Banking Board of Ecuador

RESOLUTION No. JB-2015-3375

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 Compilation of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, and norms issued by control bodies, will remain in force insofar as they do 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 it was hearing as of 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 on April 7, 2014, Mr. FAUSTO AMILCAR ACOSTA ARELLANO, filed a claim before this control body against BANCO PICHINCHA C.A., through which he requested that the aforementioned banking institution be ordered to return unrecognized values debited from his checking account No. 3050191504 in the amount of USD $3,319.65, basing his claim on the following:

• "On Friday, December 13, 2013, at 20:00 hours (sic), I withdrew 100,00 USD from the Banco Pichincha ATM at the Villaflora agency, without realizing that I was being followed by some criminals. After this, I drove to my workplace, Pasteurizadora Quito. On the Napo Avenue, in front of the eco-way stop (sic), this is where I was intercepted in a vehicle by two supposed agents who showed me a police ID and asked for documents, claiming that a vehicle similar to mine was stolen from the daughter of a Colonel, to which, due to the pressure, I agreed to hand over my document holder, and one of the supposed agents took them to the vehicle parked behind mine, which I could not observe them reviewing; subsequently, they returned them to me and left the place.";

• "On Monday, December 16 (sic), I was contacted by phone by the bank to notify me that strange withdrawals and purchases had been made with my card, and immediately the card was blocked (...)";

THAT through letter No. DNAE-SAU-2014-02477 of April 22, 2014, the bank was requested to present the pertinent explanations and defenses; a requirement attended to through letters No. AUD-C-R-063-2014 and No. BP-ACEC-2014-0439, received by this control body on May 12 and 14, 2014, in which it states the following:

"Once the corresponding verifications were made in our ATM files, it was established that the transactions subject of the claim were made in checking account No. 3050191504 with the debit card

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debit No. 4381081079318508 issued in the name of Mr. FAUSTO AMILCAR ACOSTA ARELLANO, holder of the aforementioned account (...)

The card was blocked on 12/15/2013 at 06:12:26, that is, when the transactions had already been made (...)

The debit card and personal key generated by Mr. FAUSTO AMILCAR ACOSTA ARELLANO constitute the only mechanism to access ATM services and Xperta debit payments at different commercial establishments, so the strict custody and care taken with the card, as well as keeping the personal key secret, are specific responsibilities of the client. It is important to indicate that Banco Pichincha is technologically prevented from knowing the client's key. (...)

c. The transaction subject of the claim was made at an ATM registered as non-exposed. (...);

THAT through letter No. DNAE-SAU-2014-03559 of June 9, 2014, the User Attention Subdirectorate partially accepted the claimant's request, resolving to order BANCO PICHINCHA C.A. to "(...) within seventy-two (72) hours, (...) make a partial refund of the values claimed by his client and corresponding to the purchases made at the commercial establishments: 'Creaciones Yoli' and 'La Cigarra' on December 14 and 15, 2013, respectively. The value to be credited to the claimant Mr. Fausto Amilcar Acosta Arellano is USD $1,998.40 (...)"; a letter to which, through communication received by this control body on June 17, 2014, BANCO PICHINCHA C.A., filed an appeal for reconsideration, which through letter No. DNAE-SAU-2014-05179 of August 18, 2014, was rejected;

THAT through a document entered into the Superintendency on August 29, 2014, Mr. Simón Acosta Espinosa, Vice President of Banco Pichincha C.A., with the professional sponsorship of lawyer María José Araujo Álvarez, filed an administrative review appeal before the Banking Board against the administrative act contained in letter No. DNAE-SAU-2014-05179 of August 18, 2014, which was accepted for processing by Lic. Pablo Cobo Luna, Secretary of the Banking Board, through letter No. JB-2014-2374 of September 4, 2014; and, in which it argues:

• That "(...) the case we are dealing with is subject to ordinary justice, we respectfully insist that the Control Body abstain from hearing it."
• That "(...) taking into account that the client's personal key has the character of secret and non-transferable, that is, that the key should only be known and handled by its holder, being the sole custodian of the debit card, and that said key and debit card constitute the only mechanism to access payment services via debit at different commercial establishments, it is clear that the Institution has no responsibility regarding the transactions subject of the claim."; and,
• Requests "(...) that the Control Body hold responsible whoever corresponds for the events that occurred. We regret that a respectable client has been

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object of a criminal act; however (sic) it is not viable, fair, nor legal that the Bank should be responsible for events caused by third parties, over which it has no influence.";

THAT article 2 of chapter XII "Norms for the issuance of debit and ATM cards", title VI "Of Operations", book I "General Norms for Institutions of the Financial System", of the Compilation of Resolutions of the Superintendency of Banks and the Banking Board, states that the debit card allows making transactions through ATMs charged to a checking or savings account of the client, likewise, it allows making payments at establishments charged to the card account; that is, that the debit card can be used for ATM withdrawals and as a payment method in commercial institutions charged to a bank account; service coming from an issuer, instrumented in a contract containing rights and obligations;

THAT regarding the argument of the appellant determined in letter a, it must be indicated that according to article 215 of the Code of Criminal Procedure, the preliminary investigation constitutes a pre-procedural moment, consequently, the bank's argument is not appropriate in the sense that the Superintendency of Banks should abstain from hearing and resolving the case that motivates this appeal since it is subject to the knowledge and resolution of ordinary justice;

THAT paragraphs 15.1 and 15.2 of article 15, of chapter V "Constitution, Functioning and Operations of Credit Card Issuing or Administering Companies and Credit Card Departments of Financial Institutions", title I "Of the Constitution", book I "General Norms for Institutions of the Financial System", of the Compilation of Resolutions of the Superintendency of Banks and Insurance and the Banking Board, establish:

"ARTICLE 15.- Institutions authorized to issue or administer credit, payment, or affinity cards, must sign written contracts with affiliated establishments, in which at least the following clauses will be stipulated:

15.1 Obligation of the affiliated establishment to receive the card as a payment method;

15.2 Obligation of the establishment to issue the charge slip and to verify that the signature and rubric signed by the cardholder is the same as that on the back of the card and in the identification document, for which the establishment will require the presentation of the identification document and will note on the receipt the number of the citizenship ID, identity, or passport;"

THAT the banking entity, based on the above, is obligated to subscribe contracts with the affiliated establishments, in which it must be stated as an obligation of the commercial establishment to verify the identity of the cardholder and request the presentation of an identification document, to verify

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that the signature and rubric signed by the cardholder is the same as that on the back of the card, a fact that should have occurred for the claimed transactions to be carried out, detailed below:

TRANSACTION DATE AND TIME	ACCOUNTING DATE	CONCEPT	COMMERCE	NO. OPERATION	AMOUNT
12/14/2013 14:31:41	12/16/2013	POS PURCHASE (ATM)	"Creaciones Yoli"	2989423	1,000.00
12/15/2013 00:40:45	12/16/2013	POS PURCHASE (ATM)	"La Cigarra"	4531882	998.40
				TOTAL	1,998.40

THAT from the review and analysis carried out on the documents that make up the file, it emerges that, with respect to the signatures on the vouchers backing the transactions made, they were not duly verified, as it is evident that there is a notable difference between the signature and rubric on the vouchers, compared to the one registered at the bank and the one on the citizenship ID of Mr. Fausto Amilcar Acosta Arellano, holder of debit card No. 4381081079318508;

THAT in virtue thereof, the affiliated establishments "Creaciones Yoli" and "La Cigarra" failed to comply with what is established in paragraph 15.2 of article 15 cited above, which in order establishes the obligation of the affiliated establishment to verify the identity of the cardholder, confronting the signature appearing there with the signature stamped on the charge slip (voucher) at the time of the transaction; and that the signature and rubric signed by the cardholder be the same as that on the back of the card, in addition to requiring and reviewing that the identification document noted on the receipt be the number of the identity ID or passport of the cardholder, since it is observed in the photocopy of the charge slips, the only document backing the debt assumed with the financial institution issuing the credit card, the statement: "THE ESTABLISHMENT CERTIFIES THAT THE CLIENT'S SIGNATURE IS AUTHENTIC";

THAT based on the obligation of banking entities or authorized to subscribe affiliation contracts with establishments, it emerges that there is a clear contractual non-compliance by the bank and the establishment regarding the validation and verification of the cardholder's identity. It is pointed out that the financial institution in its defenses has not demonstrated the existence of the contract signed with the aforementioned commercial establishments, a contract that according to what is established in the Civil Code article 1561 constitutes law for the parties, and which among its clauses contemplates the mandatory action for the application of the "Safe Sale" procedure in which the aforementioned procedures must be applied;

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THAT paragraph 12.2 of article 12, of chapter III "Code of rights of the user of the financial system", title XIV "Code of Transparency and User Rights", book I of the referred Compilation, states that the user has the right to have entities of the financial system proceed to "Reject and not pay products that have not been expressly requested by the user of the financial system...". Normative provision that Banco Pichincha C.A. failed to observe by accepting the vouchers that were not processed observing the applicable regulation;

THAT the transactions analyzed above, and which are the subject of the claim, are detailed below:

THAT article 3 of chapter I "Of integral management and risk control", title X "Of risk management and administration" of the referred Compilation, refers to that integral risk management is one of the responsibilities attributed to institutions that are part of the Financial System, by virtue of that, they must have formal integral risk management processes that allow identifying, measuring, controlling, mitigating, and monitoring the risk exposures they are assuming;

THAT it is necessary to clarify that the order to restitute the claimed values does not constitute a sanction, but the faculty derived from article 5, chapter IV "Procedure for the attention of claims against institutions of the financial

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system", title XX "Of the Superintendency of Banks and Insurance", book I "General Norms for Institutions of the Financial System", of the Compilation of Resolutions of the Superintendency of Banks and Insurance and the Banking Board;

THAT for the reasons stated, it is evident that in the present case there was an incorrect procedure since the banking entity paid the vouchers, without observing the evident disagreement of signatures;

THAT the National Legal Intendency, through memorandum INJ-DNJ-SAL-2015-0204 of March 9, 2015, recommended to the Banking Board to reject the request contained in the appeal filed by the Vice President of Banco Pichincha C.A.; and,

IN exercise of its legal attributes,

RESOLVES:

SINGLE ARTICLE.- REJECT the request contained in the administrative review appeal filed by Mr. Simón Acosta Espinosa, Vice President of Banco Pichincha C.A.; and, consequently CONFIRM letter No. DNAE-SAU-2014-05179 of August 18, 2014, which ratified letter No. DNAE-SAU-2014-03559 of June 9, 2014, through which the User Attention Subdirectorate partially accepted the claimant's request, resolving to order BANCO PICHINCHA C.A. to "(...) within seventy-two (72) hours, (...) make a partial refund of the values claimed by his client and corresponding to the purchases made at the commercial establishments: 'Creaciones Yoli' and 'La Cigarra' on December 14 and 15, 2013, respectively. The value to be credited to the claimant Mr. Fausto Amilcar Acosta Arellano is USD $1,998.40 (...)"

NOTIFY.- Given at the Superintendency of Banks and Insurance, in Quito, Metropolitan District, on the twenty-second of April of two thousand fifteen.

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

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

Lic. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD