Banking Board of Ecuador

RESOLUTION No. JB-2015-3351

THE BANKING BOARD

CONSIDERING:

THAT this appeal is resolved in accordance with the First Transitory Provision of the Organic Code of Monetary and Financial Matters, 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 of the Banking Board, and the norms issued by the control bodies, will maintain their validity in all that does not oppose what is established in the Organic Code of Monetary and Financial Matters, until the Monetary and Financial Policy and Regulation Board resolves what corresponds, according to the case; and, with the second paragraph of the Third Transitory Provision, which states that the Banking Board will continue to act until it resolves all complaints, appeals, and other administrative procedures that it was hearing on 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 from the indicated provisions it is established that the Banking Board is competent to resolve the present review appeal;

THAT Ms. Tania Maribel Valverde León, holder of the MasterCard PacifiCard No. (...), through a communication entered into this Superintendence of Banks and Insurance on January 2, 2014, filed a complaint against Pacificard S.A., Card Issuing and Administration Company, regarding charges she claims she did not make, in which she stated: "(...) On October 14, 2013, around 7:30 AM (Italian time) I was in the city of Florence-Italy registering my departure from the hotel (...) I left my wallet for a moment at the hotel reception desk and when I went to look for it it was no longer there, (...) and after searching the entire hotel and not finding it I understood that my wallet had been stolen, in which were all my documents (...) including the PacifiCard MasterCard. (...) In view of the fact that I was on a tour (...) any procedure regarding the theft had to be carried out in the next stopping city (...) for this in Italy it was 11:30 AM and in Ecuador it was 4:40 AM, I could not contact the [sic] telephone numbers of the Pacificard MasterCard in Ecuador and I had to search for an emergency number finally around 12:00 (Italian time) and 05:00 AM Ecuador time that I managed to block the PacifiCard MasterCard (...)";

THAT the Director of User Attention and Education of the Regional Intendancy of Guayaquil, through letter No. DAYEU-ISFP-REQ-2014-099, of January 13, 2014, requested Pacificard S.A. Card Issuing and Administration Company to send the pertinent explanations and defenses;

THAT the Judicial Attorney of PACIFICARD S.A., with letter No. DJ-PC-044-2014, of January 23, 2014, informed the control body that the complaint was not valid since the transactions met all requirements to be successful and were made before the time and date of the card block, as established in literal "e", numeral 2, third clause of the credit card contract, in harmony with article 13, numeral 13.9 of section III of chapter V "Constitution, functioning and operations of card issuing or administering companies;"

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of the credit card, as established in literal "e", numeral 2, third clause of the credit card contract, in harmony with article 13, numeral 13.9 of section III of chapter V "Constitution, functioning and operations of card issuing or administering companies;"

THAT with letter No. IRG-DAYEU-V-R-2014-0234, of March 31, 2014, the Regional Intendant of Guayaquil, resolved the following: "1.- ACCEPT the complaint presented by Mrs. TANIA MARIBEL VALVERDE LEÓN with citizenship ID No. 0917120313, against the controlled financial institution PACIFICARD S.A., (...) and dispose to cancel the charges made to her MasterCard - PacifiCard No. (...) credit card amounting to $ 717.47 (SEVEN HUNDRED SEVENTEEN 47/100), United States dollars, for two purchases made at establishments named Autogrill SPA and ICI DI REPETTO [sic], located in Florence - Italy, with the MasterCad - PacifiCard credit card indicated above, for the reasons invoked in the body of the present letter. (...)";

THAT through a document received at the Superintendence of Banks and Insurance on April 10, 2014, the economist Miguel Carrillo Bastidas, Acting Manager of the General Manager and as such legal representative of Pacificard S.A. Card Issuing and Administration Company, with the professional sponsorship of lawyer Gerson Haro Merino, filed a review appeal before the Banking Board, against letter No. IRG-DAYEU-V-R-2014-234, of March 31, 2014;

THAT the appellant argued that with the challenge of the transaction support by the user, the Dpto. of Control and Fraud Prevention of PacifiCard was asked to pronounce on the case; that the head of the said Department stated that the complaint is not valid, based on the Credit Card Issuance Agreement signed by the user, because the transactions were made before the time and date of the credit card block, that is, the established process for handling complaints was carried out; that the judging official did not take into consideration that the user stated in her complaint that the person who took her credit card also took her wallet where her personal documents were, therefore he raises, among others, these questions: and if the person who made the transaction presented the user's citizenship ID and signed the voucher very similar to the user's signature? does the clerk (salesperson) at the commercial establishment in ITALY, once the credit card and identification containing the same name as that registered on the card are presented, still have to suspect that the person making the purchase is not the cardholder?; that the fact that the signature on the voucher and the signature of the cardholder registered with the entity are evidently different cannot be taken as a basis to resolve the complaint; that as the claimant indicates if she suffered a theft her signature will not be on the voucher, therefore it is not fair or legal to shift the responsibility to the issuer; that he reinforces his argument citing one of the considerations of the Banking Board resolution on an analogous review appeal in which it was noted that affiliated establishments will require in case of doubt the presentation of the identity card or passport of the cardholder to confront the signature of the owner or holder of the credit card; that in this regard, to the control body and the employees

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of the commercial establishments does not correspond and they are not capable of verifying the authenticity of the signature of the credit card holder; that commercial establishments are not affiliated with PacifiCard S.A. and there is no contractual relationship with them, that therefore they demonstrated having carried out a chargeback process to the acquiring banks of the transactions (who do have a contractual relationship with these commercial establishments) to try to recover the values for the disputed transactions; that PacifiCard is responsible for charges that enter after the block notification made by the cardholder, and that charges made before the notification by the cardholder in cases of loss, theft or misplacement of the card will be the responsibility of the cardholder himself, as stated in the credit card issuance agreement signed by the cardholder, which is law for the parties, as established by the Civil Code, in concordance with what is established in the norm constant in the Compilation of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board;

THAT with letter No. JB-2014-881, of April 16, 2014, the Secretary of the Banking Board, accepted the review appeal filed, and with letter No. JB-2014-882, of the same date, made known the particular to Mrs. Tania Maribel Valverde León;

THAT through memorandum No. JB-2014-348, of May 9, 2014, the Secretary of the Banking Board transferred to the National Legal Intendancy the document of Mrs. Tania Maribel Valverde León, in which she made observations to the resource presented by PacifiCard S.A.;

THAT article 1, in concordance with 180, letters b) and o) of the General Law of Institutions of the Financial System, in force on the date of the event, disposed to the Superintendence 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 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, title XX, book I, of the Compilation of Resolutions of the Superintendence of Banks and Insurance and of 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 his delegate will issue the corresponding disposition. Likewise, if the situation that motivated the complaint referred to in the previous paragraph originated in an incorrect procedure of the controlled institution, which caused damage to the claimant, 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 the

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notification to send, under the precautions of law, the proof of compliance with the order issued;

THAT numeral 13.9, of chapter V.- Constitution, functioning and the operations of card issuing or administering companies and credit card departments of Financial Institutions; title I.- Of the Constitution; book I.- General norms for the application of the General Law of Institutions of the Financial System, of the Compilation of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, in force, on the date of the event, 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, citizenship ID number and card number, must notify the issuer of the particular, the first not being responsible, from that moment on, for the charges made against the card reported as lost or stolen. The notification can 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 Civil Procedure Code. The notification made by telephone must be ratified in writing within the term of 48 hours;

THAT in tune with the aforementioned norm, literal e) of the third clause of the PacifiCard Credit Card Issuance Agreement, signed with the cardholder, stated that in case of theft, robbery or loss of the card, the cardholder must notify PacifiCard of the particular, the first not being responsible from this moment on for the charges made against the card reported as lost or stolen; and, literal a), ibidem, stipulated that in case of cardholder complaints alleging fraud by improper use of their card and if they manage to prove said fraud, they will be released from responsibility for such charges, which will be assumed by PacifiCard, who in turn will charge them to the affiliated establishments;

THAT from the information constant in letter No. DJ-PC-044-2014, of January 23, 2014, it is evident that the two transactions subject of the complaint were made in commercial establishments located in Florence, Italy, on October 14, 2013, from 1:09:29 to 1:19:02 and the card was blocked on October 14, 2013, at 05:02:22 (Ecuador time). From the vouchers in dispute it is appreciated that the first purchase was made at 08:09 hours and the second purchase at 08:19 hours, (Italian time). In any case, the claimant stated in her complaint letter the reasons that prevented her from making, immediately, the request to Pacificard S.A. for the blocking of the credit card;

THAT the initial complaint of the cardholder concerned the non-acceptance of two purchases made abroad, who alleged theft of the credit card; therefore the signature that appears on one of them does not belong to her and the other contains no signature whatsoever;

THAT the legal representative of Pacíficard S.A. in the review appeal filed against the administrative act indicated in the preceding paragraph, submitted to the

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charge corresponding to the purchase made in Autogrill SPA, for US$20.90, which appears without signature, accepting partially the resolution of the control body; but not, of the purchase in ICI REPETTO, for US$696.57 (both establishments located in Italy);

THAT with respect to the signature constant in one of the vouchers, which has not been assumed by the cardholder as hers, numeral 15.2 of article 15, chapter V, title I, book I of the Compilation, ibidem, norm in force on the date of the event, states that institutions authorized to issue or administer credit, payment or affinity cards, must sign written contracts with affiliated establishments, in which the obligatoriness of the establishment to issue the charge note and to verify that the signature and rubric that the cardholder signs is the same that appears on the back of the card will be stipulated; and, that in case of doubt, the establishment will require the identification document and note the number of the identity card or passport. In this line, it is not pertinent that PacifiCard argues that the commercial establishments where the transactions were made are not affiliated with PacifiCard; however, it evidences a contractual relationship with the acquiring banks, which demonstrates the responsibility between parties to guarantee the cardholder, who cannot be left without defense, as she is not a party to the commercial contracts with the establishments and the acquiring banks; and, in attention to the fact that the vouchers were sent to PacifiCard Ecuador for its acceptance and charge management, which at this moment was already aware of the cardholder's complaint in order to verify the safe sale procedure; likewise, with respect to the signature stamped on the voucher of the five hundred ten euro purchase, which evidences a difference at first glance, with the signature that appears on the photocopy of the citizenship ID of Mrs. Tania Maribel Valverde León and with the contract signed by the cardholder with the issuer, which is part of the file; nevertheless, it competes to analyze that the charge notes meet the requirements contemplated in the norm and reject those that do not comply with them, in any circumstance of the purchase; in the present case, the voucher of the transaction carried out at the establishment "Ice Di Repetto" for five hundred ten euros, evidences lack of verification of the signature, so the issuer should have abstained from paying; consequently, the argument of the appellant is not valid in disavowing his responsibility for the fact that the premises where the transaction was made do not have a contractual link with PacifiCard S.A.; as well as not pretending to assimilate as analogous to the case a resolution issued in a different cause;

THAT it does not correspond to the control body to adjudicate the legitimacy of the signature, but to verify that PacifiCard S.A. for the provision of a financial product, adjusts to what is established in the current regulations, based on the contractual link agreed with the cardholders, notwithstanding that the appellant has argued that the charges that enter after the block notification by the cardholder are accepted by the issuer;

THAT for the above, the premise of article 5 of chapter IV.- Procedure for the attention of complaints against institutions of the financial system, title XX.- Of the Superintendence of Banks and Insurance, book

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I "General norms for the application of the General Law of Institutions of the Financial System" of the Compilation of Resolutions of the Superintendence of Banks and Insurance and of the Banking Board, has been fulfilled, having determined an incorrect procedure on the part of PacifiCard S.A. Card Issuing and Administration Company for not applying safe purchase procedures in the claimed transaction;

THAT the National Legal Intendancy, through memorandum INJ-DNJ-SAL-2015-0228 of March 17, 2015, recommended to the Banking Board to reject the claim contained in the review appeal filed; and,

IN exercise of its legal attributions,

RESOLVES:

SINGLE ARTICLE.- REJECT the claim contained in the review appeal filed by the Acting Manager of the General Manager of Pacíficard S.A. Card Issuing and Administration Company; and, consequently, CONFIRM the administrative act contained in letter No. IRG-DAYEU-V-R-2014-234, of March 31, 2014, in which, it was resolved to accept the complaint presented by Mrs. Tania Maribel Valverde León and in which it disposed PACIFICARD S.A. to cancel the charges made to her MasterCard - PacifiCard credit card for USD 717.47, for the two purchases made at the establishments named Autogrill SPA and ICI DI REPETTO [sic], located in Florence - Italy.

NOTIFY.- Given at the Superintendence of Banks, in Quito, Metropolitan District, on the fifteenth of April of two thousand fifteen.

Econ. Rodrigo Landeta Parra
GENERAL INTENDANT, S
PRESIDENT OF THE BANKING BOARD, E

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

Lcdo. Pablo Cobo Luna
SECRETARY OF THE BANKING BOARD