Wells Fargo is an American bank that was created in 1852 by Henry Wells and James Fargo. It is the second largest bank in the USA in terms of market cap, operates in over 42 countries around the world, and has over 260,000 employees.
In 2016, federal regulators caught Wells Fargo, creating millions of fake bank and credit card accounts; over 1.5 million bank accounts were created. Furthermore, federal regulators also said that 565,443 credit cards were created, and 1400 of those accounts had been charged over 400,000 dollars in fees. Wells Fargo employees broke many ethical and legal boundaries and engaged in counterproductive work behavior.
Counterproductive work behavior has a negative impact on the company, it’s employees and
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This practice was so common that Wells Fargo employees had several methods for doing this. The first method is sand bagging. Sand Bagging involves failing to open accounts by customers at their requested date, instead accumulating accounts to open in the next sales period to inflate profits. Another practice was called Pinning which was creating pin numbers without customer’s authorization, and attaching them to credit cards. Then employees would impersonate customers on Wells Fargo’s computers and use these pin numbers to create online banking and bills for customers. Finally, a practice called bundling was done where Wells Fargo employees would mislead customers saying that certain banking products were only available in bundles which forced customers to add more products than they wanted. So, one wonders, how could this have happened? Why did high expectations of sales lead to unethical, almost criminal behaviour? This is tied to Goal Setting theory. Goal setting theory, created by Edwin Locke, states that employees are motivated by clear goals, and appropriate feedback. Individuals that were given clear, specific and difficult goals had greater performance than individuals given general and easy goals. However, research has shown that setting unattainable and challenging goals can lead to risky or even unethical behaviour. A study done by
Wells Fargo fired 5300 employees. The employees took millions in fees by regularly opening new
The questionable issue really close by kind of is Wells Fargo essentially has discovered generally phony records that definitely were made without buyers having any information that the records for the most part were being made in a kind of big way. The underlying examination led uncovered that out of nighty-three point five million records audited around two point one million basically were resolved to definitely be sort of phony (McCoy, 2017), which definitely is fairly noteworthy. The initial examination uncovered that out of one hundred sixty-five million records inspected near three point five million of them were found to be unapproved accounts, or so they particularly thought. The organization really has chosen to literally organize its picture fiscally to the world as opposed to literally remain consistent with what it particularly was established for, sort of contrary to popular
Wells Fargo is an American multinational diversified financial services company. The company operates throughout the world. It is one of the largest banks in the US in the state of assets. Moreover, Wells Fargo is the largest market capitalization bank in the US. It takes the second category in the field of deposits, delivery of home mortgage services, and delivery of credit cards. The company has its headquarters in Francisco, California. The company has coverage of more than twenty-four states in the US. In every state, it has established its headquarters that act as distribution and storage regions for the company's products and services. The company offers insurance, banking, mortgage, and consumer financing through the sale and distribution of its networks across the US. The advantages of Wells Fargo Company are widely distributed: they have helped it realize a stable market in the United States and around the globe.
The article,”To Disclose or Not to Disclose? Wells Fargo Woes Shine Light on a Knotty Problem
Wells Fargo has a social responsibility to its customers to fulfill their economic, legal, ethical, and philanthropic needs. The scandal has presented numerous legal issues. It was negligent of the bank's executives and managers by placing impossible sales goals on lower level employees then encouraging, and pressuring them to meet these goals. The use of customer's information for fraudulent purposes was an invasion of customers privacy. Wells Fargo has violated the Federal Trade Commission Act which protects customers from unfair practices and has also violated the Sarbanes-Oxley Act (Thorne, 2011).
According to Emily Glazer of the Wall Street Journal, Wells Fargo’s Sales Practice Scandal is a result of their corporate culture. The upper level executives could be getting nothing as their bonuses this year as the board continues to decide. This is because those men and women are responsible for the actions of those who they employ/supervise Making money has been the firm’s primary goal for many years and the higher up’s all the way down to the lower managers are responsible for creating this type of environment. According to the Wall Street Journal “One manager…in an email peppered with exclamation points and capital letters…urged her employees to ignore the bosses and get sales up at any cost, says someone who saw the email.” This is a perfect example of terrible managing. Throwing ethics and good conduct out the window just so that a few of the staff get bonuses at the year’s end is just wrong. In class, we constantly discuss the ethics involved in business and recently we’ve spent a lot of time on corporate culture. Shockingly enough, in last year’s annual report the company
(2)Since 2011, Wells Fargo’s employees have been secretly creating millions of unauthorized bank and credit card accounts, and some Wells Fargo employees even created fake Personal Identification Numbers (PIN) as well as fake email addresses to give the illusion of a growing customer base. The fake accounts earned the bank unwarranted excess fees, which led to increased sales figures. Everyone who had a legit account with Wells Fargo and the people who owned stocks in Wells Fargo were affected. Richard Cordray, director of the Consumer Financial Protection Bureau said, “Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses" (Cordray, 2016). The unethical behavior led to the termination of about 5,300 employees, and eventually Wells Fargo had to pay over $185 million dollars in fines, plus an additional $5 million to each affected customer.
In my opinion, this scandal is much deeper then it appears. It looks like we have a case were the company is corrupt at the very top, where these unreasonable expectations came from. Employees of the company felt like they had to go to extreme measures and do illegal things simply to keep their jobs. This is not fair nor should it be allowed. The main underlying problem in this situation is that Wells Fargo is not being ethical towards their employees. These employees have responsibilities, such as feeding themselves and their families, so of course they will go to extreme measures to keep their job. The more I read into this case the more I felt like the heads and directors of Wells Fargo were in the wrong more then the people that were actually
On September 8 2016, the Consumer Financial Protection Bureau (CFBP) announced that it was taking an enforcement action against Wells Fargo Bank . Wells Fargo is a Fortune 100 company and one of the "Big Four Banks" of the United States. Investigations conducted by the Bureau revealed that employees of the bank created unauthorized deposit and credit card accounts across the country to meet sales goals. Over the years, the bank’s employees opened over 1.5 million fraudulent bank accounts and 0.5 million fake credit card accounts for customers, to meet sales targets and obtain bonuses. The affected consumers, were being harmed by the associated charges and fees for these accounts. The fees include insufficient funds or overdraft fees for the deposit accounts and annual fees for credit card accounts.
Neither Wells Fargo employees nor board followed many of the stated ethical values. The compensation plan was a large promoter of the unethical behavior. Wells Fargo rewarded employees for providing unknown services the customer did not know about nor needed. These actions were in direct conflict with the ethical values of “Value and reward open, honest, two-way communication”, “Avoid any actual or perceived conflict of interest” and “Comply with the letter and the spirit of the law” (Ferrell, et al, 2013, p.184). Wells Fargo over the last few months has been in the news for deceiving their stakeholders.
In 2016, federal regulators caught Wells Fargo creating millions of fake bank and credit card accounts; over 1.5 million bank accounts were created. Furthermore, federal regulators also said that 565,443 credit cards were created, and 1400 of those accounts had been charged over 400,000 dollars in fees. Wells Fargo employees broke many ethical and legal boundaries and engaged in counterproductive work behavior.
The ethics of the bank requires that there is ethics of integrity. It is supposed to be created through a culture in the bank and it should be one of the banks priorities because this is a business and they gain the profits from the people they serve on daily basis. Even if the bank shall survive this wave of scandal is so difficult now to convince any client to join this Wells Fargo which shall cause them a lot of money. Also all the old customers may start withdrawing and looking for other banks which they feel are more secure when they are keeping the money for them. It is so hurting and distrustful for a banking instead of accruing money in the accounts of their customers what they wells was doing was that it was misusing their money and giving them extra fees.
In September of 2016, it was revealed that there was alleged misconduct at one of the largest and safest banking institutions in the United States. Wells Fargo Bank was ranked among the nation’s safest financial institutions according to an analysis done by Global Financial, (Inside Tucson Business, 2009). Alleging that between May 2011 and July 2015, there were more than 2 million bank accounts or credit cards opened for customers without their knowledge or permission (Blake, 2016). Clients started complaining the they were receiving debit/credit cards from the bank that they had not ordered. Wells Fargo employees also started complaining that about the unethical behaviors they witnessed or were asked to participate in to the Human Resource Departments, the bank’s internal ethics hotline, branch’s individual managers and supervisors. All which led to the discovery of the fraud scandal.
Scandals in the business world are not an uncommon topic to appear in new headlines. Recently Wells Fargo has fired over 5,000 employees for creating over 2 million fake accounts. New bank and credit card accounts were created without prior knowledge from their customers. The accounts that were created resulted in those customers inquiring fees such as overdraft fees. These fake accounts have been created over a five-year timeframe.
The reason why Well Fargo Bank is an ethical quandary would be how they have gotten a fine for 185 Million dollars and have fired over 5,300 which were employee and manager.