Wells Fargo Financial Scandal

The Wells Fargo Fake Accounts Scandal

In September 8, 2016 the US Consumer Financial Protection Bureau announced that, Wells Fargo is going to pay a combined amount of $185 million fine to the (C.F.P.B.), the Office of the Comptroller of the Currency and the City and County of Los Angeles to settle charges of being engaged in illegal practices of opening two million fake accounts between May 2011 and July 2015.

So what exactly happened is that at Wells Fargo employees to reach the sales goals set by the bank executives had open more than 1.5 million deposit accounts and more than 565,000 credit-card accounts without the customer’s consent. Customers were charged fees, had collection agencies calling them due to unpaid fees on accounts they

In 2010 a whistleblower’s case was closed by OSHA based on a conversation with the Wells Fargo bank’s lawyer, despite being responsible for the protection of whistleblowers under Sarbanes-Oxley Act. Irene Perez, an employee of Wells Fargo from 2008 to 2011, says that everyone at the branch was aware of the unethical conduct of bankers. Usage of false identification on accounts to change customers names and open new accounts was a normal business practice. No employee was allowed to complain about these unethical practices.

In these type of high profile, corporate fraud whistleblowers have always been ignored. The fact that in 2017 Wells Fargo rehired nearly 2,000 employees who had quit or were fired from the job mainly for reporting the fraudulent actions proves that Wells Fargo was aware of the ongoing fraud in the bank. When the employees were investigated for being engaged in these acts, the employees in a large number said that these were done to meet the so-called “eight is great” sales target or to obtain performance bonuses this is where the primary responsibility rests. Its true that employees were not directly forced to take these actions and individuals are ultimately responsible for their own actions but

It fired 5,300 employees, both managers, and team members were affected by the firings. The fact that management was involved makes the situation worst which shows how the unethical culture was followed throughout the organization. There are four intersections where ethics strategic planning and corporate responsibility meet to create the systemic issues which then created the environment that facilitated this illegal and unethical conduct:

1. Cross Selling: The first intersection of ethics strategic planning and oversight is Wells Fargo's heavy emphasis on cross-selling of products. Cross-selling is where banks or other services based companies sell additional services to their existing customers.

“Eight is great” a saying which was used for the cross-selling target scheme advocated by Former CEO John Stumpf in the Wells Fargo retail-banking division. According to this scheme which demanded higher productivity from employees, every employee had the target to open eight accounts per employee to get a bonus and save their jobs in the bank. Which caused the employees to create fake accounts for the consumers without their consent and reach the