Banking Board of Ecuador

RESOLUTION No. JB-2015-3396

THE BANKING BOARD

CONSIDERING:

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 and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT through a communication entered in the Regional Intendancy of Cuenca of this Superintendency on July 18, 2013, Mr. Edgar Rodrigo Morocho Tutillo filed a claim against Banco Pichincha C.A., related to a charge of USD 770.00 debited from his credit card, stating:

"I was a victim of a robbery, and by virtue thereof, my credit card No. (...) VISA FROM BANCO PICHINCHA was stolen, which was communicated to the indicated Banking Institution (Banco del Pichincha), but it turns out that said Bank has paid amounts totaling seven hundred seventy US dollars, based on a 'voucher' (sic) that is not signed by the claimant, a payment received by Comercial González, as evidenced by the copies I attach.(...) therefore I request that the '...be ordered and exhorted to Banco del Pichincha (...) to return the values that were improperly charged and that I never authorized payment for...' (sic);

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

THAT via Official 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 Official 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, via Official 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 Official Letter No. IRC-2013-5818 of December 9, 2013, and additionally requested additional information. This request was attended to by the banking entity via Official Letter BP – ACEC – 2014 – 0229, received on March 14, 2014;

THAT with Official Letter No. IRC-2014-2644 of April 22, 2014, the Regional Intendancy of Cuenca, regarding the claim 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 the month of June 2013;..." (sic);

---

Banking Board of Ecuador

Resolution No. JB-2015-3396

Page No. 2

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

THAT via a document received at the Superintendency of Banks and Insurance on July 4, 2014, Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A., with the professional sponsorship of Dr. Pablo Cadena Merlo and lawyer Andrea García Díaz, filed an appeal for review before the Banking Board against Official 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 measure, therefore it is not appropriate to instruct the refund of values, given that within the legal attributions 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 notification via telephone for the cancellation of the same due to theft.", constituting a breach on their 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 thereof; he laments the event occurred, but that it is not viable nor legal for the entity to be responsible for facts caused by third parties; and, regarding the analysis contained in letter 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 via Official Letter No. JB-2014-1757 of July 8, 2014, the Secretary of the Banking Board, accepted the appeal for review filed for processing, and via Official Letter No. JB-2014-1758, of the same date, informed Mr. Edgar Rodrigo Morocho Tutillo of the matter;

THAT article 1, in conjunction with article 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 interests of the public is taken into account, as well as requiring that controlled institutions present and adopt the corresponding corrective measures;

THAT in light 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 Codification 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 interests of the public, as mandated by law, whose article 5 establishes that if the result of the analysis performed 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 disposition. 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 entity may order the return of the claimed values, granting the legal representative of the entity a period not greater than (15)

---

Banking Board of Ecuador

Resolution No. JB-2015-3396

Page No. 3

days from the notification, to send under the legal precautions, the proof of compliance with the order issued; therefore, what is affirmed by the appellant that within the legal attributions 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 Codification 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, national identity card or citizenship number, and card number, must notify the issuer of the particular, and the first shall not be responsible, from that moment on, for the charges made against the card reported as lost or stolen. The notification may 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 Code of Civil Procedure. The notification made by telephone must be ratified in writing within a term of 48 hours;

THAT on the other hand, the Civil Code, which deals with obligations in general and contracts, in article 1453, states: "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 FOR 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 charges 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 this claim 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, said consumption is backed by a charge note in which a signature is recorded that differs from that recorded in his national identity 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 Codification, ibidem, the norm in force at the date of the event, states that institutions authorized to issue or administer credit, payment, or affinity cards, must enter into written contracts with affiliated establishments, in which the obligation of the establishment to issue the charge note and to verify that the signature and rubric recorded by the cardholder is the same as that recorded on the back of the card will be stipulated; and, in case of doubt, the establishment will require the identification document and record the national identity card number or passport number on the receipt, that is to say, that the credit card is a means of payment with the sole presentation of the same; nevertheless, affiliated commercial establishments

---

Banking Board of Ecuador

Resolution No. JB-2015-3396

Page No. 4

have the contractual obligation to carry out the respective verifications in order to secure a safe sale. In the disputed voucher, a signature is recorded, which at first glance differs notably from that recorded by the cardholder in his ID and in the referred contract, followed by a ID number and a phone 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, the credit card issuing entity, prior to making the payment to the affiliated establishment, is obliged to fulfill its obligation to validate that said establishment has complied with what is provided in number 15.2 of article 15 of the aforementioned regulation, as well as that it has carried out the actions, verifications, and precautions pertinent in the transaction that is the subject of this claim, a situation that has not occurred in the present case;

THAT just as the cardholder assumes contractual responsibilities, the issuing entity likewise 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 charges to reflect legitimate transactions; in this 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 that recorded by Mr. Edgar Rodrigo Morocho Tutillo, in the "CONTRACT FOR 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 provided in number 15.2 of article 15 of the referred norm is determined, to abstain from paying the consumption of said voucher, the only document that backs the debt assumed with the banking institution issuing the credit card; determining non-compliance on its part with such obligations, for which the controlled entity for the provision of the credit card purchases transaction channel must adhere to what is provided in said regulation, based on the contractual bond agreed upon both with the cardholders and with the affiliated establishments;

THAT for the foregoing, 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 Codification of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, has been fulfilled in the present case, by having determined an incorrect procedure of the Visa Card issuing entity Banco del Pichincha, for not having carried out the internal procedures and controls it is obliged to comply with, for the provision of a secure 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 respective precaution and verification mechanisms for the completion of a safe sale in the claimed transaction, consequently if it was appropriate

---

Banking Board of Ecuador

Resolution No. JB-2015-3396

Page No. 5

that the control body had ordered the entity to return the value claimed by Mr. Edgar Rodrigo Morocho Tutillo;

THAT the National Legal Intendancy, via memoranda Nos. INJ-DNJ-SAL-2014-0995 of December 12, 2014 and INJ-DNJ-SAL-2015-335 of April 21, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the Adjunct President of Banco Pichincha C.A.; and,

In exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the appeal for review filed by Mr. Antonio Acosta Espinosa, Adjunct President of Banco Pichincha C.A.; and, consequently, CONFIRM the administrative act contained in Official Letter No. IRC-2014-4252 of June 24, 2014, with which the Regional Intendancy of Cuenca ratified the administrative act contained in Official 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 the month of June 2013; (...)” (sic).

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

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

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

Lcdo. Pablo Cobo Luna SECRETARY OF THE BANKING BOARD

---

Banking Board of Ecuador