Circular 29/2008 — Credit Card Rules

Friday, July 11, 2008 OFFICIAL GAZETTE (First Section) 1 CIRCULAR 29/2008 regarding the Rules to which the issuance and operation of credit cards shall be subject. At the margin a logo, which says: Bank of Mexico. CIRCULAR 29/2008 TO MULTIPLE BANKING INSTITUTIONS; LIMITED OBJECT FINANCIAL SOCIETIES, AND REGULATED MULTIPLE OBJECT FINANCIAL SOCIETIES SUBJECT: RULES TO WHICH THE ISSUANCE AND OPERATION OF CREDIT CARDS SHALL BE SUBJECT The Bank of Mexico, based on what is provided in articles 28 of the Political Constitution of the United Mexican States, sixth and seventh paragraphs; 24, 26 and 35 of the Bank of Mexico Law; 22 of the Law for Transparency and Ordering of Financial Services; 48, 72 Bis and 103 fraction IV of the Credit Institutions Law; 8th of the Monetary Law of the United Mexican States; 8th third and sixth paragraphs, 10 first paragraph, 14 first paragraph in relation to 25 fraction II and 17 fraction I, which grant the Bank of Mexico the authority to issue provisions through the General Directorate of Financial System Analysis and the Directorate of Central Banking Provisions, respectively, all of the Internal Regulations of the Bank of Mexico, as well as the Single Agreement on the Affiliation of the Administrative Units of the Bank of Mexico, fractions III and IV, with the object of promoting the healthy development of the financial system and protecting the interests of the public, considering that: a) The Law for Transparency and Ordering of Financial Services made known through Decree published in the Official Gazette of the Federation on June 15, 2007, assigned to other financial authorities various faculties that corresponded to this Central Bank; b) As a result of said assignment of faculties, it is necessary to adapt the regulation issued by the Bank of Mexico in the matter of credit cards, and c) It is important to have rules that promote greater competition and transparency in the credit market, as well as to protect those who request and use credit cards. It has resolved to issue the following: RULES TO WHICH THE ISSUANCE AND OPERATION OF CREDIT CARDS SHALL BE SUBJECT

1. DEFINITIONS For brevity, singular or plural shall be understood by: Contract: the legal act that documents a credit, loan or revolving financing, entered into between the Issuer and individuals or legal entities, based on which Credit Cards are issued. Account: the accounting records of charges or credits that identify the operations carried out with the Credit Cards related to each Contract. Business Days: the days of the week, except Saturdays, Sundays and those on which financial entities are obliged to close their offices and branches, in terms of the general provisions issued for such effect by the National Banking and Securities Commission. Establishment: the provider of goods, services or cash, by accepting Credit Cards. Issuer: multiple banking institutions and limited object financial societies, that issue Credit Cards based on Contracts, as well as regulated multiple object financial societies that are obliged to comply with the credit card rules issued by the Bank of Mexico. Card Number: the serial number that appears on the front of the Credit Card for its

Friday, July 11, 2008 OFFICIAL GAZETTE (First Section) 2 identification. Credit Card: the means of disposition that is issued under the Contract. Cardholder: the individual or legal entity that enters into the Contract with the Issuer. Card User: the individual in whose name the Credit Card is issued. 2. GENERAL PROVISIONS 2.1 The Issuer undertakes, under the Contract, to pay on behalf of the Cardholder the goods, services and, if applicable, the cash provided by the Establishments to the Card Users. 2.2 Credit Cards may be for exclusive use within national territory, or for use within national territory and abroad. 2.3 Credit Cards shall always be issued in the name of an individual, shall be non-transferable and shall contain at least the following: a) Mention of being Credit Cards and that their use is exclusive within national territory, or both within national territory and abroad; b) Social name of the Issuer; c) Credit Card Number; d) Name of the Card User and space for their autograph signature; e) Mention that their use subjects the Cardholder to the corresponding Contract; f) Mention of being non-transferable, and g) Expiration date. 2.4 When Contracts are entered into with legal entities, Credit Cards shall be issued in the name of the individuals designated by them. 2.5 When so agreed by the parties, Card Users may obtain cash at the counters of the Issuer's branches, through automated equipment or systems, as well as, if applicable, at the Establishments that provide it and through the persons with whom multiple banking institutions enter into commercial commission contracts to carry out the operations provided for in article 46 of the Credit Institutions Law, in terms of the general provisions issued by the National Banking and Securities Commission. 2.6 The Issuer may make charges in the Account for the amount of payments for goods, services, contributions, direct debits and cash withdrawals, that the Card User authorizes as follows: a) In operations where the Card User presents the Credit Card at the Establishment, through: i) The signing of promissory notes or other documents; ii) Documents authorized through the use of optical devices that produce the digitized image of the signature, or iii) Documents that are accepted by the Issuer, authorized through electronic means by the Card User's personal identification number (PIN). b) When the Card User presents the Credit Card at the Establishment and authorizes the operation under terms different from those provided in the previous subsection, the amount may not exceed the equivalent in national currency to seventy units of investment per transaction, nor five hundred units of investment per day. These limits shall not apply to the Issuer that for this type of operations assumes in writing the risk of improper use of the Credit Card in case of theft or loss and that therefore absorbs the costs of such improper use, freeing the Cardholder from them, regardless of the date on which the latter gave the respective notice. c) Regarding operations where the Card User does not present the Credit Card at the Establishment, such as those carried out by telephone or through the electronic page on the worldwide network (Internet), it shall be understood that the operation was authorized by the Card User, when the goods or services acquired are delivered or provided, as appropriate, at the address that he has registered with the Issuer. In the event that the goods or services are not delivered or provided at the address mentioned in the previous paragraph, the credit institution that performs the acquiring function, shall agree with the Establishment the manner in which it will verify that the person carrying out the operation is the Card User. Also, the Issuer may make charges in the Account for the agreed interest, commissions and collection expenses established in the Contract. Collection expenses may not be charged more than once a month and must comprise any type of charge for failure to pay on time, regardless of their denomination. 2.7 When the Cardholder, in accordance with article 72 Bis of the Credit Institutions Law, has authorized through the direct debit service the recurring payment of goods and services charged to his Account, he may request the Issuer at any time to cancel the referred authorization. The Issuer must give the Card User the corresponding acknowledgment number, keeping a record of the date on which it was made. Such request shall take effect within a period not exceeding ten Business Days counted from the date the Issuer receives it, so that once the period has expired the Issuer must reject new charges in favor of the Establishment, relating to the respective goods and services. The Issuer must inform the Cardholder, through its Internet electronic page, as well as through a document attached to the Contract, the Contract itself or the account statement, that it has the right to cancel before it the authorizations it has granted in accordance with the provisions of the referred article 72 Bis, as well as that the cancellation will be carried out within a period not exceeding ten Business Days counted from its request. 2.8 Charges made abroad must be recorded in the Account, invariably in national currency. The exchange rate used to calculate the equivalence of the peso in relation to the United States dollar, may not exceed the amount resulting from multiplying by 1.01 the exchange rate that the Bank of Mexico determines on the day of presentation of the respective collection documents, in accordance with what is stated in the "Provisions applicable to the determination of the exchange rate to settle obligations denominated in foreign currency payable in the Mexican Republic" and published in the Official Gazette of the Federation on the next Business Day. 2.9 The Issuer must credit payments made in the Account, subject to what is provided in Circular 22/2008 issued by this Central Bank and published in the Official Gazette of the Federation on May 23, 2008, as well as its modifications. 2.10 In the event that the Cardholder agrees with the Issuer that payments to the Account are made through the direct debit service charged to a demand deposit account at any credit institution or entity, he must grant his written authorization in a document different from the Contract, or through electronic, optical or any other technology that the parties previously agree, in which at least the following information is established: a) Number of the demand deposit account at which the payment will be debited and the name of the corresponding credit institution or entity; b) Date on which said direct debit will take place; c) Amount to be debited, whether fixed or variable, in which latter case a maximum limit must be agreed upon, and d) Procedure to be followed in the event that said account does not have sufficient funds on the agreed date to cover the respective amount or that the amount to be debited exceeds the agreed maximum limit. The Issuer must inform the Cardholder, through its Internet electronic page, as well as through a document attached to the Contract, the Contract itself or the account statement, the manner in which he can debit his payments at other credit institutions, in accordance with this section. 3. CARD USER PROTECTION 3.1 The Issuer may only issue and deliver Credit Cards: a) Prior to the request of the holder in the forms used by the Issuer in accordance with what is provided in article 10 of the "General Provisions referred to in articles 11, 12, 13 and 23 of the Law for Transparency and Ordering of Financial Services applicable to credit institutions, limited object financial societies, regulated multiple object financial societies and financial entities that act as trustees in trusts that grant credit, loan or financing to the public", issued by the National Banking and Securities Commission; b) By the signing of a Contract by the Cardholder, or c) On the occasion of the replacement of a Credit Card issued previously. All Credit Cards must be delivered deactivated and for activation the Card User must expressly request it through the use of automated teller machines, by telephone, through its Internet electronic page, going to the branches or in the premises of the persons with whom multiple banking institutions enter into commercial commission contracts to carry out the operations provided for in article 46 of the Credit Institutions Law, in terms of the general provisions issued by the National Banking and Securities Commission, the Issuer or the commissioned agent in question must keep a record of such activation. Charges in the Account regarding unactivated Credit Cards are not appropriate in accordance with the provisions of this section, except regarding charges for direct debits previously authorized by the Card User. The PIN must be delivered to the Card User separately from the Credit Card. 3.2 The Issuer must have an insurance that covers the outstanding balance of the Account at the time of the Cardholder's death, or forgive said balance upon such event. The Issuer may not establish expiration periods less than one hundred eighty natural days counted from the Cardholder's death, to make effective the aforementioned insurance or forgiveness. In the event that authorized Card Users of additional Credit Cards continue to use them after the Cardholder's death, the Issuer may demand from each of such Card Users, the payment derived from the transactions they have carried out charged to the Account. 3.3 In the event of theft or loss of the Credit Card, once the Card User has knowledge of it, he must notify the Issuer through any of the agreed means. In any case, the Issuer must give the Card User the reference number of the notice, keeping a record of the date and time it was made. From said notice, the Issuer must block the Credit Card, so the Cardholder, his joint and several obligors and subsidiary obligors, will not be responsible for charges made in the Account subsequently. This without prejudice to the fact that the Issuer may release said persons from the payment of charges arising from operations carried out prior to the referred notice, in the terms and conditions agreed for such effect. The Issuer must inform the Cardholder, through its Internet electronic page, as well as through a document attached to the Contract, the Contract itself or the account statement, the scope of its responsibility in case of theft or loss for transactions carried out before the notice. Additionally, it must include the telephone number to make notices for theft or loss of Credit Cards. Notwithstanding the foregoing, the Issuer may make charges subsequent to the notice of theft or loss, the charges previously authorized by the Card User through the direct debit service referred to in section 2.7 of these Rules. 3.4 The Issuer is prohibited from making, on its own behalf or on behalf of third parties, offers to Card Users for the acquisition of goods or services whose payment is made through charges that the Issuer makes in the respective Account, in which it is indicated that to avoid said charges Card Users must express their disagreement. 3.5 The Issuer must include in the correspondence for sending the Credit Card or the PIN, the telephone number to make notices for theft or loss, as well as the following recommendations to the Card User: a) Do not disclose the PIN; b) Do not record the PIN on the Credit Card or keep it with it; c) Destroy the document with the PIN once memorized; d) Change the PIN frequently, and e) Take care of the Credit Card to avoid its improper or fraudulent use. 3.6 In the event that the Cardholder has authorized the Issuer to charge unpaid debts in time for the use of the Credit Card, in any account he has open with it, the respective compensation may only be carried out when the Account maintains a debtor balance past due for more than ninety natural days and that it concerns charges that have not been objected to in time by the Cardholder, whose clarification is pending resolution. 3.7 The Issuer may only charge late interest on the amount of past due minimum payments, in each payment period and regarding the outstanding balance, from the date on which the credit is considered past due for accounting purposes in terms of the general provisions issued by the National Banking and Securities Commission. 3.8 The persons to whom the Cardholder has authorized the use of additional Credit Cards, in no case may be joint and several obligors or subsidiary obligors of the Cardholder. 3.9 In accordance with what is provided in article 23 of the Law for Transparency and Ordering of Financial Services and in the provisions issued by the National Banking and Securities Commission, credit institutions must adhere to the procedure referred to in such article, to attend to the clarifications formulated by Cardholders regarding the charges or credits made in the Account. 3.10 Limited object financial societies that issue Credit Cards based on Contracts, as well as regulated multiple object financial societies - hereinafter Societies - that are obliged to comply with the credit card rules issued by the Bank of Mexico, regarding transactions that do not exceed the equivalent in national currency to twenty thousand units of investment, must adhere to the procedure for clarification of charges or credits described below: a) When the Cardholder does not agree with any of the movements of the Account, he may present a clarification request within the period of ninety natural days counted from the date of the statement or, if applicable, from the carrying out of the operation or service. The request may be presented at the offices, branches or in the specialized unit of the Society in question, in writing, by email or any other means by which its receipt can be reliably proven. In all cases, the Society is obliged to acknowledge receipt of said request. The Cardholder has the right not to make payment of the transaction for which he requests clarification, as well as any other amount related to said payment, until the clarification is resolved in accordance with the procedure referred to in this Rule; b) Once the clarification request is received, the Society has a maximum period of forty-five natural days to deliver to the Cardholder the corresponding report, attaching a simple copy of the document or evidence considered for the issuance of said report, based on the information that, in accordance with applicable provisions, should be in its possession, as well as a detailed report in which all the facts contained in the request presented by the Cardholder are answered. In the case of claims relating to transactions carried out abroad, the period provided for in this paragraph shall be up to one hundred eighty natural days. The aforementioned report and report must be formulated in writing and signed by personnel of the Society authorized for such purpose. In the event that, in accordance with the report issued by the Society, the collection of the respective amount is appropriate, the Cardholder must make the payment of the amount due to him, including ordinary interest in accordance with what was agreed, without the collection of late interest and other accessories generated by the suspension of payment carried out in terms of this Rule; c) Within the period of forty-five natural days counted from the delivery of the report referred to in the previous subsection, the Society is obliged to make available to the Cardholder at its offices, branches or in the specialized unit of the Society in question, the file generated on the occasion of the request, as well as to integrate into it, under its strictest responsibility, all the documentation and information that, in accordance with applicable provisions, should be in its possession and that relates directly to the clarification request that corresponds and without including data corresponding to operations related to third parties, and d) Until the clarification request in question is resolved in accordance with the procedure indicated in this Rule, the Society may not report as past due the amounts subject to such clarification to credit information societies. The Societies subject to this Rule must inform Cardholders in an explanatory document that they attach to the Contract, as well as through their Internet electronic page, that to formulate clarifications regarding the charges or credits made in the Account, they can use the procedure described above. TRANSITORY FIRST. These Rules shall enter into force on July 28, 2008, except for what is provided in Rules 2.6, subsections b) and c), as well as the last paragraph; 2.7, third paragraph; 2.10, second paragraph; 3.1, second and third paragraphs; 3.3, fourth paragraph; 3.5, subsection e); 3.7, as well as 3.10, which shall enter into force on November 28, 2008, and in Rule 3.8 which shall enter into force on July 27, 2009, and SECOND. From July 28, 2008, the "Rules to which multiple banking institutions and limited object financial societies shall be subject in the issuance and operation of credit cards" published in the Official Gazette of the Federation on August 4, 2004 are repealed. Mexico City, July 9, 2008.- BANK OF MEXICO: The General Director of Financial System Analysis, José Gerardo Quijano León.- Initials.- The Director of Central Banking Provisions, Fernando Luis Corvera Caraza.- Initials. For any consultation regarding the content of this Circular, please go to the Department of Authorizations, Consultations and Legal Control, located at Avenida 5 de Mayo number 2, sixth floor, Centro Neighborhood, Mexico City, C.P. 06059, or to the phones 5237.2308, 5237.3200 or 5237.2317.