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Wells Fargo Fraud Essay

613 Words3 Pages

To improve security of the operation, an automated system and fraud analytics technology should be installed. This will eliminate human error and any interference in the system. For instance, the company should notify customers of any transaction or activity related to their account through automated emails or text message as soon as it takes place. Investment in Artificial Intelligence could improve the security of data, in which the machine learns to interpret and understand a large amount of data. Algorithm of the machine will consider factors such as diversity of email addresses, transaction behaviour, and IP addresses. The machine could then alert management if there is any unusual activity or pattern of deviation appears. This could trigger a response from management or customer in validating the suspicious activity. Additionally, the use of electronic signature software that uses biometrics such as face recognition or fingerprint could verify the authenticity of the transaction. To prevent unauthorised access to sensitive data and report, user identification (ID) and password are given to each specific individual to control data confidentiality. …show more content…

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. Wells Fargo has put a lot of work on damage control in order to rebuild trust with its clients. Although employees were the one committing misconduct, the company as an entity is legally answerable to the

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TL;DR –The Wells Fargo Vice President who oversaw the retail division which was responsible for mass fraud should have been fired rather than allowed to retire. The article “In Wells Fargo Scandal, the Buck Stopped Well Short” by Susan Ochs examines the behavior of Wells Fargo in regards to the Carrie Tolstedt. Carrie Tolstedt was the Wells Fargo Community Banking senior vice president during the time where thousands of fraudulent accounts were created by employees who directly or indirectly reported to her. Starting last November, Wells Fargo was under investigation of fraud based on customer complaints concerning account being opened in their name without their knowledge. Ms. Tolstedt was in charge of over 94,000 employees in the Community Banking division during the five years of fraudulent activity.

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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

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Wells Fargo & Company is a publicly traded company that provides banking and financial services. This company was founded by Henry Wells and William Fargo in March 18, 1852 in New York, New York and third largest bank in the country. Today’ the headquarters are in San Francisco, California and John G. Stumpf as Chairman and CEO. Wells Fargo offers a large range of products that include, Consumer banking, corporate banking, credit cards, finance and insurance, foreign currency exchange, investment banking, mortgage loans, private banking, private equity, and wealth management. This company doesn’t only serve the United State; it also serves a multinational range.

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According to Fortune, “Executives sought to drive growth by putting undue pressure on its employees to hit sales quotas, and many employees responded by fraudulently opening customer accounts. In most cases these accounts were closed before customers noticed, but in other cases consumers were hit with associated fees or took hits to their credit ratings. The bank was forced to return $2.6 million in ill-gotten fees and pay $186 million in fines to the government. But the biggest hit Wells Fargo will take is to its reputation, as the media and government officials spent much of the year slamming the bank for its fraud,” (Mathews). The victims being the unknowing customers who saw their credit ratings plummet and faced steep financial fees, that were brought about through no fault of their own.

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This implication made Wells Fargo a national brand. To this day Wells Fargo keeps growing and is becoming bigger in the banking industry. This was all affected by the competition between other banks and buying Wachovia National

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Wells Fargo confirmed to CNN that they indeed did fire 5,300 employees over the last few years because of unethical behavior they admitted that employees even assigned fake pin numbers and emails to register clients in online banking services. After investigation it was clear that employees opened 1.5 million unauthorized deposit accounts, employees moved funds from customers’ existing accounts into newly-created ones without them knowing or approving these actions regulators say. Customers were also being charged for insufficient funds or overdraft fees if they

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Stumpf's approach had a negative impact on Wells Fargo's organizational culture. The aggressive sales-centric culture eroded trust between employees and management and fostered an environment where ethical concerns overwhelmed performance metrics. Management placed its own position security above ethical considerations. And employees continued to make inappropriate sales under pressure from senior executives. They were even fired for reporting things that were unethical (Santa Clara University, 2017a).

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JPMorgan Chase Bank has faced several lawsuits in recent years. They have been hit with cases concerning fraudulent misrepresentation, bribery, and many things in between. By studying the accusations the company has faced, one receives a better understanding of who is really handling their money. An act of fraudulent misrepresentation cost JPMorgan the fine of a lifetime.

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The main issue that Wells Fargo faced was their employee and management cultural environment within the company and the other issue was the sales quotas. There are several solutions that could be implemented to address the issues raised by this scandal, including management changes, stronger internal controls, altering incentives, and building a stronger culture/ethical environment. Wells Fargo could work to build an ethical culture within the organization, including fostering a strong sense of accountability among employees and promoting a culture of transparency and integrity. Wells Fargo could revise its employee incentives to discourage employees from engaging in fraudulent practices. This could involve placing less emphasis on sales targets

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As all this came to fruition, the bank was penalized with $185 million dollars in fines and other penalties by county and federal organizations (Blake, 2016). On top of getting slapped with millions of dollars worth of fines, Wells Fargo fired 5,300 employees that may have been involved in the scandal (Blake, 2016). Some of Wells Fargo’s top executives where asked to step down in court proceedings as well as in other meetings with federal agencies. There have also been several lawsuits filed against Wells Fargo by customers and former employees of the company that feel that they were wronged and bombarded with threats. Thankfully, this scandal did not affect most of Wells Fargo’s clients.

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Due to the scandal, Wells Fargo faced customer confidence issues. Trevino and Nelson suggest customer confidence issues include confidentiality, product safety and effectiveness, truth in advertising, and special fiduciary responsibilities (126). Based on the unethical behavior noted in the scandals, the organization violated the customer’s privacy and failed to perform their fiduciary responsibilities on multiple occasions. Wells Fargo and its employees broken several laws to meet quotas and make profit for the organization. In this scandal, there are legal implications to be faces noted in court documents include but not limited to fraudulently opening accounts without the consent of a customer, falsifying credit documents, identity theft

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The customers of Wells Fargo who were affected by this scandal had many issues. Where customers had their funds moved to another account created by a Wells Fargo employee without the customer’s knowledge that their money is being moved

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The then CEO John Stumpf was forced to resign following insurmountable political and public pressure. Federal prosecutors also issued subpoenas and congressional hearings were held, for which then CEO John Stumpf attended. Additionally, on February 21, 2017, Wells Fargo terminated four high level executives involved in the scandalous news. The SEC’s investigation consists of warrants against bank executives for possible violations of GAAP principles and the Sarbanes-Oxley Act for inaccurate accounting practices. The SEC will probe possible violations of employee whistleblowing protection under the Sarbanes-Oxley and Frank-Dodson Act.

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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

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Wells Fargo’s “Gutless Leadership” Wells Fargo is one of the largest banks in the United States, with “…more than 8,600 locations [and] 13,000 ATMs” (Wells Fargo Today). Millions of Americans trust them with their finances. However, after a federal investigation, Wells Fargo has admitted to opening up to two million accounts without customers’ permission. While this had financial implications for many customers, this scandal most heavily affected Wells Fargo’s low-level employees.

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