We provide you with original essay samples, perfect formatting and styling. (2020, January 2). Those “free” accounts promised by employees to customers were actually premium accounts, Wells Fargo premium accounts are associated to large fees. Retrieved February 8, 2020, from https://money.cnn.com/2016/10/24/investing/wells-fargo-fake-accounts-angry-customers/index.html, Egan, M. (2018, July 13). Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. The scandals have also “raised their legal expenses and drawn the ire of regulators” (Egan, 2018). This was the case for Wells Fargo Bank, the growth of the company led to added pressure on employees and less emphasis on company honesty. This is not an example of the work written by professional essay writers. The first indication of rampant unethical practices at Wells Fargo emerged from a 2013 report by the Los Angeles Times. They also “created as many as two million fake bank and credit card accounts between 2011 and 2015” (Egan, 2016). By clicking “Send”, you agree to our Terms of service and Privacy statement. Wells Fargo and Its Ethical Platform Essay, Adam Bernstein's Fargo: A Movie Review Essay, Color and Light in Fargo and No Country for Old Men Essay, Models of political rebellion as displayed in 1984 and V for Vendetta Essay, Analysis of Underlying Themes in Twelve Angry Men Essay, Guilt Or not Guilty: the Delicate Balance of Seeking for Justice Essay, From Villain to victim as highlighted in A clockwork Orange Essay, How Opposing Forces Are Interconnected, Interdependent and Complementary Essay. Wells Fargo Struggling in Aftermath of Fraud Scandal. Californian and federal regulators took three additional years to take action against Wells Fargo. Wells Fargo launches ad campaign to leave accounts scandal behind. New CEO At Wells Fargo Faces A Heavy Lift. We’ve got you covered. When misconduct becomes the central focus of attention, an organization has the opportunity to show that they have better ethical norms or they become perceived as non-strict enforcers to ethical practices. Wells Fargo lost so much public trust for the bank’s shady business practices, which came to light in the aftermath of the Great Recession, that it … Wells Fargo ranked 96th “(Craver, 2019). The most evident ethical issue with the 2008/2009 Wells Fargo scandal was the loss or misuse of trust, which resulted in the loss of integrity of Wells Fargo employees. Those large fees lead to over drafted accounts and those over drafted accounts lead to larger issues such as ruining a customer’s lines of credit. The most evident ethical issue with the 2008/2009 Wells Fargo scandal was the loss or misuse of trust, which resulted in the loss of integrity of Wells Fargo employees. On September 8, 2016, Wells Fargo, one of the nation’s oldest and largest banks, admitted in a settlement with regulators that it had created as many as two million accounts for customers without their permission. https://doi-org.ezproxy.snhu.edu/10.1362/204440814X14103454934258, Charles W. Scharf. This was the case at Wells Fargo where employees had to participate in unethical business processes in order to meet their expectations. More effective, and what has now happened, is that an outsider, Charles W. Scharf, is currently at the helm and has the opportunity to “really define the company and its destiny” (Todd, 2019). Wells Fargo fired the Pomona, California branch manager for using the very protections the government put in place to protect Americans from this egregious behavior: the Wells Fargo’s Whistleblower Hotline. Retrieved February 8, 2020, from https://www.nytimes.com/2017/01/13/business/dealbook/wells-fargo-earnings-report.html, Craver, R. (2019, December 26). Retrieved February 5, 2020, from https://www.qualitymag.com/ext/resources/files/white_papers/BuildingaCultureofCompliance-IBS.pdf, Peltz, J. F. (2018, May 9). Having trouble finding the perfect essay? Approximately half of the people (or at least those surveyed) believe that business is unethi… Once Stumpf did ultimately step down, Chief Operating Officer Tim Sloan took over. (2019, March 30). Change ), You are commenting using your Twitter account. ‘My own unconscious bias’ – Wells Fargo CEO issues apology. As penalty, “they agreed to pay $2.09 billion for actions that allegedly contributed to the 2008 Financial Crisis” (Shen, 2018), and a $1.2 billion fine paid in April 2016” (Shen, 2018). These characteristics must be met in this order to be considered ethical; courage, honesty, temperance/self-control, and justice/fairness. Retrieved February 8, 2020, from https://www.wellsfargo.com/about/corporate/governance/scharf/, Corkery, M. (2017, January 13). With the combination of personal and business ethics, organizational controls and governmental regulation, a company to creation of an unethical corporate culture becomes less. Change ), You are commenting using your Google account. Retrieved February 8, 2020, from https://www.forbes.com/sites/samanthatodd/2019/09/27/new-ceo-at-wells-fargo-faces-a-heavy-lift/#228a57a27431financial-crisis-fine-mortgage-backed-security/, Walsh, B. Pssst… we can write an original essay just for you. 2019 Jun 12 [cited 2021 Jan 12]. It's been a year since Wells Fargo admitted to creating unauthorized accounts for customers, and problems continue to mount. All rights reserved Gradesfixer ™, “Wells Fargo Scandal: Ethical Issues And Possible Prevention Measures.”, Wells Fargo Scandal: Ethical Issues And Possible Prevention Measures [Internet]. First of all, by not offering an incentive for quota purposes. You can order Unique paper and our professionals Rewrite it for you. Piazza & Jourdan (2018) recognized that when a member of an organization are tied to it, and have to deal with the consequences, the less they are to react to a scandal. It is also a brand that has faced many ethical and legal issues. • We treat one another with fairness and dignity; we do not tolerate dis crimination, harassment, or intimidation. GradesFixer.com uses cookies. The virtue theory is made up of four characteristics. Social Business, 4(3), 245–253. The loss of honesty for a personal incentive had an effect on the corporation as a whole. How this came about begins with: Wells Fargo company … How a business responds and resolves the issue can turn into detrimental to the bottom line of success and development. This could have shown the establishment of a culture of compliance within the organization ­­– attributes that are “established by top management, characterized by senior management example, embedded in activities such as education, reinforced by incentive systems, given force through the treatment of transgressors, integral to information systems and their use and management, and inseparable from the organization’s structure, processes, and management style”(LeGrand, 2005). Not everyone is buying it. The company used its financial strength to purchase Wachovia during the height of the financial crisis—forming what is now the third largest bank in the country by assets—and emerged from the ensuing recession largely unscathed, with operating and stock price performance among the top of its peer group (Exhibit 1). In addition, “just over half of non-Wells Fargo customers surveyed said they were unlikely to join the bank, compared with 22 percent previously” (Egan, 2016). Building Wells Fargo’s ethical culture. Wells Fargo stands as another testament to the consequences of ignoring ethics and compliance. Several regulatory bodies opened investigations into Wells Fargo following the article. OSHA has since ordered Wells Fargo to reinstate the whistleblower’s position, awarded $577,500 in back pay, damages and attorney fees(CNN). Wells Fargo has long had a reputation for sound management. By continuing we’ll assume you board with our cookie policy. CEO Charles Scharf apologises for comments blaming ‘limited pool of Black talent’ for lack of diversity in recruiting. The bank admitted that … He had been working at the bank for more than two and a half decades (Walsh, 2019). In September 2016, Wells Fargo announced that it was paying $185 million in fines for the creation of over 2 million unauthorized customer accounts. Wells Fargo also faces lawsuits and other legal actions from former and current employees who alleged they were retaliated against after … Home — Essay Samples — Entertainment — Fargo — Wells Fargo Scandal: Ethical Issues And Possible Prevention Measures. More so, when Wells Fargo executives discovered that there was an issue with fake accounts they needed to stop the program, announce the issue, and resolve before it got worse. Then, in 2016, its pattern of wrongdoing became public. Wells Fargo could have done so much more immediately in the wake of the scandals. The ultimate implication of all of this is that the scandals have hurt Wells Fargo’s bottom line and reputation. Many employees did speak up, and the company retaliated, firing … ( Log Out /  You can get 100% plagiarism FREE essay in 30sec, Sorry, we cannot unicalize this essay. These scandals “inflicted serious damage on the Wells Fargo brand” (Egan, 2016). The bank reported 24.3 million customers who actively use their checking accounts. Wells Fargo and Moral Emotions. Wells Fargo gets poor reputation ranking to start 2020. I am writing to you regarding recent Wells Fargo’s fraudulent accounts issue. In analyzing the Wells Fargo fake account scandal from the ethical theory of Kantianism, this case is most certainly ethically impermissible. The entire account opening scandal of Wells Fargo was systemic in the sense that it was companywide, and not caused by one individual. Despite Wells Fargo’s public statements that the scandal was confined to the retail sales group and that the majority of the company “does the right thing,” there was plenty of evidence that the ethical fading ran wide and deep throughout the company. Carberry, E. J., Engelen, P., & Van Essen, M. (2018) found that the costs of misconduct by corporations begins with the cost of replacing employees and can lead to reputation penalties, which can be rooted to the decline of a corporations stock price and loss of stakeholders. The scandal that recently enveloped Wells Fargo teaches an important lesson about running an ethical business. For example, Well Fargo avoided many of the pitfalls and risky investments that plagued other big banks in 2008/2009. To export a reference to this article please select a referencing style below: Sorry, copying is not allowed on our website. (n.d.). The knowledge and distribution of incentives to employees for cross-selling services and accounts began the largest issue of Wells Fargo’s scandal. The report stated Wells Fargo had an unhealthy “pressure-cooker” sales culture. Here is what happened. The loss of honesty for a personal incentive had an effect on the corporation as a whole. The bank offered many different services to its customers. Still, in 2020, Wells Fargo has “considerable work to do in rehabilitating its reputation with federal lawmakers and consumers” (Craver, 2019). Different ethical issues can be addressed using different ethical platforms depending on the sensitivity of the matter. Wells Fargo does not endorse and is not responsible for their content, links, privacy, or security policies. When you create a reward, but do not monitor how it achieved or earned, then you begin to allow employees to engage in unethical business practices. How Wells Fargo’s Fake Accounts Scandal Got So Bad. Wells Fargo’s reputation is tanking, survey finds. Ethics | Wells Fargo Scandal Continues By Curtis C. Verschoor, CMA, CPA ... New disclosures increase the scope of fraud and raise issues of audit and disclosure failure. Results showed that before the scandals, negative perceptions were 15 percent. Students who find writing to be a difficult task. Available from: https://gradesfixer.com/free-essay-examples/wells-fargo-scandal-ethical-issues-and-possible-prevention-measures/, Recieve 100% plagiarism-Free paper just for 4.99$ on email, *Public papers are open and may contain not unique content. Are you interested in getting a customized paper? ( Log Out /  Wells Fargo employees were wrong for lying, creating and opening false accounts as well as hiding the fact that they were doing so in order to receive an incentive. The damage to its reputation is staggering and the ability of the bank to recover will depend on a sustained commitment to ethics and compliance and careful management of its business practices. On September 8, 2016 they finally fined the bank $185 million US. And Wells Fargo was trying to run an ethical business, despite its huge blunder. It turns out that management and employees were not so trustworthy after all. Wells Fargo Scandal: Ethical Issues And Possible Prevention Measures In today’s society the scandals that hit huge corporations are found and discussed speedily due to the use of the media. In addition to 5,300 employees being fired, if a change from an internal to an external CEO had happened earlier, consumers would have been given the signal that corporate cultural change was happening (Egan, 2016). Blythe, J. The choices made were companywide in order for all who participated to benefit. Investigators discovered the “pressure-cooker” sales culture led … This could have instilled some confidence in consumers that everything was being taken seriously and work was being done to restore trust. Despite a mission statement and vision indicating that they are a “trusted provider”, Wells Fargo has had years of scandal. 5 OUR CODE OF ETHICS AND BUSINESS CONDUCT People As team members and representatives of Wells Fargo, we always value and support one another. ( Log Out /  The corporate culture would need to change, starting by verifying that the CFO or CEO’s ethical decisions are in line with the company’s. Piazza & Jourdan (2018) recognized that without publicity, an organizations misconduct may or may not alter organizational membership, meaning that if not caught, employees would stay to reap the benefits to their paychecks. It soon came to light that the pressure on employees to hit sales quotas was immense: hourly tracking, pressure from supervisors to engage in unethical behavior, and a compensation system based heavily on bonuses. We will occasionally send you account related emails. WELLS FARGO ETHICAL ISSUES Wells Fargo Bank Fake Account Scandal: As company’s grow and expand more throughout the years, the founding values and initial ethics can tend to be forgotten. Retaliating against whistleblowers is a major breach of trust. The company needs to have a good moral compass and make sure that all employees do as well. (2014). A similar surveyin Britain resulted in just 52% of respondents saying they felt businesses behave ethically. If a customer bought one service, employees were urged to “cross-sell” several more. Did you catch that? In a recent Deloitte survey, respondents were asked to agree or disagree with the proposition that businesses behave in an ethical manner. Asked then to opine on the statement that businesses focus on their own agenda, rather than considering wider society, 75% agreed. Wells Fargo’s scandals are hurting its bottom line. The philosophy of ethics and the corporate conscience. Wells Fargo & Co. is a financial services company and the “fourth largest bank in the United States by assets” (Dixon, 2020). ( Log Out /  Wells Fargo deals with one of the most sensitive items in the society: money. Investment products and services are offered through Wells Fargo Advisors. In 2008/2009 Wells Fargo mandated a companywide quota for opening, or the cross selling of services, on new customer accounts by employees. If you’d like this or any other sample, we’ll happily email it to you. Despite a mission statement and vision indicating that they are a “trusted provider”, Wells Fargo has had years of scandal. The ethical dilemma of Wells Fargo. Retrieved February 8, 2020, from https://www.journalnow.com/business/wells-fargo-gets-poor-reputation-ranking-to-start/article_85d087d0-6bf7-5fbc-87e0-a4577ed0d11e.html, Dixon, A. In today’s society the scandals that hit large corporations are discovered and discussed quickly due to the use of the media. 48% disagreed. Wells Fargo has a fiduciary duty to treat its customers fairly. “Axios and the Harris Poll released a ranking of the 100 most visible companies in America by their reputations. Note: This piece was updated to include the connection to the ethical failures at Wells Fargo as a strong illustration of the article's focus Follow … In the following text we will discuss a recent Wells Fargo scandal, the ethical issues and how or if the scandal could have been prevented. Retrieved February 3, 2020, from https://fortune.com/2018/08/01/wells-fargo-, Todd, S. (2019, September 27). There is need to ensure that there is an ethical culture that keeps a tab on the business ethics practiced by the organization globally. After the scandal, negative perceptions rose to 52 percent” (Egan, 2016). Want us to write one just for you? It would have been a good decision for then CEO John Stumpf to have stepped down right away (Walsh, 2019). Having been on the inside, this didn’t help establish trust and the sense of fresh beginnings (Walsh, 2019). Retrieved February 3, 2020, from https://www.bankrate.com/banking/biggest-banks-in-america/, Egan, M. (2016, October 24). Survey respondents ranked the companies according to criteria that included good culture, vision, and ethics. if Wells Fargo had at least one employee stand up and said what they were doing was unethical and should be stopped, it would be considered ethical. That’s … Building a Culture of Compliance. Corporations facing misconduct findings, attempt to limit the discloser of issues in order to limit outside damages. Retrieved February 8, 2020, from https://www.barrons.com/articles/wells-fargo-makes-a-clean-break-51553908012. “In 2016, a survey was done of 1500 bank customers. We can custom edit this essay into an original, 100% plagiarism free essay. However, when there are multiple reasons for hitting certain market thresholds, more than your daily employees are at fault. 2021 © gradesfixer.com. Remember: This is just a sample from a fellow student. Despite its reputation issues, Wells Fargo is still recruiting new customers. Incorrect decision making issues chosen and followed through by employees and not the consumers lead to lowered reputation and moral of Wells Fargo. Incorrect decision making issues chosen and followed through by employees and not the consumers lead to lowered reputation and moral of Wells Fargo. Wells Fargo was regarded for years as one of America’s best banks. The 15 Largest Banks In America. In an attempt to correct the situation, Wells Fargo fired 5,300 participating employees, which amounts to about 1 percent of the 300,000 total company employees. GradesFixer. Retrieved February 3, 2018, from https://www.latimes.com/business/la-fi-wells-fargo-ad-campaign-20180509-story.html, Shen, L. (2018, August 1). If you fit this description, you can use our free essay samples to generate ideas, get inspired and figure out a title or outline for your paper. Retrieved February 3, 2020, from https://fortune.com/2016/09/15/wells-fargo-scandal/, Le Grand, C. H. (2005). Wells Fargo Just Got Hit With a $2.1 Billion Penalty For the Financial Crisis. Wells Fargo & Co. “deceived the Federal Housing Administration into insuring risky mortgages that were ineligible for federal support between 2001 and 2008” (Shen, 2018). Attention! However, more than one person or department is responsible for how an organization is run and becoming or being socially responsible leads to better end results, great profits and attraction of more consumers for business growth. Change ), You are commenting using your Facebook account. Wells Fargo Ethical Issues Lead to Class Action Suit November 13, 2017 by Beck Law P.C. Overlapping with the timing of the fake account scandal, for example, the bank was also misrepresenting the quality of loans they sold. "The only thing that is constant is change.". People witnessed the downfall and bankruptcy of huge financial institutions like Lehman Brothers, Merrill Lynch and several other key members of the fraternity. Wells Fargo Makes a Clean Break. The higher powered employee has the ability to trickle down to all employees the ethical business values necessary to run in a truthful way. Wells Fargo & Co. is a financial services company and the “fourth largest bank in the United States by assets” (Dixon, 2020). Ultimately, Wells Fargo “will be affected by the invisible hand of the market; they will have to operate within the law; and they will also develop their own internal ethical position (Blythe, 2014). But the bank’s management set unrealistically high sales goals for its employees, encouraging many employees to game the system. Wells Fargo, in its formal ethics program, did train employees to avoid unethical behavior, and counseled them to call the company’s ethics hotline if they suspected anyone was behaving unethically. Change ), https://doi-org.ezproxy.snhu.edu/10.1362/204440814X14103454934258, https://www.wellsfargo.com/about/corporate/governance/scharf/, https://www.nytimes.com/2017/01/13/business/dealbook/wells-fargo-earnings-report.html, https://www.journalnow.com/business/wells-fargo-gets-poor-reputation-ranking-to-start/article_85d087d0-6bf7-5fbc-87e0-a4577ed0d11e.html, https://www.bankrate.com/banking/biggest-banks-in-america/, https://money.cnn.com/2016/10/24/investing/wells-fargo-fake-accounts-angry-customers/index.html, https://money.cnn.com/2018/07/13/news/companies/wells-fargo-earnings-stock/index.html, https://fortune.com/2016/09/15/wells-fargo-scandal/, https://www.qualitymag.com/ext/resources/files/white_papers/BuildingaCultureofCompliance-IBS.pdf, https://www.latimes.com/business/la-fi-wells-fargo-ad-campaign-20180509-story.html, https://fortune.com/2018/08/01/wells-fargo-, https://www.forbes.com/sites/samanthatodd/2019/09/27/new-ceo-at-wells-fargo-faces-a-heavy-lift/#228a57a27431financial-crisis-fine-mortgage-backed-security/, https://www.barrons.com/articles/wells-fargo-makes-a-clean-break-51553908012. It is also a brand that has faced many ethical and legal issues. We believe everyone on our team is important and deserves respect. 5,300 Wells Fargo employees were forced to resign or were fired amid a huge scandal involving hundreds of thousands of customers and millions of dollars. A Brief Wells Fargo 's Fraudulent Accounts Issue 1202 Words | 5 Pages. New York (CNN Business) Wells Fargo was hit with a $3 billion fine Friday by federal authorities outraged by the millions of fake accounts created at the troubled bank over many years. However, it was discovered that in order to meet the quota employees began creating fake accounts for customers. How a company responds and resolves the issue can become detrimental to the bottom line of success and growth. The ethical issue, as reported by San Francisco Business Times, consisted in the dismissal of thirty workers of Wells Fargo because of the above mentioned fictitious new accounts. “New credit card applications were down 43 percent in the fourth quarter of 2016 from 2015, and new checking account openings fell 40 percent” (Corkery, 2017). Such corporate scandals raise issues associated with ethics, as well as outcomes of unethical practices. Today, we see ethical failings repeatedly in corporate America despite the talk of the importance of ethics. this essay is not unique. Retrieved February 8, 2020, from https://money.cnn.com/2018/07/13/news/companies/wells-fargo-earnings-stock/index.html, Kouchaki, M. (2016, September 15). This essay has been submitted by a student. The financial crisis of 2008 led to the economic downturn all over the world.