeal for review, in which he attached new documentation showing that the debt was transferred to another credit card "Visa World Card", which clearly demonstrates that Banco Pichincha C.A. credited the claimed values on the Visa Premium International card to subsequently transfer that "debt" to another credit card, thereby hiding that the Bank assumed responsibility for the values improperly charged, which is why the Banking Board resolved to leave the referred resolution without effect and ordered the Bank to return in full the values paid by the claimant reported on the Visa World Card credit card No. 4500810000165273;

THAT what is mentioned is also found exposed in letter No. BP-ACEC-2012-0321, of May 3, 2012, in which Ms. Tatiana Vergara Carrera, Authorized Signatory of Banco Pichincha C.A. in response to letter No. DNAE-SAU-2012-1167, informed the following:

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"...our institution, complying with what is provided by the International Franchise, requested from the establishment the support for the billed consumptions and, due to not having received from the commerce the documents that support the transaction, on December 15, 2011, the value of USD $ 4,017 was credited to the referred card, charged to the establishment, this value was reflected in the statement issued in the month of December 2010."(Emphasis added)

THAT in virtue of this, Banco Pichincha C.A. proceeded to credit on the Visa Banco Pichincha C.A. card No. 4514320001020034, the value of the consumptions claimed by Mr. David Segovia Naranjo, as it did not have the supporting documents (charge note) to hold responsible and charge the cardholder;

THAT said crediting is evidenced in the statement of the Visa Banco Pichincha credit card No. 4514320001020034 with a cut-off date of March 15, 2011, under the code "OTHER CREDIT NOTES" (N/C) for an amount of US $ 4,927.62; and, in the statement of the referred card for the following month (April 2011), the charge for the claimed consumptions is not observed, with a total value to pay of US $ 0.00;

THAT from the preceding analysis, it is inferred that indeed Banco Pichincha C.A. charged values for consumptions made at OTECEL to cardholder David Segovia Naranjo, without having the voucher or charge note that justifies that the claimant made the claimed consumptions; subsequently, according to the statement of the Visa Banco Pichincha card No. 4514320001020034, the bank reversed them; however, in the appeal for review, Mr. Segovia attaches the statement with a cut-off date of March 15, 2011, corresponding to the Visa World Card credit card No. 4500810000165273;

THAT from the above, it is clear that indeed to the Visa World Card No. 4500810000165273, Banco Pichincha C.A. charged the value of US $ 4,927.62 for the concept of a stolen card whose payment they defer for sixty months, which evidences that the Bank transferred without any justification the consumptions subject of the complaint to another card whose holder is also Mr. David Segovia Naranjo, which contradicts the decision adopted by the Bank through letter No. BP-ACEC-2012-0321 of May 3, 2012;

THAT in that line, it is not appropriate that the bank has charged consumptions that do not have the supports that evidence an obligation, since numeral 12.2 of article 12, chapter V "Code of rights of the user of the financial system", 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 of the Banking Board, states that the user has the right to have the entities of the financial system proceed to "Reject and not pay the products that have not been expressly requested by the user of the Financial System..."(Emphasis added). Regulatory provision that the

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Banco Pichincha C.A. failed to observe by transferring the value of the claimed consumptions to another card of Mr. David Segovia Naranjo (Visa World Card No. 4500810000165273);

THAT it is necessary to cite article 5, of chapter IV "Procedure for the attention of complaints against Institutions of the Financial System", 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 of the Banking Board, which empowers this Control Body to order the return of the values claimed by the controlled institutions, in exercise of the functions and attributions that both constitutional and legal norms establish, since it provides:

"(...) If the situation that motivated the complaint referred to in the previous paragraph, originated in an incorrect procedure of the controlled institution, which has caused harm to the claimant, 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 period that cannot exceed fifteen (15) days from the notification to send, the legal precautions, the proof 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 issuing institution of the credit card or where the client maintains his 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 in the case at hand, it is evidenced from the statement of the Visa World Card No. 4500810000165273 that Banco Pichincha C.A. incurred in an incorrect procedure by transferring to said card the value of consumptions that at the time were charged to the Visa Premium International card No. 4514320001020034 without support of the charge note; and, that additionally, the banking entity recognized not holding the client responsible by crediting the corresponding values, as stated in letter No. BP-ACEC-2012-0321, of May 3, 2012. Consequently, and in application of what is provided in the transcribed article 5 of the aforementioned norm, the return of the values registered by the bank and paid by Mr. David Segovia Naranjo through the Visa World Card credit card No. 4500810000165273, of which he is the holder, corresponds;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0317, of April 15, 2015, recommended to the Banking Board to reject the claim contained in the appeal for reconsideration filed;

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IN exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the appeal for reconsideration presented by Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A.; and, consequently RATIFY resolution No. JB-2014-2861 of April 3, 2014, through which the Banking Board accepted the claim contained in the appeal for review filed by Mr. David Segovia Naranjo, left without effect letter No. DNAE-SAU-2012-5937 of October 9, 2012, and ordered Banco Pichincha C.A. to return in full the values paid by Mr. David Segovia Naranjo reported on the Visa World Card credit card No. 4500810000165273, of which he is the holder.

COMMUNICATE.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on the thirtieth of April of two thousand fifteen.

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

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

[Signature] Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD

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Banking Board of Ecuador