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Wells Fargo Fraud Case Recently, Wells Fargo gained a lot of media attention due to its illegal sales practices scandal. In order to understand the fraud, it is important to shed light on how it all started.
Employees at Wells Fargo were forced to meet impossible sales quotas or else lose their job. They were asked to hunt for potential customers, even at bus stops and retirement homes.
In 2014, the bank held a meeting in Florida to scold lower-level managers for opening accounts for nonexistent people. However, one manager in the room believed otherwise and urged her employees to ignore the bosses and increase sales at any cost. Thus, selling more products to meet aggressive sales targets
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Yet, John Stumpf, CEO of Wells Fargo, denies that the bank’s culture is obsessed with nonstop selling. According to him, the scandal resulted because some employees did not honor the bank’s values (Glazer). It was recently disclosed that Wells Fargo fired 5300 employees in the past few years, including the manager who forced employees to meet sales targets (Peck). Yet, questionable sales tactics persisted and were an open secret in several of the bank’s branches. The branch managers regularly monitored the employees’ progress toward achieving sales targets and reported it to higher-ranking managers. Meeting targets resulted in hefty bonuses, which bankers used to compensate for low salaries. On the other hand, employees who failed were asked to open accounts for their mother, siblings or friends (Glazer).
Some employees reached sales goals by using wealthy, existing customers preselected for credit cards. These customers were called and told that Wells Fargo wanted to send them a new credit card in appreciation of their business with the bank. If a customer refused the card, he was told to cut and discard it upon arrival. However, they were not informed that issuing each new card required a credit check, which can lower a person’s credit score
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In 2011, Jabbari opened savings and checking accounts with Wells Fargo. However, after two years he found out that there were seven unauthorized accounts in his name. Soon, he started receiving notices for unpaid fees on those accounts. While some of the accounts had been opened with forged signatures, others were opened with no signatures at all (Hiltzik).
Heffelfinger had a similar experience. In March 2012, she opened a checking and a savings account with Wells Fargo. However, Wells Fargo had opened fake accounts in her name in January that year. She ended up with seven accounts, opened with forged signatures and fake Social Security numbers (Hiltzik). According to the lawsuit, bank employees at Wells Fargo were informed that an average customer tapped six financial tools. However, the employees were to push the customers to use eight products, because “eight is great” (Kelly).
In May 2015, the LA city attorney’s office declared a lawsuit against Wells Fargo for pressuring its retail employees to commit fraud, opening accounts for nonexistent people and charging customers for products without authorization. In response, the bank hired the consulting firm PricewaterhouseCoopers for an in-depth analysis. After almost a year, PwC employees confirmed the fraudulent sales practices
One year ago, on September 8, 2016 the Consumer Financial Protection Bureau(CFPB), the Los Angeles City Attorney and the Office of the Comptroller of the Currency (OCC) fined Wells Fargo Bank $185 million, alleging that more than 2 million bank accounts or credit cards were opened or applied for without customers' knowledge or permission between May 2011 and July 2015. This essay will discuss the Wells Fargo scandal by explaining how the event happened and describing how the organization approached handling a response to the crisis. This will be seen, firstly by describing the how the scandal happened, and what were the causes, secondly by discussing the reaction of the company in front of the situation, how they dealt with the crisis and then
So just how did Scott Welch fit the profile of the average perpetrator? Based off the information reported by the Association of Certified Fraud Examiners’ (ACFE) 2010 Report to the Nation, Welch fit directly into the median for a perpetrator – he was male, between the ages of 46 – 50, had a tenure of at least 6 – 10 years, an executive position as a Vice President. According to the ACFE’s report a perpetrator’s position within the company, age, tenure, gender and education level all have a have consideration in a fraud. In the 2010 report, it is noted that 66.7% of all frauds are perpetrated by men, more than likely due to the fact that more men hold a position of authority. Of the cases studied, 74% of all managers and 88% of all owners/executives were men (Association of Certified Fraud Examiners (ACFE), 2010). The combination of Welch’s tenure and authoritative position may have exacerbated the losses suffered by Wachovia and may also have helped him hide the fraud from detection for an extended period of time of eight years (“Former Wachovia,” 2011). This period is well above and beyond the 24 months reported by the ACFE as the median time frame in which frauds perpetrated by executives/owners were detected (ACFE, 2010). Taking into consideration all the kn...
Key stakeholders are owners, directors, employees, and the community that the organization draws it resources businessdictionary.com,2016). Out of the 1000 Wells Fargo customers that were surveyed 3% stated that they were personally affected by the scandal and 14% of them stated that they have changed banks while 30% of them were currently looking to switch. Studies predict that Wells Fargo could lose about $99 billion in deposits and $4 billion in revenue because of customers rejecting to do business. Individual customers weren’t the only ones that were affect by the scandal but similarly 10,000 small businesses (Razin, 2016). I believe that the owners will be affected as well because of profit losses that will eventually affect Wells Fargo shares and the employees were affected after 5,300 of were fired (Razin,
From big financial and ethical scandals like Enron to WorldCom, Wells Fargo may be the next big financial and ethical scandal. Wells Fargo is one of the leading banks and credit lending companies in America. Now, they’re on a slippery slope downhill to one of the worst—and most unethical—banking and credit lending companies in America, maybe even in the world. Wells Fargo has been in an ethical uproar, has questionable ethical values, and questionable principles and practices in culture due to their downhill ethical standards. The company may have been influenced by bad stakeholder judgment, and are now struggling to maintain the company’s culture.
In 1852, as a response to the California Gold Rush, Henry Wells and William Fargo created Wells Fargo & company. Initially, the purpose of the company was to provide express and banking services to California. Shortly thereafter, Wells Fargo experienced rapid growth and unpredictable changes. Today the company is viewed as a nationwide, diversified, community-based financial services company with over $1.8 trillion in assets. Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through 8,700 locations and 12,800 ATMs.
Almost all customers that enter a bank expect to hear questions like "Would you also like to get a mortgage or an auto loan? Would you like to open another account? A savings account?" Most of the time, people say no, and this can hurt the bank 's infrastructure, especially since the number of people that physically go to the bank is gradually decreasing. In order to make sure enough accounts are created, branch managers will sometimes set goals for the employees. Since the number of products sold affects the salary of the branch manager, their goals may sometimes be very demanding. Most of the time, the employees are not able to reach that goal while sticking with Wells Fargo 's values: ethics, what 's right for
One of the most recent white-collar crime involved Wells Fargo, a banking and financial services provider. In 2016 San-Francisco based bank Wells Fargo (WFC) employees secretly created millions of unauthorized bank and credit card accounts without permission of their customers. Opening about 1.5 million fraudulent deposit accounts and submitting 565,443 credit card applications allowed Wells Fargo employees to boost their sales targets and receive bonuses. Consequently, customers were wrongly charged fees for accounts they did not know existed. In this business crime scenario, Wells Fargo involved to pay $185 million in fines and refund $5 million to affected customers. Also, around 5,300
For Chase bank the mission and vision should always be clear to their customers. "At JPMorgan Ch...
Report to SSB Board of Directors Antonio Collins MEMORANDUM TO: Super Secure Bank (SSB) Board of Directors FROM: Antonio Collins Cryptographer Computer Security Divisions DATE: October 5, 2014 SUBJECT: Suit stating that transfer of money was made by forged email. Facts: Super Secure Bank (SSB) and bank manager Bob are co-defendants in a recently lawsuit filed by one of Super Secure Bank (SSB) high net worth customers, Alice. Alice opened one of her monthly bank statements and noticed there was a $1,000,000 debit transferred out of her account.
One of the most recent white-collar crime involved Wells Fargo, a banking and financial services provider. In 2016 San-Francisco based bank Wells Fargo (WFC) employees secretly created millions of unauthorized bank and credit card accounts without permission of their customers. Opening about 1.5 million fraudulent deposit accounts and submitting 565,443 credit card applications allowed Wells Fargo employees to boost their sales targets and receive bonuses. Consequently, customers were wrongly charged fees for accounts they did not know existed. In this business crime scenario, Wells Fargo involved to pay $185 million in fines and refund $5 million to affected customers. Also, around 5,300
Wells Fargo surfaced in 2013, and it was confirmed Wells Fargo employees were under the gun to make impossible sales quotas to cross sell other bank products to existing bank customers. Wells Fargo violated bank policy, corporate and personal ethics and the law by opening accounts in existing customer’s names including funding these accounts with yet other customer’s money. Wells Fargo is not just a case of unethical behavior, but a dishonorable culture from the senior management all the way down to the lowermost employee. The scandal of Wells Fargo culture has so far concentrated on the high-pressure sales environment that drove employees to generate as many as two million false accounts.
In this paper I will identify and analyze the Wells Fargo scandal as it pertains to the breakdown of leadership and ethics. I will first identify and analyze the event and discuss the challenges and conflicts the scandal presented. Then I will evaluate the issue by explaining why the issue has interest and concern to stakeholders followed by discussing the challenges presented to individuals and/or organizations around this case. Lastly, I will recommend action steps that should be taken to those involved as well as discuss what I have learned from exploring this topic.
During the past year Wells Fargo, a well-recognized bank of the United States, has been trying to clean its name and the mess it got itself into, when it was brought to the public that the bank was involved in generating fraudulent checking and savings accounts for its clients without their knowledge or their authorization. “The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent”
...et up illegitimate credit card accounts, bank accounts and other accounts – this is called identity theft.
Recently, three individuals were awarded $170 million for helping investigators gather a record $16.65 billion penalty against Bank of America. Based on their action of inflating the value of mortgage properties and selling defective loans to investors. By influencing the market falsely is unethical and wrong. That is also why their punishment was so harsh. Firms today warn their managers and employees that failing to report unethical behavior and violations by others, could get them fired.