Circular 34/2010 — Credit Card Rules

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CIRCULAR 34/2010, addressed to multiple banking institutions, limited object financial societies and regulated multiple object financial societies regarding the Credit Card Rules.

At the margin a logo, which says: Bank of Mexico.

CIRCULAR 34 /2010

TO MULTIPLE BANKING INSTITUTIONS,
LIMITED OBJECT FINANCIAL SOCIETIES
AND REGULATED MULTIPLE OBJECT FINANCIAL SOCIETIES:

SUBJECT: CREDIT CARD RULES

The Bank of Mexico, considering that to promote the sound development of the financial system and protect the interests of the public, it is necessary:

a) To issue norms that provide greater protection to cardholders in the event of theft or loss of their credit cards, establishing simple and expeditious procedures that allow them to request clarifications from the issuers. The foregoing, without prejudice to the right that cardholders have to resort, among others, to the procedure provided for in article 23 of the Law for Transparency and Ordering of Financial Services;

b) To establish incentives for credit card issuers to adopt additional measures for the benefit of cardholders, in order to reduce risks derived from their use in commercial transactions through electronic pages on the worldwide network (Internet); as well as to avoid the improper use of the information contained in said credit cards ("cloning");

c) To homologate the rules and formats that allow cardholders to authorize with charge to their credit cards the recurring payment of goods or services, with the rules for direct debit in debit cards. The foregoing, with the aim of facilitating its contracting, the objection of improper charges and the cancellation of said service in a fast and secure manner;

d) To establish the manner in which credit card issuers must determine the amount of the minimum payment they request from cardholders in each period, through the incorporation of a formula that promotes that with each minimum payment part of the credit principal is amortized, in order to ensure that debts are covered in a reasonable period, and

e) To update the regulation issued by this Central Institute in matters of credit cards in order to facilitate its consultation and application.

Based on what is provided for 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; 8th of the Monetary Law of the United Mexican States; 4, 4 Bis, 18 Bis 7, 22 and 23 of the Law for Transparency and Ordering of Financial Services; 48, 48 Bis 2, 72 Bis, 103 penultimate paragraph of the Credit Institutions Law; 8th fourth and seventh paragraphs, 10 first paragraph, 14 Bis in relation to 17 fraction I, as well as 14 Bis 1 first paragraph in relation to 25 Bis 1 fraction IV, of the Internal Regulations of the Bank of Mexico, which grant it the attribution to issue provisions through the General Legal Directorate and the General Directorate of Affairs of the Financial System, respectively, as well as the Unique of the Agreement on the Affiliation of the Administrative Units of the Bank of Mexico, fractions III and XII, has resolved to issue the following:

CREDIT CARD RULES

1. DEFINITIONS

For brevity, singular or plural shall be understood as:

Acquirer: the credit institution with which the Establishment or Provider contracts the necessary infrastructure to carry out the clearing and settlement of transactions carried out with Credit Cards.

Contract: the legal act that documents any revolving financing based on which Credit Cards are issued.

Account: the accounting records of charge or credit that identify the operations carried out with Credit Cards related to each Contract.

Business Days: the days of the week in which financial entities are not obliged to close their doors or suspend operations, in terms of the general provisions issued for such effect by the National Banking and Securities Commission.

Recurring Charges:
a) the express acceptance of the Cardholder to make periodic charges in the Account, relating to the payment of goods or services in accordance with what is established in article 72 Bis of the Credit Institutions Law.

Establishment: the provider of goods or services, acquired through the use of Credit Cards.

Issuer: multiple banking institutions and limited object financial societies, as well as regulated multiple object financial societies that are obliged to comply with the Credit Card Rules of the Bank of Mexico, that issue Credit Cards.

Minimum Payment: the amount that the Issuer must require from the Holder in each payment period so that, once covered, the credit is considered current.

Provider: the person who provides the good or service, authorized by the Cardholder to instruct charges in the Account.

Credit Card: the disposal instrument that is issued under the Contract.

Cardholder: the natural person in whose name the Credit Card is issued.

Holder: the person who enters into the Contract with the Issuer.

UDI: the unit of account, whose value in national currency publishes the Bank of Mexico in the Official Gazette of the Federation, in accordance with articles Third of the "Decree by which the obligations that may be denominated in investment units and reform and add various provisions of the Federal Tax Code and of the Income Tax Law" published in the Official Gazette of the Federation on April 1, 1995 and 20 Ter of the Federal Tax Code.

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of the Federation.

2. GENERAL PROVISIONS

2.1 The Issuer is obliged to pay on behalf of the Holder the goods, services and, if applicable, the cash provided by the Establishments to the Cardholders.

2.2 Credit Cards may be for exclusive use in national territory, or for use in national territory and abroad.

2.3 Credit Cards shall always be issued in the name of a natural person, shall be non-transferable and shall contain at least the following:

i. Mention of being a Credit Card and that its use is exclusive in national territory, or in national territory and abroad;

ii. Corporate name of the Issuer;

iii. Serial number of the Credit Card;

iv. Name of the Cardholder and space for his/her autograph signature;

v. Mention that its use subjects the Holder to the corresponding Contract;

vi. Mention of being non-transferable, and

vii. Expiration date.

2.4 When Contracts are entered into with legal entities, Credit Cards shall be issued in the name of the natural persons designated by them.

2.5 When so agreed by the parties, Cardholders may obtain cash at the counters of the Issuer's branches, through ATMs, as well as at the Establishments that provide it and through banking commissioners.

2.6 The Issuer may make charges in the Account for the amount of payments for goods, services, contributions, Recurring Charges and cash withdrawals, as follows:

a) For operations in which the Cardholder presents the Credit Card at the Establishment and authorizes the transactions through:

i. The subscription 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 Cardholder's personal identification number (PIN).

b) For operations in which the Issuer allows the Cardholder to carry out transactions by presenting the Credit Card at the Establishment and its authorization does not require any of the acts provided for in the previous subsection.

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c) For operations in which the Cardholder 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).

d) For the agreed interest and commissions established in the Contract. Commission for 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 its denomination.

2.7 In the event that the charges made in accordance with subsection b) of paragraph 2.6 are not recognized by the Holder within a period of ninety natural days counted from the date on which they are made, the Issuer must credit the Account with the amount in question no later than the second business day following the receipt of the claim.

For this effect, the Issuer may not require the Holder to present information or carry out additional procedure other than the claim through a request for clarification in any of its branches. The foregoing is without prejudice to the Issuer authorizing the use of other means that facilitate the Holder's formulation of the claim.

2.8 When the charges made in accordance with subsection c) of paragraph 2.6 are not recognized by the Holder within a period of ninety natural days counted from the date on which they are made, the Issuer must credit the Account with the amount in question no later than the fourth business day following the receipt of the claim.

For such effect, the Issuer may require the Holder to present the claim in any of its branches, through a request for clarification accompanied by a copy of the Credit Card and an official identification. The foregoing, without prejudice to the Issuer authorizing the use of other means that facilitate the Holder's formulation of the said claim.

What is stated in the first paragraph of this paragraph regarding transactions carried out through Internet, will not be applicable when the Issuer, within the mentioned period, proves to the Holder through the delivery of the record of the transaction in question, that it was carried out using online authentication systems that guarantee that the Cardholder authorized it, such as those known as "Verified by Visa" or "MasterCard SecureCode".

In the event that any Issuer intends to use any other online authentication system equivalent to those mentioned above, it must previously present the respective request to the Authorizations, Queries and Legal Control Management of the Bank of Mexico.

2.9 When the Issuer does not reflect in the corresponding statement of account the charges referred to in paragraphs 2.7, 2.8 and 3.4, the period of ninety natural days established in them to file the respective claim, will begin to run from the statement of account closing date that reflects it.

2.10 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 which it publishes in the Official Gazette of the Federation on the next Business Day.

What is provided for in this paragraph will not be applicable with respect to Credit Cards whose Holder is a resident abroad at the time of issuance.

2.11 The Issuer must credit the Account with the payments made, subject to what is provided for 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.

2.12 The Issuer must allow the direct debit of Credit Card payments to a deposit or investment account at any credit institution. For this, the Issuer must be subject to what is provided for in the "Rules for direct debit in money deposit bank accounts" issued by the Bank of Mexico.

The Issuer must inform the Holder through other means through its Internet page, that he may direct debit the payment of his Credit Card at any credit institution in accordance with what is stated in this paragraph.

3. CARDHOLDER PROTECTION

3.1 The Issuer may only issue and deliver Credit Cards:

a) Prior to the Holder's request in the forms used by the Issuer;

b) Through the subscription of a Contract by the Holder, or

c) On the occasion of the substitution of a Credit Card issued previously.

All Credit Cards must be delivered deactivated and for their activation the Cardholder must request it expressly, either through the autograph signature of the Cardholder himself at the time of receiving it or through the use of ATMs, telephone, through its Internet page, going to the branches or through banking commissioners.

The Issuer must deliver to the Cardholder the corresponding PIN, separately from the Credit Card.

Charges in the Account in relation to Credit Cards not activated in accordance with what is provided for in this paragraph are not applicable. The foregoing will not be applicable to Recurring Charges and others previously authorized by the Cardholder, when the Credit Card is substituted.

3.2 The Issuer must have an insurance through which the outstanding balance of the Account at the time of the Holder's death is covered, or, in its absence, with a similar coverage scheme.

The Issuer may not establish periods less than one hundred eighty natural days counted from the Holder's death, to make effective the insurance or the coverage scheme in question.

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3.3 Notice in case of theft or loss

The Issuer must receive from its Cardholders the notice of theft or loss that they present through any of the agreed means and give a reference number of the notice, as well as keep a record of the date and time in which it was made.

The Holder, his solidary obligors and subsidiary obligors, will not be responsible for the charges that are made on account of the use of the Credit Card from said notice. Notwithstanding the foregoing, the Issuer may demand the payment of Recurring Charges or others previously authorized by the Cardholder.

The Issuer must inform the Holder through its Internet page or in a document attached to the statement of account, the scope of its responsibility for transactions registered before the notice referred to in this paragraph. Additionally, the Issuer must inform the telephone number to make the reference notice.

3.4 Liability in case of theft, loss or improper use of the information contained in the Credit Card

a) Theft or loss.

When transactions are carried out with the Credit Card at an Establishment during the forty-eight hours prior to the notice indicated in the previous paragraph 3.3 and the Holder does not recognize any charge relating to said transactions, the Issuer must credit the respective resources no later than the fourth banking business day following the receipt of the claim.

For the effect of the foregoing, the Holder may file the claim and present it in any branch of the Issuer through a request for clarification and an official identification, within a period of ninety natural days counted from the date on which the charge was made. The foregoing, without prejudice to the Issuer authorizing the use of other means that facilitate the Holder's formulation of the said claim.

b) Improper use of the information contained in the Credit Card ("cloning")

When transactions are carried out with the Credit Card at an Establishment and the Holder does not recognize any charge and claims it within a period of ninety natural days counted from the date on which the charge was made, the Issuer must credit the Account with the respective resources no later than the fourth banking business day following the receipt of the claim.

For such effect, the Holder may file the claim and present it in any branch of the Issuer through a request for clarification, accompanied by a copy of the Credit Card and an official identification. The foregoing, without prejudice to the Issuer authorizing the use of other means that facilitate the Holder's formulation of the said claim.

What is stated in the first paragraph of this subsection will not be applicable when the Issuer, within the mentioned period, proves to the Holder through the delivery of the record of

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the transaction in question, that it was authorized at a point of sale terminal through the authentication of the integrated microcircuit (CHIP) of the card.

3.5 The Issuer is obliged to acknowledge receipt of the request for clarification referred to in paragraphs 2.7, 2.8 and 3.4, indicating at least the number assigned to follow up on the request, as well as the hour and date of receipt.

3.6 In the event that the Issuer has made the credit referred to in paragraphs 2.8 and 3.4, and is able to demonstrate to the Holder that he or any of his additional Cardholders was the one who authorized the charge; it may reverse said credit by making a new charge in the Account.

The foregoing, provided that within a period of forty-five natural days counted from the date on which it received the request for clarification, it delivers to the Holder a report signed by personnel of the Issuer authorized for this purpose, attaching a simple copy of the documents and evidence considered for its issuance, based on the information that should be in its possession, as well as a detailed report in which all the facts contained in the request for clarification presented by the Holder are answered.

In the case of claims relating to operations carried out abroad, the period provided for in the previous paragraph will be one hundred eighty natural days.

Additionally, the Issuer during the period of forty-five natural days following the delivery of said report must make available to the Holder at the branch where the Account is located, or in the specialized unit of the institution in question, the file generated on account of the request for clarification, in which the documentation and information that relates directly to said request is incorporated.

In these cases, late interest or other accessories other than ordinary interest, generated by the failure to pay the charge whose credit has been made by the Issuer in accordance with paragraphs 2.8 and 3.4 mentioned above, will not proceed.

If the period referred to in the second or third paragraphs of this paragraph, as applicable, has elapsed and the Issuer does not deliver said report in the terms indicated, the credit previously made by it will remain firm, so it cannot be reversed.

3.7 Regarding the claim procedures provided for in paragraphs 2.8 and 3.4, the Issuer may only request additional documentation to that indicated in them, when the Bank of Mexico has previously authorized it.

For such effect, the interested parties must present their request to the Authorizations, Queries and Legal Control Management of the Bank of Mexico.

3.8 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 Cardholder:

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a) Do not disclose the PIN; b) Do not engrave the PIN on the Credit Card or store it with the card; c) Destroy the document containing the PIN once memorized; d) Change the PIN frequently, and e) Safeguard the Credit Card to prevent misuse.

3.9 In the event that the Holder has authorized the Issuer to charge the overdue balance of the Account to any deposit or investment account held with it, the Issuer may only make the respective charge when said overdue balance has been overdue for more than ninety (90) natural days and concerns charges that have not been objected to in a timely manner by the Holder, whose clarification is pending resolution.

3.10 In case of non-compliance with the Minimum Payment, the Issuer shall not accelerate the installments not yet due relative to promotions of months without interest or with interest. The foregoing shall apply until the credit is considered due for accounting purposes in terms of the general provisions issued by the National Banking and Securities Commission, without prejudice to what is provided in Article 294 of the General Law of Negotiable Instruments and Credit Operations.

3.11 The Issuer may only charge late interest on the outstanding balance of the credit from the date it is considered due for accounting purposes in terms of the general provisions issued by the National Banking and Securities Commission. Until such a situation occurs, the Issuer may only charge late interest on the amount of Minimum Payments not covered in each payment period.

3.12 The Issuer is prohibited from making, on its own behalf or on behalf of third parties, offers to Cardholders 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, Cardholders must express their disagreement.

4. MINIMUM PAYMENT

4.1 The Minimum Payment shall be the amount resulting from the greater of the following items:
a) The sum of: i) 1.5 percent of the outstanding balance of the revolving part of the credit line at the cut-off of the period, without taking into account the interest of the period nor the value added tax (VAT), plus ii) said interest and VAT, and b) 1.25 percent of the credit line limit.

In the event that the Minimum Payment is greater than the outstanding balance of the revolving part of the credit line at the cut-off of the period, the Issuers shall charge the latter.

4.2 The Issuer may freely determine the amount of the Minimum Payment, provided that said amount is greater than that corresponding in accordance with what is established in item 4.1 of these Rules.

5. RECURRING CHARGES

5.1 Contracting

When the Issuer allows Recurring Charges to be made, it shall attend to the contracting requests presented by Cardholders in accordance with item 5.4 and by using the format established in Annex 1.

The Issuer may only process the Recurring Charge requests requested by the Acquirer when the information sent by the latter includes at least what is established in said Annex 1. For this purpose, the Acquirer shall agree with the Providers the obligation to collect at least said information.

5.2 Cancellation

The Issuer shall inform, through its Internet page or in a document attached to the account statement, the right that the Cardholder has to request the cancellation of any Recurring Charge.

The Issuer shall allow the Cardholder to use the format provided in Annex 2 to request the cancellation of Recurring Charges at any time in accordance with item 5.4.

The foregoing, regardless of whether the Cardholder had authorized said Recurring Charges through the Provider or whether the means used to authorize them was different from that used to formulate the cancellation request.

The cancellation shall take effect within a period not exceeding three (3) Business Days counted from the date the Issuer receives the request, so that after the referred period has elapsed, the Issuer shall refrain from making charges in the Account related to the Recurring Charge in question.

5.3 Objection of charges

The Issuer shall attend to objections of Recurring Charges in accordance with what is provided in Article 23 of the Law for the Transparency and Ordering of Financial Services and by using the format contained in Annex 3.

5.4 Common provisions for Recurring Charges

5.41 The Issuer shall make known the formats for the contracting requests of Recurring Charges, their cancellation, or to make objections of charges related to said service, contained in Annexes 1, 2, and 3, respectively, in its branches and on its Internet page in one of the sections through which the general public has access.

Credit institutions that are Issuers shall also do the aforementioned through the electronic banking service they provide to their Cardholders.

5.42 The Issuer shall receive in its branches the requests referred to in the previous item that Cardholders present to it, as well as, in the case of credit institutions, through the electronic banking service they offer, during public service hours.

The Issuer may also receive said requests through other electronic, optical, or any other technology means previously agreed upon with Cardholders. In the event that such requests are made by telephone, the Issuer shall collect the same information indicated in said Annexes 1, 2, and 3, as applicable.

In no case may the Issuer require any additional information, documentation, or procedure other than those established in these Rules, to attend to the aforementioned requests or objections, except for what is necessary to identify the Cardholder.

5.43 The Issuer shall keep a record of the date on which it receives from the Cardholder the request to make Recurring Charges, cancellation, or objection of charges and acknowledge receipt with at least the number that identifies the request and the date of receipt. The acknowledgment of receipt shall be made through the same means in which the request in question is presented.

5.44 The Issuer shall not charge commissions for processing and resolving objections that are deemed valid, nor for canceling Recurring Charges.

ANNEX 1
FORMAT FOR CONTRACTING RECURRING CHARGES
___ of ___________ of 20___.

---

(NAME OF RECIPIENT)
I request the Recurring Charge subject of this authorization based on the information indicated below:

1. Name of the Provider: _______________________________________________________.
2. Description of the good or service subject of the Recurring Charge: __________________________.
3. Duration of the billing period (Example: weekly, bi-weekly, monthly, bimonthly, quarterly, semi-annual, annual, etc.)_______________________________________________________.
4. Name of the Credit Card Issuer._____________________________________.
5. Credit Card Number (16 digits):________________________________________.
   OPTIONAL INFORMATION FOR THE CARDHOLDER:
   Identification number generated by the Provider:
   Client _____________;
   Reference _____________, or
   Contract _____________.
   I am aware that at any time I may ask the Issuer to cancel without cost the performance of the requested Recurring Charge.
   Sincerely,
   _________________________________________________ (NAME OR BUSINESS NAME OF THE CARDHOLDER)

ANNEX 2
FORMAT FOR CANCELING RECURRING CHARGES
___ of ____________ of 20___.
__________________________________________________ (NAME OF THE CREDIT CARD ISSUER) I request that said Issuer cancel the Recurring Charge of the payment corresponding as follows:

1. Name of the Provider: _______________________________________________________.
2. Description of the good or service subject of the Recurring Charge that is requested to be canceled__________________________________________________________.
3. Credit Card Number (16 digits):________________________________________.
   OPTIONAL INFORMATION FOR THE CARDHOLDER:
   Identification number generated by the Provider:
   Client _______________;
   Reference ___________, or
   Contract _____________.
   I am aware that the cancellation is at no cost to me and that it will take effect within a period not exceeding 3 business days counted from the date of presentation of this request.
   Likewise, I am aware that if in addition to the Recurring Charge I am requesting to cancel, there were other Recurring Charges authorized by me in favor of the same Provider that cannot be distinguished from the first, it is likely that to attend to this request, the Issuer may have to cancel all of them. Sincerely, _________________________________________________ (NAME OR BUSINESS NAME OF THE CARDHOLDER)

ANNEX 3
FORMAT TO OBJECT CHARGES DERIVED FROM RECURRING CHARGES ___ of ___________ of 20___.
__________________________________________________ (NAME OF THE CREDIT CARD ISSUER) I request that said Issuer cancel the charge for $_________ made on day ___ of 20__, to the Card identified with the number: ________________ (16 digits of the credit card). Regarding this, I declare that:
(* Mark with an X the corresponding option)
____* I did not authorize the charge.
____* The authorization was canceled prior to the making of the charge.
_* There is duplication of charges, made on the day or days of ___________ of 20.
I am aware that this objection will have no cost when resolved in my favor. Likewise, I am aware that if it is resolved against me and that Issuer intends to charge for the management, the charge may not exceed: $ _______.
OPTIONAL INFORMATION FOR THE CARDHOLDER:
Additional comments: ______________________________________________________.
Email address to receive the response: _______________________________________.
Identification number generated by the Provider:
Client ___________;
Reference ___________, or
Contract ___________.
Sincerely,
_________________________________________________ (NAME OR BUSINESS NAME OF THE CARDHOLDER)

TRANSITIONAL PROVISIONS
FIRST. These Rules shall enter into force on the third banking business day following their publication in the Official Gazette of the Federation.
On the date indicated, Circular 29/2008 published in the Official Gazette of the Federation on July 11, 2008, including its modification made known through Circular 4/2010 published in the Official Gazette on January 18, 2010, shall be repealed.

SECOND. Regarding credit cards issued prior to the date of entry into force of these Rules:
a) The percentage referred to in Rule 4.1, item a), shall enter into force in accordance with the following:
i) From January 3, 2011, to January 3, 2012, it shall be 0.5; ii) From January 4, 2012, to January 3, 2013, it shall be 1.0, and iii) From January 4, 2013, onwards, it shall be 1.5 as provided in the referred item a). b) What is provided in item 4.1, item b), shall enter into force on January 4, 2013.

THIRD. Issuers shall make known the formats referred to in item 5.41 no later than January 3, 2011.

Mexico, D.F., November 11, 2010.- BANK OF MEXICO: The Director General of Affairs of the Financial System, José Gerardo Quijano León.- Rubric.- The General Legal Director, Héctor Reynaldo Tinoco Jaramillo.- Rubric.
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, Colonia Centro, Mexico City, D.F., C.P. 06059, or to the phones 5237.2308, 5237.2317 or 5237.2000 Ext. 3200.