Wells Fargo Unethical Account On Business Practices

In California, eight Wells Fargo employees were convicted of committing fraud facing a maximum penalty of 30 years in federal prison, also each employee is charged with at least one count of aggravated identity theft, which carries another two years in prison (https://www.justice.gov/usao-cdca/pr/eight-people-charged-bank-fraud-scheme-allegedly-used-information-stolen-wells-fargo). In the wake of the scandal, over 5,300 employees were fired over the course of five years for their involvements in the creation of the fake accounts. Some of the initial whistleblowers of the scandal faced retaliation by being terminated for speaking out against the orders to open fake accounts. CNN Money correspondent Matt Egan spoke with Bill Bado, a former employee of Wells Fargo, who has not been able to security another banking securities job since his termination for calling the Ethics Hotline to report the fraudulent activities.

Many believe that business entities should have an ethical duty to be socially responsible, to work towards increasing its positive effects on society while decreasing its negative effects. Many organizations look for opportunities to be socially responsible while also creating shareholder wealth.

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.

Wells Fargo had said that they open 1.4 million fake accounts but eventually it went up to 3.5 million fake accounts. Those accounts weren’t use by the customers. Wells Fargo company discovered that their employees were the reason behind the scandal by using unauthorized credit card and bank accounts from customers who wasn’t activity using them. Wells Fargo realize that this problem was dating back since the early 2000’s. Wells Fargo also had another scandal that involved 570,000 auto loan customers who were charged with insurance that they didn’t use which eventually resulted in repossessing cars of those customers. Wells Fargo was fined for 185 million dollars after Wells Fargo said that the employees had opened fake accounts. Wells

According to Glazer (2016), one of the former employees of Wells Fargo said that “if you could sell, you had a job and bank branch managers pressured them to look for sales prospects at bus stops and retirement homes” (para. 5). How will a bank manager make bank employees become sales agents and road side marketers? This type of leadership style is questionable and unethical. Consequently, Due to the issues of fake accounts openings in over 6,000 Wells Fargo bank’s branches, the scandal quickly brings the attentions of the news media. Glazer (2016) wrote that the “Wells Fargo chairman and chief executive office, John Stumpf denied that the company’s culture is obsessed with nonstop selling that ran in different bank branches and blamed it on some employees that didn’t honor the bank’s values” (para. 6).

The characters that we have chosen that are involved in this scandal is Wells Fargo which mainly involves former CEO’S John Stumpf and Richard kovacevich, the customers, and also the employes. The base assumptions that we have made is that Richard Kovacevich is the one who brought the culture of cross-selling at Wells Fargo and once he stepped down as CEO John Stumpf replaced him in 2007. Once John Stumpf took over the company he followed Richard 's cross-selling method that focused more on profits rather than customer satisfaction. This led to over 3.5 million fake bank accounts and services created by Wells Fargo employees stretching over the past five years. The reason this was done was due to the amount of pressure the company would put on their employees to meet their ridiculous quota. Then we have the customers who had no idea that they were being charged for

Wells Fargo CEO John Stumpf had to recently resign as illegal banking practices cost his bank $185 million in fines as Wells Fargo employees opened nearly 1.5 million fraudulent bank accounts and applied for 565,000 credit cards that were not authorized by customers. The Wells Fargo board of directors rightly allowed John Stumpf to resign instead of taking a more aggressive action of dismissing him.

As Julie Ragatz, the director of Ethics in Financial Services at the American College of Financial Services said, “ If 5,000 people were engaged in it, how many do you think knew?” (White, 2016). Reaching higher goals and increasing revenue is great; however, if unrealistic standards are set, employees are forced to meet those standards at any cost. Jeb Hensarling said, “Fraud is fraud. Theft is theft, and what happened at Wells Fargo over the course of many years cannot be described any other way” (Blake, 2016). In other words, what happened at Wells Fargo is a combination of both fraud and theft, and no other alternative explanation for these actions would be able to classify it as

Although a top management purge would be highly effective in rebranding your company and creating a more trustworthy and ethical environment both internally and externally, this overhaul would not come without its costs. Not only would this result in extensive hiring costs to replace top managers, but it would also cause allow for the additional knowledge and personnel issues that come with top management changes. Also hiring quality top managers is no easy task, and it could be difficult to find someone who would want to take on the Wells Fargo issue. Also changing top management would require a lot of time commitment to fully debrief new management on company policies, issues, etc. However, if the vetting process is done properly potential legal action could be taken against the main top managers that inevitably had knowledge of these incidents and retaliated against employees for their whistleblowing efforts.

To what degree social responsibility should be considered in the conduct of business is an issue that has been debated extensively over time. While there are those who claim that businesses must fully embrace social responsibility, others are convinced that such a move would affect the ability of business entities to fully exploit the opportunities at their disposal. It should however be noted that in those instances where businesses neglect their ethical (and legal) mandate, the backlash is often severe.

In the city of Seattle, the city council’s finance committee has decided to stop doing business with Wells Fargo because of ethical and environmental issues. During the city council meeting, hundreds of outside community members who opposed Wells Fargo lined the streets and marched to show their frustration. Eli Crawford, who is part of Environmental Group 350 Seattle, addressed the social responsibility of Wells Fargo, and said that they will not support banks or corporations that harm the climate or the environment. Wells Fargo also has financial ties with the Dakota Access Pipeline, which the Seattle city council opposed, and was part of a nationwide banking scandal. The city’s current contract with Wells Fargo expires in 2019, so at that

I decided to analyze the case of Wells Fargo because I am working in a Corporate bank as well

Organizations in the market are expected by the authorities and the public to behave ethically in the manner in which they undertake their activities. Acting responsibly and ethically means operating in a way that every stakeholder to the organization is content "Stakeholders are those individuals who are impacted by a company's operations. Based on the moral standards of trustworthiness, respect, responsibility, and caring, companies would appear to be required to address their obligations to their stakeholders" (Schwartz, 2002, p.30). Therefore, this means being consistent in actions that individuals and the society think are typically good values. Actually, this could go beyond the normal obligations toward the stakeholders like wages and reduce prices. So, businesses are considered to observe ethical behavior when they demonstrate the essential moral values at their workstations that include fairness, equality, honesty, dignity, and

One of the main objectives of any business organization includes making profits and enhancing the economic growth (Davis, 2012). Most businesses aim at discharging their economic and legal responsibilities. It is because for a business to continue as going concern, the business have to obey the law and be profitable. However, being ethically and philanthropically responsible can also affect the businesses apart from economic and legal factors.

Ethics and social responsibility are very important irrespective of the community in which you conduct business in. All stakeholder groups are benefited from the use of ethical behavior. For one, stock holders benefit as the financial numbers used to evaluate and engage in business activities are legitimate. These numbers will therefore provide a solid foundation in which to evaluate the merits of a particular activity such as a merger, acquisition, dividend, stock buy back and so forth. Consumers benefit as they are not mislead in regards to purchasing decisions. These builds trust as the brand will become synonymous with ethics further expanding the market share of the company. This will then benefit the shareholders even further as more consumers purchase products from this trusted company. The community benefits as the company contributes to the community through the profits garnered from sales (Business, 2011). As such, all stakeholder groups benefit and flourish. Social responsibility is no different in this regard. Companies, especially during tough economic circumstances want to demonstrate their commitment to the communities in which they operate. Usually, these commitments translate into high sales figures and better customer loyalty. Social responsibility also engages associates on a personal level as they can volunteer and contribute to causes pertinent to their beliefs. These increases employee satisfaction which ultimately helps improve productivity.