Banking Board of Ecuador

RESOLUTION No. JB-2015-3404

THE BANKING BOARD

CONSIDERING:

THAT the second paragraph of the Third Transitory 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 hearing on the date of entry into force of this Code, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT by letter dated November 18, 2013, received at the Regional Intendancy of Guayaquil, Mrs. Alba Yadira Yaselga Aspiazu filed a claim against the National Development Bank (Banco Nacional de Fomento) for unusual withdrawals from savings account No. 0550078244, which she owns, carried out through ATMs in the amount of US$ 4,975.00;

THAT lawyer Federico Sandoval Valverde, Director of User Attention and Education at the Regional Intendancy of Guayaquil, through Official Letter No. DAYEU-ISFP-REQ-2013-1547 of November 22, 2013, admitted the claim filed by Mrs. Alba Yadira Yaselga Aspiazu for processing, and requested explanations from the National Development Bank regarding the claim filed by Mrs. Alba Yadira Yaselga Aspiazu;

THAT through Official Letter No. 01411 of February 5, 2014, received at the Regional Intendancy of Guayaquil on the 7th of the same month and year, Mr. Marco Ruales Valverde, Director of the Customer Service Unit of the National Development Bank, in response to the request from the control body, stated that the withdrawals made from Mrs. Alba Yadira Yaselga Aspiazu's account were due to the lack of application of basic security recommendations for handling the debit card;

THAT through Official Letter No. IRG-DAYEU-V-R-2014-391 of May 8, 2014, lawyer Humberto Moya González, Regional Intendant of Guayaquil, accepted the claim filed by Mrs. Alba Yadira Yaselga Aspiazu and ordered the National Development Bank to refund US$ 4,975.00 to savings account No. 0550078244 for the unauthorized withdrawals made through ATMs of the Network;

THAT through communication entered at the Regional Intendancy of Guayaquil on May 30, 2014, the National Development Bank filed an appeal for reconsideration (recurso de reposición) against the content of Official Letter No. IRG-DAYEU-V-R-2014-391 of May 8, 2014, which was rejected through Official Letter No. IRG-DAYEU-V-R-2014-628 of June 18, 2014, since the bank did not provide documentary evidence or new information regarding the merits of the administrative claim that would change the circumstances under which the appealed letter was issued;

THAT on July 10, 2014, Mrs. Paula Ponce Quiroz, Commercial Manager of the National Development Bank – El Empalme Branch, with the professional sponsorship of lawyers María Angélica Pazmiño M. and Licencia Rizzo Zambrano, filed an appeal for review (recurso de revisión) before the Banking Board against the content of Official Letter No. IRG-DAYEU-V-R-2014-628 of June 18, 2014;

THAT through Official Letter No. JB-2014-1875 of July 17, 2014, lawyer Pablo Cobo Luna, Secretary of the Banking Board, accepted the appeal for review filed; and, through Official Letter No. JB-2014-1876 of July 17, 2014, notified Mrs. Alba Yadira Yaselga Aspiazu of the appeal for review filed, and extended the term to resolve the appeal by an additional sixty days;

THAT regarding the appellant's allegation that Official Letter No. IRG-DAYEU-V-R-2014-628 of June 18, 2014, violates the principle of legal certainty provided for in the Constitution of the Republic of Ecuador, it should be indicated that Official Letter No. IRG-DAYEU-V-R-2014-391 of May 8, 2014, being motivated, that is, explaining in a reasoned and exhaustive manner the link between the decision adopted by the Regional Intendancy of Guayaquil, the factual background, and the legal norms, allows the principle of legal certainty to be effective and ensures the right to defense, as provided for in numeral 7, letter l) of article 76 of the Constitution of the Republic of Ecuador;

THAT Official Letter No. IRG-DAYEU-V-R-2014-628 of June 18, 2014, contains all the constitutional norms that guarantee due process provided for in article 76 of the Constitution of the Republic of Ecuador; furthermore, upon review of the file, it has been verified that the National Development Bank presented, in response to the requests of the control body, the defenses it considered pertinent before the Superintendence of Banks and Insurance, and exercised its right to defense;

THAT article 52 and numeral 25 of article 66 of the Constitution of the Republic of Ecuador provide as follows:

“Art. 52.- Persons have the right to dispose of goods and services of optimal quality and to choose them freely, as well as to receive precise and non-misleading information about their content and characteristics.

The law will establish the mechanisms for quality control and the procedures for the defense of consumers; and the sanctions for violation of these rights, the repair and indemnification for deficiencies, damages, or poor quality of goods and services, and for the interruption of public services that were not caused by fortuitous event or force majeure.”

“Art. 66.- Persons are recognized and guaranteed the following rights:

(...)

25. 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.

(...)”;

THAT letter b) of article 180 of the General Law of Institutions of the Financial System, among the functions of the Superintendent of Banks, provides that it must: Ensure the stability, solidity, and correct functioning of entities subject to its control;

THAT numerales 2 and 4 of article 4 of the Organic Law for Consumer Defense establish that fundamental consumer rights are that public and private providers offer competitive goods and services of optimal quality, and to choose them freely, and to receive 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 thereof, including the risks they may present;

THAT numeral 9.6 of article 9 of paragraph II “Right to information on financial products and services”, of chapter V “Code of user rights of the financial system”, of title XIV “Code of Transparency and User Rights”, of 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, establishes the following:

“ARTICLE 9.- Access and receive directly clear, precise, timely, reasonable, adequate, validated, truthful, and complete information related to the products and services offered by financial system institutions, especially in financial, legal, juridical, operational, fiscal, and commercial aspects, among others, including associated risks:

(...)

9.6 Receive clear, non-misleading advertising that does not induce error, which collects the necessary, complete, and adequate conditions of the advertised product or service. Advertising will have binding force when services or agreements are agreed upon based on the advertising offer; and,

(...)”;

THAT the Superintendence of Banks is a technical entity for surveillance, auditing, intervention, and control of economic activities, and of the services provided by private entities, with the purpose that these activities and services comply with the legal framework and attend to the general interest, according to what is provided in article 213 of the Constitution of the Republic of Ecuador; it is appropriate for this control body to observe the National Development Bank so that the services provided to the client are of optimal quality, which can also be chosen freely; therefore, the appellant's assertion that prior to the order for refund of values, the Superintendence of Banks and Insurance must coordinate with the Comptroller General of the State is not appropriate;

THAT what is stated above is corroborated by the fact that the public interest must be protected by the Superintendence of Banks and Insurance, according to the first paragraph of article 1 of the General Law of Institutions of the Financial System;

THAT the appellant's assertion that the withdrawals made through ATMs were carried out with the PINs and with debit card No. 6031600027025169, the exclusive responsibility of Mrs. Alba Yadira Yaselga Aspiazu, is not appropriate, since according to letter a) of article 51 of the General Law of Institutions of the Financial System, the National Development Bank is the depositary of its clients' money and is also responsible for the coverage services offered through the ATMs of the Network, the operational risk of which cannot be transferred to the clients of the country's banking entities, as it is their obligation to require that they have the appropriate security measures;

THAT the Banking Board issued the regulations inherent to the filing of claims against controlled institutions, currently contained in section I, chapter IV, title XX, book I of the Codification of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, whose article 5 in its second paragraph establishes:

“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, the Superintendence of Banks and Insurance may order the return of the claimed values, in exercise of the functions and attributes 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 may not exceed fifteen (15) days from notification to send, under the precautions of the Law, proof of compliance with the order issued.”

THAT there is no evidence to affirm that the holder of savings account No. 0550078244, Mrs. Alba Yadira Yaselga Aspiazu, has failed to comply with her preventive obligations in the use of PINs and debit card No. 6031600027025169, since the National Development Bank itself stated that the withdrawals present an atypical transactional scheme and that they could have been exposed to third-party manipulation;

THAT transferring the responsibility for the disputed transactions to the customer, as the appellant bank did, on the grounds that it issued a debit card and that the PIN was generated by its own authorship to access ATM services, while these would constitute part of the conditions supporting a written agreement between the parties regarding deposits, fund withdrawals, credits, debits, and any other transaction permitted in monetary accounts or deposits, carried out through electronic or electromechanical means, it is no less true that the National Development Bank, upon receiving public funds, also has the obligation to safeguard the funds delivered to its custody, in order to return to the depositor the monetary equivalent deposited when requested; therefore, the customer's responsibility for transactions carried out through ATMs must be accompanied by parallel physical and digital security measures. Therefore, whenever in the claim the bank admitted that the card could have been compromised at any BANRED ATM, it leads to the conclusion that such compromise occurred due to a lack of security measures that the bank was required to adopt, since by recognizing such a situation, the appellant entity could not substantiate the claim that the user did not apply basic security recommendations for handling the debit card;

THAT the National Development Bank agreed with the client, under its responsibility, the use of BANRED ATMs as electronic channels to return funds entrusted to its custody; therefore, said bank had to evaluate and require that the ATMs enabled to dispense cash from the debit cards of its savings or checking accounts delivered to its clients, have the appropriate security measures in order to fulfill its obligations as depositary of the monies entrusted to it by its users;

THAT it is necessary to point out that in similar cases, the Banking Board has already resolved different appeals for review, accepting the analyses carried out by this Office in the same sense as presented in the current case, ordering financial institutions to return the claimed values to users. It is worth citing as an example Resolution No. JB-2013-2646 of September 26, 2013, which was based on Memorandum No. INJ-DNJ-SAL-2013-0277 of April 19, 2013, whose case had similar characteristics to the one treated in the present appeal for review;

THAT the National Legal Intendancy, through Memorandum INJ-DNJ-SAL-2015-0112 of February 4, 2015, recommended the Banking Board reject the claim contained in the appeal filed by the Commercial Manager of the National Development Bank - El Empalme Branch; and,

IN exercise of its legal attributions,

RESOLVES:

ARTICLE ONE.- REJECT the claim contained in the appeal for review filed by Mrs. Paula Ponce Quiroz, Commercial Manager of the National Development Bank – El Empalme Branch; and, consequently, CONFIRM Official Letter No. IRG-DAYEU-V-R-2014-628 of June 18, 2014, through which the appeal for reconsideration against the content of Official Letter No. IRG-DAYEU-V-R-2014-391 of May 8, 2014, was rejected, through which lawyer Humberto Moya González, Regional Intendant of Guayaquil, accepted the claim filed by Mrs. Alba Yadira Yaselga Aspiazu and ordered the National Development Bank to refund US$ 4,975.00 to savings account No. 0550078244 for the unauthorized withdrawals made through ATMs of the Network.

NOTIFY.- Given at the Superintendence of Banks and Insurance, in Quito, Metropolitan District, on the eighth of May of two thousand fifteen.

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Econ. Rodrigo Lándeta Parra
GENERAL INTENDANT (S)
PRESIDENT OF THE BANKING BOARD SESSION (E)

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

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD