Today, Wells Fargo is widely recognized for its commitment to the Hispanic and Latino community. This commitment however, is not a recent phenomenon and dates back to before the turn of the century. Since its founding in 1852, Wells Fargo had encouraged team members to treat all customers with courtesy and respect. The once informal policy became company standard in 1888 when agents and managers were required to show “proper respect to all. Let them be men, women, children, rich or poor, white or black…”
Based on information provided by the financial institution, one could infer that Wells Fargo has a corporate culture that empowered its employees to put their own interests ahead of its customers and a “sales at all costs” culture provided the backdrop for the deed. It seems the underlying cause for the unauthorized accounts with customers’ monies was a sales culture that provided an incentive structure that rewarded employees on the more products they sold. Some employees did not open accounts requested by customers and, instead, accumulated a number of account applications to be opened at a later date. This is called “sandbagging.” Another example is some employees would tell customers that certain products were only available as a package
Wells Fargo has been in the news lately. Thanks to the scandal surrounding reports that bank employees have opened accounts without client’s approval. As a result, Wells Fargo’s share price has taken a beating, losing 14% of its market value for the year. Berkshire Hathaway is the bank’s biggest shareholder with almost 10% stake. Its famous CEO, Mr. Warren Buffett is known as a long-time WFC fan, even praising the bank’s untarnished ethical culture.
The Wells Fargo scandal included the creation of fake banking accounts, savings accounts, and credit cards. People who were employed at the bank opened these accounts in order to meet goals and make profit. When the fake accounts were discovered 5,300 employees were fired. However, the problem went beyond the fired employees.
Nevertheless, Wells Fargo has been fully accountable by taking immediate actions and measures to rectify the issue arose. First, the company was transparent in disclosing the unethical sales practice. Customers who were affected by the fraud are given reimbursement and fines of $185 million were paid to regulators. The company also closed more branches to focus on automated online banking. Based on the literature review, being held accountable is associated with answerability towards all stakeholders including the public.
BACKGROUND: The name Wells Fargo is forever linked with the image of a six-horse stagecoach thundering across the American West, loaded with gold. The full history, over more than 160 years, is rich in detail with great events in America’s history. From the Gold Rush to the early 20th Century, through prosperity, depression and war, Wells Fargo earned a reputation of trust due to its attention and loyalty to customers. Wells Fargo delivered business by the fastest means possible whether it was by stagecoach, steamship, railroad, pony rides or telegraph.
Wells Fargo Mockup Wells Fargo’s agreed to pay $110 million dollars to customers because unrealistic sales goals prompted personal bankers to open over 2 million fake accounts, this settlement is over and above, the $3.2 million in fees refunded when the scandal became public in September 2016. The practice allegedly started in early 2009, notorious and unrealistic sales goals were the primary cause of the “widespread fraud”, according to a top Federal Reserve official (Egan, 2017). According to Warren Buffet, who owns 10% of Wells Fargo stock, failing to address the problem, was the real “terrible mistake” (Cummings & Malter, 2016). Was there oversite? One might think, how does this happen, how could they miss such an obvious problem?
Seydi Burak GAYRETLİ MGMT 512 – Corporate Governance EXAM 1 WELLS FARGO FAKE ACCOUNT SCANDAL In September 2016, we learned that Wells Fargo, one of the biggest banks in USA, has millions of accounts which is created by employees without authorization of customers. Employees have created those phony bank and credit cards accounts since 2011. By those accounts, Wells Fargo employees reached their targets and received bonuses. 5.300 employees are fired because of 2 million fake accounts.
Lastly, the SEC will scrutinize any securities fraud that may have been committed as a result of withholding private information (insider trading) to investors due to possible accounting malpractice. Currently, the SEC and Department of Justice results are still pending the ongoing investigation. Tomi Kilgore of MarketWatch reported “Wells Fargo investigation into sales practices should be completed before the April 2017 shareholder meeting.” Likewise, Wells Fargo responded following the mandates of the Office of the Comptroller of the Currency by opening
According to this article, “ Chase Bank has admitted to the presence of a technical bug on its online banking website and app that allowed accidental leakage of customer banking information to other customers.” This shows us that even perfect systems can be faulty. This can also connect back to consumers because not only were they the victim in this situation but they have to go out of their way and dedicate time and money back into fixing their financial situation because of the recklessness of Chase Bank. The impact this left on the consumers was a perfect example that they should not be totally reliable on technology. In this article it states, “BleepingComputer has asked Chase specific questions including how many customers were impacted by this issue and what was its cause.
Wells Fargo & Co. is a popular banking company that provides various banking services to individuals and businesses alike inside the United States. As of recently, a massive scandal within this company has come to light. On September 8, 2016, evidence was reported to the Consumer Financial Protection Bureau (CFPB), Los Angeles City Attorney and the Office of the Comptroller of the Currency (OCC) suggesting that Wells Fargo & Co. had opened more than 2 million bank accounts and issued unauthorized credit cards without their customers’ knowledge/consent between the months of May 2011 and July 2015 (Masunaga and Koren, 1). To make matters worse, there were managers that tried to silence the employees that spoke out against the opening of these
Many individuals are asking: how could it have been prevented? Or how could it have been better handled? There is a small window of time needed to make executive decisions about how to handle a breach, especially one of this magnitude. Issues climb the corporate ladder to the leadership and decisions must be made about how to proceed considering the new information. The ethical dilemma that surrounds Equifax has more to do their corporate leadership than it does anything else.
When your organization is responsible for keeping track of the money and property of approximately 70 million individuals, you can be sure that customer service is going to be one of your most pressing concerns. Such is the case with Well’s Fargo, one of the “Big Four” banks in the United States. When your organization is responsible for keeping track of the money and property of approximately 70 million individuals, you can be sure that customer service is going to be one of your most pressing concerns. Such is the case with Well’s Fargo, one of the “Big Four” banks in the United States. When your organization is responsible for keeping track of the money and property of approximately 70 million individuals, you can be sure that customer service
When it comes to the Ethical Decision Model, it does not just pertain to the employees who opened these accounts but also leadership who either failed to realize what was going on or decided to sweep it under the rug by just covertly firing some employees. Wells Fargo did take the first step in recognizing the problem but failed to define it, which explains why these unethical behaviors continued for so many years. When the corporation was initially aware of what was going on, they should have acted immediately and strategized a solution that would dilute the possibility of it occurring again. Instead of defining the problem, which would have foster, a proper solution but company decided to just terminate
As employees faced pressure to reach quotas, they found ways to cheat the system. If a customer came in to open an account, the employee would simply make it two or three. The intense pressure placed on employees created an environment that not only rewarded dishonesty and malpractice, but made it necessary to maintain employment. Many employees attempted to report these illegal practices to the Wells Fargo ethics line, but action was never taken and the problem escalated.
