Wells Fargo

Wells Fargo

Introduction

Well’s Fargo recent unethical practices uprooted crushing repercussions, the exact definition of soberly implications. As reported by Cavico, Frank and Mujtaba, a case points to Wells Fargo’s scandal that incorporated the use of fake accounts as a way of defrauding customers (4). This however does not dispute the fact that, like any other profitable financial institution in the U.S, at one point this bank’s objectives were geared towards realizing 100% customer satisfaction. This is in line with the U.S market capitalization system that placed Wells Fargo & Company on top of other banks as at 2015.

This research examines Wells Fargo recent unethical practices and the related implications to the people involved.

Wells Fargo & Company Scandals

According to various reports conducted to investigate what really transpired in relation to Wells Fargo’s previous disclosures, it’s logical to think that the effects were unethical and a drive-down to the company’s profits (Cavico, Frank and Mujtaba 4). In this study, it’s stated that the 2016 fake accounts scandal was the peak of it all. This case disclosed all sorts of unethical standards- corruption, greed, fraud and deception, among others. The bank operated a clandestine technique which engaged a good number of employees in fraudulent acts. The idea was to generate undisclosed customer credit-cards and bank accounts, to take advantage of the overdrafts (Cavico, Frank and Mujtaba 4).

The next thing that happened is that, these practices were unveiled in the open attracting close to infinity public criticisms. Barely 13 months later; the aftermath took a tall on the company. The bank’s customer list instantaneously decreased by over 40%. Even worse is the fact that the number of the new recruits, as account owners kept dropping profoundly as compared to the previous years. The company profits drove down at an alarming rate threatening bankruptcy. Wells Fargo suffered even more losses when the fraudulent act was equated to a fine of $185 million (Bukhari par.1)

Secondly is the insurance scandal issue that involved customer cars. In reference to the research conducted By Kim, close to 900,000 of Wells Fargo’s auto loan customers were victims of the auto insurance scandal(4). The bank adapted a habit of charging the customers unnecessarily car insurance.  Upon realization, the customers were outraged and it was agreed that a full compensation of $80 million should be covered by the bank (Kim par. 5)

Untimely sizing down of employees fits as another Wells Fargo’s scandal. In a related report by CNN Money, the employees who allegedly brought to light the bank’s fraudulent dealings were up for termination. An external investigator was hired by the bank to look into the case, resulting to an employee being laid- off prematurely for reporting on the company’s unethical behaviors (Bukhari par.3)

Recommendations and Possible Punishments

Professionalism and ethics defines the integrity and validity of handling customer accounts, by financial institutions.  Giving reference to Bukhari study, the most probable reasons that may have forced the employees into acting in accordance with the banks unethical practices, is the pressure of keeping up with the bank’s expectations (par.6). For this reason, it’s only logical to involve the law as the most appropriate way of putting a stop to such cases. The U.S law defines clear lines on issues related to fraud and fraudulent practices. In this case no one is above the law, therefore both the company CEO; Stumpf and the employees who opened the accounts should be subjected under the arm of the law (Cavico, Frank and Mujtaba 4).

Conclusion

As at now, Wells Fargo’s public image is completely cleaned out. Not even a good apology from the management can restore what’s already lost. Despite the fact that the bank was facing all those scandals, it still failed to provide convincing approach of addressing such issues. This provided a substantial reason why the causes that shuttered the bank’s financial outlook are still under investigation.

Work cited

Cavico, Frank J., and Bahaudin G. Mujtaba. “Wells Fargo’s Fake Accounts Scandal and its Legal and Ethical Implications for Management.” SAM Advanced Management Journal 82.2 (2017): 4.

Bukhari Jeff. “3 More Scandals That Will Have You Saying, ‘WTF Wells Fargo’.”FORTUNE. Jan 26, 2017.Web.< http://fortune.com/2017/01/24/wells-fargo-scandals/>

Kim Tae. “Wall Street is livid over Wells Fargo’s latest scandal: ‘Here we go again’”CNBC. 31 July 2017. Web. <https://www.cnbc.com/2017/07/31/wall-street-is-livid-over-wells-fargos-latest-scandal-here-we-go-again.html>