Banking Board of Ecuador

RESOLUTION No. JB-2015-3460

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 Superintendence of Banks and Insurance and the Banking Board, and the norms issued by control bodies, will remain in effect in all that does not oppose what is established 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 handling on the date of its entry into force, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board;

THAT from the indicated provisions, it is established that the Banking Board is competent to resolve the present review appeal;

THAT Mrs. Mayra Lissette Pérez Cedeño, through a complaint form, filed on March 12, 2014, at the Regional Intendancy of Guayaquil, a complaint against the Banco Nacional de Fomento, as she stated, having suffered a cloning of her debit card. In the complaint filed against the Banco Nacional de Fomento on October 16, 2013, she detailed twenty-six unauthorized withdrawals, made between October 2 and October 10, 2013, through various automated teller machines (ATMs), for an amount of US$ 2,521.50, plus costs generated by financial services;

THAT by letter No. DAYEU-ISFP-REQ-2014-545 of March 24, 2014, the Director of User Attention and Education of the Regional Intendancy of Guayaquil requested the Superintendent of Customer Attention of the Banco Nacional de Fomento Guayaquil to send explanations and defenses regarding the present complaint; a matter that was communicated to the complainant by the same means;

THAT by letter No. 04347 of April 14, 2014, the Director of the Customer Attention Unit of the Banco Nacional del Fomento presented the information required by the control body;

THAT by letter No. IRG-DAYEU-V-R-2014-415, of May 9, 2014, the Regional Intendant of Guayaquil resolved:

"1.- ACCEPT the complaint presented by Mrs. MAYRA LISSETTE PEREZ CEDEÑO, with citizen ID No. 092638294-6, against the controlled financial institution BANCO NACIONAL DE FOMENTO, due to the considerations expressed in the sixth recital of the present letter.

2.- ORDER the controlled financial institution BANCO NACIONAL DE FOMENTO to proceed to restore to Mrs. MAYRA LISSETTE PEREZ CEDEÑO the sum of US$ 2,521.00 (TWO THOUSAND FIVE HUNDRED AND TWENTY-ONE 00/100 DOLLARS)"

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(...), debited from savings account No. 4001141938, on October 2 and 10, 2013, being able to exercise their right of recourse against the financial institutions owning the automated teller machines where the disputed withdrawals occurred;

THAT by writing received in the control body on June 5, 2014, the Commercial Manager of the Banco Nacional de Fomento, Guayaquil Branch, filed a request for reconsideration against letter No. IRG-DAYEU-V-R-2014-415 of May 9, 2014, through which the control body ordered the refund of values to Mrs. Mayra Lissette Pérez Cedeño;

THAT the Banco Nacional de Fomento, through a credit note, refunded to the complainant's account the sum of US$ 291.50, for the concept of "card and magnetic band cloning insurance," contracted and applied by BANRED, for cases of risks inherent to the use of debit cards, a value that did not cover the value subject of the complaint;

THAT the Regional Intendant of Guayaquil, through letter No. IRG-DAYEU-V-R-2014-837 of July 30, 2014, partially accepted the claim of the request for reconsideration filed by the Banco Nacional de Fomento, "with respect to the credit note in favor of Mrs. Mayra Lissette Pérez Cedeño, for the sum of USD $291.50, dated April 11, 2014, and also CONFIRM the administrative act contained in Letter No. IRG-DAYEU-V-R-2014-415 of May 9, 2014, ordering the controlled institution BANCO NACIONAL DE FOMENTO to proceed with the restitution of the sum of USD $ 2,229.50, corresponding to the difference of the unauthorized transactions by the user; Banco Nacional de Fomento is empowered to recur against the institutions owning or operating the automated teller machines whose defects or lack of security measures caused the fraud, pursuant to the regulations indicated in paragraph 7 of the present letter";

THAT by communication entered in the Superintendence of Banks and Insurance on August 18, 2014, Mgs. Ángela M. Avilés Gómez, Commercial Manager (E) of the Banco Nacional de Fomento - Guayaquil, with the professional sponsorship of lawyer Nicolás Rodríguez Campo, filed before the Banking Board a review appeal against the administrative act contained in letter No. IRG-DAYEU-V-R-2014-837 of July 30, 2014, with the following arguments: that clauses fourth and eighth of the agreement celebrated between the savings account and the bank stipulate the responsibilities of the client as custodian of the card and the key delivered by the bank; that the client did not apply basic security recommendations for the handling of the debit card, which were made known to them through various means, among others: "SECURITY FLEX; ATM MESSAGING; TRANSACTION RECEIPTS; CIRCULARS, ETC.; that it was brought to the knowledge of the Regional Intendant of Guayaquil that the Banco Nacional de Fomento is permanently carrying out procedures in order for the requested information to be delivered to the control body, since without access to those files they are subject to some entities having less predisposition than others, which has caused the information to be delivered partially by said entity; that the evidence provided by the Banco Nacional de Fomento through the documentation sent to the body regarding the client's complaint was not considered for resolution, which becomes new documentary evidence or new information, insofar as despite always being

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incorporated into the process, elements that do change the circumstances, so that ultimately the challenged resolution is null;

THAT by letter No. JB-2014-2321 of August 28, 2014, the Secretary of the Banking Board communicated to the appellant that the referred review appeal has been accepted for processing; and by letter No. JB-2014-2322, of the same date, communicated the particular to Mrs. Mayra Lissette Pérez Cedeño;

THAT by memorandum No. JB-2014-803 of September 17, 2014, the Secretary of the Banking Board sent additional information sent by the Banco Nacional de Fomento, which has been incorporated into the file for the present analysis;

THAT this appeal is analyzed 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 Superintendence of Banks and Insurance and the Banking Board, and the norms issued by control bodies, will remain in effect in all that does not oppose what is established 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 handling on the date of its entry into force, within a period of one hundred and eighty days, extendable at the discretion of the Monetary and Financial Policy and Regulation Board. From the indicated provisions, it is established that the Banking Board is competent to resolve the present review appeal;

THAT article 1, in concordance with 180, letters b) and o) of the General Law of Financial System Institutions, in force on the date of the event, contemplated among the functions and attributions of the Superintendence of Banks and Insurance, within the orbit of its competence, the supervision and control of the financial system, keeping in mind the protection of the interests of the public, as well as required that controlled institutions present and adopt the corresponding corrective measures;

THAT based on the indicated legal norm, 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 Compilation of Resolutions of the Superintendence of Banks and Insurance and the Banking Board, the procedure for the attention of complaints 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 carried out by the Superintendence determines the need for the controlled institution to introduce corrections that regularize the situation that motivated the complaint, the Superintendent of Banks and Insurance or their delegate will issue the corresponding order. Likewise, if the situation that motivated the complaint referred to in the previous paragraph originated in an incorrect procedure of the controlled institution, which had caused harm to the complainant, the Superintendence of Banks and Insurance may order the return of the claimed values, granting the legal representative of the entity a period that cannot exceed fifteen (15) days from notification to send, under the precautions of law, the proof of compliance with the order issued;

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Additionally, the norm states that for complaints of unauthorized withdrawals due to evidence of attempts or frauds produced in automated teller machines, the control body orders the return of the claimed values to the institution where the client holds the account, if said withdrawals originated in an incorrect procedure of the controlled institution, which may recur against the owning and operating institution of the automated teller machine whose defects or lack of security measures caused the fraud;

THAT from letter number 019-2014 of January 21, 2014, it is appreciated that the Banco Nacional de Fomento, although it sends information, does so partially, therefore, its assertion that it attended the requirements of the control body becomes inadmissible, given that it tried to disclaim its responsibility regarding the complaint with the argument that the ATMs where the withdrawals were made belong to other banks. In any case, the sending of a detailed historical log of movements of the transactions carried out on Mrs. Mayra Pérez Cedeño's account is not appreciated, where the alerts of the operations being executed can be appreciated, whether by messages via email or cellular telephone and more informative data of said transactions;

THAT the "CONFIDENTIAL REVIEW REPORT", of November 11, 2014, issued by the Operational Risk Manager, states: "(...) it is determined that the transaction records were successful and carried out normally; it was not possible to find evidence of compromise of our client's credit card according to the analysis of coincidences based on the reports of the BANRED Security Committee; however, the client accessed automated teller machines of other Banks where there could have been a possible compromise of the information of his debit card";

THAT from the report of withdrawals made in the client's account, from June 4, 2013, to October 10, 2013, it is observed that twenty-six withdrawals are made only from the city of Quito, through various ATMs belonging to the Banks "PICHINCHA, INTERNACIONAL, GUAYAQUIL, and PROAMERICA", transactions that are registered as authorized by the Banco Nacional de Fomento, the depository institution of the account of Mrs. Mayra Lissette Pérez Cedeño;

THAT the cited report evidences that the withdrawals demonstrate a uniform behavior during the period questioned by the client, that is, three withdrawals are executed daily, two for one hundred dollars; and one for ninety dollars, which reached the daily limit indicated by the bank to carry out these transactions;

THAT the complaint arose from withdrawals through automated teller machines, nevertheless, the statement of account in the name of the client records a withdrawal of 600 dollars, on October 3, 2014, made with a passbook, not questioned by the complainant, and which served as an argument for the bank to point out that the savings account holder should have noticed the questioned withdrawals at the time of said movement, a fact that does not disprove the complaint of Mrs. Mayra Pérez Cedeño, as it is not pertinent, and as it is not evidenced that it was made with the presence of the aforementioned passbook by the appellant;

THAT the appellant argued that the client did not apply basic security recommendations for the handling of the debit card; however, from the review and analysis of the defenses presented by the bank and the documentation that supported the appeal in

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question, even if it referred to the content of the agreement signed by the client with the bank, brochures, and others, there is no evidence that the user failed to observe the custody of their card and the key of their debit card, even more so, when the bank did not present, within the complaint investigation, information from the video recordings of the transactions in dispute, joined to this, the Bank's Operational Risk Report of November 11, 2013, in which it derives the exposure to risk of the questioned transactions to the fact that they were made in automated teller machines of other financial institutions that potentially "could have been exposed to third-party manipulation". In any case, the bank argued that not having access to the files of the entities where the transactions were processed has caused said information to be delivered to the control body in a partial manner, an argument that does not disprove the obligation of the Banco Nacional de Fomento regarding the custody of the funds deposited in said financial institution by the client, under the contract signed between the parties, which was based, in turn, on article 51 of the General Law of Financial System Institutions, in force on the date of the claimed event;

THAT on the other hand, the user and/or client of the financial system, under the Constitution and the Law, has 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 its content and characteristics; the Banco Nacional de Fomento, by offering as a financial service the withdrawal of ATMs, is obliged to ensure that these, whether own or contracted, provide optimal security, among others, physical, mechanical, or electronic, referred not only to the use of the assigned key but also to the inviolability of the debit card delivered to the client, in order to fulfill its obligation to return the deposited funds to their legitimate owner;

THAT the preceding analysis, which included the compilation of the file formed around the complaint and appeals presented, evidences that the appealed letter complied with due process, for such reason, it is not appropriate for the appellant to argue nullity of the appealed letter, having considered for resolution the documentation and defenses provided by the Banco Nacional de Fomento;

THAT for the reasons expressed, it is observed an incorrect procedure of the Banco Nacional de Fomento in not providing the respective security for the transactions in dispute, through the network of automated teller machines, placed as a financial service for the client's use, by not monitoring nor implementing alerts on the movements that were occurring in the account entrusted to its custody, allowing the security controls of the debit card delivered by the bank to the client to be violated, which caused Mrs. Mayra Lissette Pérez Cedeño economic harm, consequently, the requirement established in article 5, section I, chapter IV, title XX, book I of the Compilation of Resolutions of the Superintendence of Banks and Insurance and the Banking Board is met, for the control body to order the refund of the disputed values;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0114 of February 5, 2015, recommended to the Banking Board to reject the claim contained in the appeal filed by the Commercial Manager (E) of the Banco Nacional de Fomento – Guayaquil; and,

IN exercise of its legal attributions,

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RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the review appeal filed by Master Ángela Mercedes Avilés Gómez, Commercial Manager (E) of the Banco Nacional de Fomento – Guayaquil; and, CONFIRM the administrative act contained in letter No. IRG-DAYEU-V-R-2014-837 of July 30, 2014, through which it partially accepted the claim contained in the request for reconsideration filed, with respect to the value of US$ 291.50 credited to the complainant's account, confirming in everything else the administrative act contained in letter No. IRG-DAYEU-V-R-2014-415 of May 9, 2014; and, ordered the BANCO NACIONAL DE FOMENTO to proceed to restore to Mrs. MAYRA LISSETTE PEREZ CEDEÑO, the sum of US$ 2,229.50 (TWO THOUSAND TWO HUNDRED AND TWENTY-NINE 50/100 DOLLARS), debited from savings account No. 4001141938, on the days from October 2 to October 10, 2013, corresponding to the difference of the transactions not recognized by the savings account.

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

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

I CERTIFY.- Quito, Metropolitan District, on June four of two thousand fifteen.

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD