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Individual Accountability in Wells Fargo's Sales Sham

9/30/2016

12 Comments

 
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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence
John Stumpf, the CEO of Wells Fargo, America’s fourth biggest bank, recently returned to Capitol Hill for the second time in two weeks to explain how his firm allowed as many as 2 million fake accounts to be created over a five-year period.  While it’s fitting for the House Financial Services Committee and others to question the systems that allowed such widespread abuse, one shouldn’t overlook that in every instance, an individual made the decision to do the wrong thing, possibly with superiors’ support, but against better moral judgment.  Those personal actions also deserve some scrutiny.
 
About 5,300 Wells Fargo employees have been implicated in setting up the fake accounts, many of which were based on the information of real Wells Fargo customers.  Over a period of several years, low-level bankers and tellers did things such as moving funds from customers’ existing accounts to fabricated ones “without their knowledge or consent.”  These schemes resulted in some customers incurring a variety of unwarranted charges, including overdraft fees because their actual account balances were lower than they should have been.  In other cases, Wells Fargo employees created “phony PIN numbers and fake email addresses to enroll customers in online banking services.”  They also set-up 565,000 fake credit card accounts.
 
Those 5,300 employees have been fired, Wells Fargo has been fined $185 million, and the company has agreed to refund customers $5 million, but those remedies haven’t stopped the outrage over the illicit acts from spreading to persons not directly affected, including members of Congress who have grilled Stumpf about his role in the scandal.  Some have compared Wells Fargo to Enron and suggested that the CEO is running a “criminal enterprise,” which should land him behind bars.
 
Stumpf, who is forfeiting at least $41 million in compensation as a result of the scandal, has apologized, saying he is “deeply sorry” for Wells Fargo failing its customers.  At the same time, he has “rejected lawmakers’ attempts to cast the scandal as a consequence of broader failings in Wells Fargo’s leadership and corporate culture.”  Instead, he has suggested that the 5,300 former employees each suffered from an individual ethical lapse.
 
How could over 5,000 people working for one company just happen to make the same moral mistake?  The fact that so many precipitated the swindle, in the same organization, over a relatively short period of time, suggests that either something was being done to encourage the fraud, or there was a glaring lack of control for preventing it.
 
Some have suggested that the company’s product sales goals may have encouraged employees to fabricate accounts in order to meet their quotas.  Although overly-aggressive goals could have contributed to the corruption, it’s unlikely that such a system was the sole cause.  Many companies provide their salespeople with performance-based incentives, yet they don’t make-up orders.  There must have been either other institutionalized efforts to cheat or shared negligence in preventing it.
 
However, whatever the corporate compromises were, they don’t absolve the individuals directly responsible for the fraudulent acts.  In other words, Stumpf was right to suggest that there were thousands of individual ethical lapses—there had to be in order for the problem to multiply the way it did.
 
Each Wells Fargo employee who opened a fake account, borrowed a real customer’s email address, or invented a PIN, knew that what they were doing was wrong.  It would have been impossible for them not to.  Banking requires mental acuity, and a company doesn’t become the fourth largest in a very competitive industry without hiring sharp people.
 
Of course, cognitive ability doesn’t always translate into moral sensitivity; however, no Wells Fargo employee should have missed one major moral standard: “Do unto others as you would have them do unto you,” or, treat others the way you want to be treated.  Virtually everyone can understand and appreciate the Golden Rule, which is found in every major world religion.
 
At some point, each person who participated in Wells Fargo’ sales sham must have thought to themselves, “I’m creating a fake account for someone, which will cost them money, compromise their identity, etc.;  I wouldn’t want anyone doing that to me,” yet they went ahead and did it anyway.  Did a corrupt corporate culture or misplaced incentives encourage or pressure employees to make the wrong choice?  Probably.  Still, each individual had a choice.  Even if doing the right thing came at great cost to them, e.g. their job, that alternative should have been preferable to intentionally harming others and sacrificing their personal integrity.
 
Poor company policies and individual impropriety both likely led to Wells Fargo’s sales scandal.  Regardless the cause, creating fake accounts cost stakeholders’ value and compromised societal values like fairness and respect.  Consequently, all those responsible, from the bottom up, are answerable for “Mindless Marketing.”
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12 Comments
Cameron Bauer
10/20/2016 04:33:20 pm

I thought this article was really interesting and helped shine some light on something I had no idea about. Wells Fargo is involved in a huge scandal that will cost the company a good amount of money. Employees started setting up fake accounts that were earning money. This is illegal and was costing customers money. This is a bummer for me to hear and makes me not trust Wells Fargo with my money. I will take my money else where and they have lost my business.

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Claire Rodrian
10/21/2016 03:54:30 pm

I definitely agree with this article and really enjoyed reading it! I had no idea that Wells Fargo had a scandal like this, and I think it was not handled well. It is no coincidence that so many employees all committed the same ethical mistake, and Stumpf should have been willing to admit the issues within the company rather than trying to blame the situation on the employees themselves.

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Christian Bujuklian
10/24/2016 02:24:31 pm

Hi Claire,

I am a Wells Fargo account holder and it was sickening to hear that this happened, all to meet their numbers. Now they are in a weird state where they could start losing a good majority of their customer base because of their greed and stupidity. For a CEO to point the finger on his employees is a sign of corruption and immaturity. It's sad but money speaks, and it certainly got in the way of their ethical choices.

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Alex Falk
10/22/2016 05:27:41 pm

This article grabbed my attention initially because I am a current customer of Wells Fargo and have been for many years. The information that this article provides if definitely eye opening to me, I had no idea that they were involved in any sort of scandal, much less a scandal of this size. I think that the CEO of Wells Fargo should absolutely be held responsible of what was going on here, it truly is a mindless situation that he got himself into. I don't know if we'll ever truly now what is going on behind the curtains, but it is shady for sure and I am not impressed.

It is also true the the employees that were involved should also feel responsible and need to realize that they are disregarding the respect that they need to have for the customers of Wells Fargo. This lack of respect from the top down is very unfortunate and I hope that they all learn their lesson from this scandal.

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Agnes Abigail Limuria
10/23/2016 07:38:07 pm

I think this analysis reveals a much deeper problem than a lack of scrutiny or random ethical lapses of individuals. I do believe in a relativistic culture that we live in now, it is very easy to avoid morally sound choices as the definition of moral itself is being rewritten everyday. In a culture where money and power are the things to strive for, the end seems to justify any means. Yes i do believe that this is definitely mindless marketing, but beneath that surface we find a misplaced priority. It shows a culture that prioritize fortune and success above everything, even moral. This blog post points out something that is inevitable: it cannot be the fault of one individual or a system, it is the fault of every single person that is involved. It is a systemic degradation of moral, it is a cultural phenomenon.

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Blake Shannon
10/24/2016 01:28:04 am

This article was very helpful in my understanding about what Wells Fargo was involved in, a scam. This scam is going to end up costing them a lot of money. The actions on the behalf of the employees was illegal and they are in a lot of trouble for setting up the fake accounts.
They will lose many customers as a result of this and I hope they learn from this horrible mistake.

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Christian Bujuklian
10/24/2016 02:22:10 pm

This article was very insightful and really grabbed my attention because I am an account holder with Wells Fargo and actually received a letter from the CEO letting me know that "things will change". At first I didn't know what that meant and then I heard of this scandal and was appalled. There were details I was unaware of but this article helped me understand what was going on behind closed doors at Wells Fargo so that would "hit their numbers" essentially at the cost of their customers.

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Ben Saucy
10/24/2016 07:59:30 pm

I have just recently heard about this. Sadly, again it can be traced back to the flawed human mind. Sin has caused humanity to be greedy and without moral means and integrity. It saddens me that so many employees were discovered to making these fake accounts for people. They stated the question of how could so many of them make the exact same moral mistake. They are not only compromising the money of customers but a lot of their individual protected information that should not be exposed to the world for protection reasons. They did not make the mistake. There is no way they accidentally all made the mistake for that long. It had to be intentional to a certain degree and now it is costing them. Like they said, it is a matter of fixing a system that did not have good accountability in place. It hurts to think that maybe accountability was there but not enforced and simply allowed to go as far as it did. In this world, perfect accountability might be out of the picture. But having integrity and respect are still possible. Humanity has come far. We are at least capable of that much.

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Erin Moon
10/24/2016 11:12:08 pm

I have previously studied this case for a class, and the question that still hangs in my mind from this research was one regarding the morality of the employees of Wells Fargo. John Stumpf had stated that all 5,300 employees had had a lapse in judgment for this ordeal to have occurred, but this statement is highly improbable. I can only imagine that Wells Fargo taught their employees to maintain a corrupt internal ethical culture, or each person was pressured into acting this way from their peers, as well as their superiors, to do what they could to match numbers.

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Luke Singleton
10/25/2016 12:47:59 am

I had not heard about the Wells Fargo situation before reading this article. But it sounds like the CEO should be held responsible for the actions of his employees, as well as all of the people who actually made the accounts. It does seem very coincidental that 5,000 employees all committed the same crime without being told to do it. I think that this is a very poor situation for Wells Fargo. People put their money in the bank because they trust the bank more than themselves. Wells Fargo broke that trust and I think that it will have severe implications.

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Cristina Schmitter
10/25/2016 02:15:37 am

I thought this article was a great overview and analysis of a horrendous incident. As a Wells Fargo account holder this story has been very concerning to me. I would agree that I can't believe what the CEO said, asserting that each guilty employee made an individual moral mistake. To me it seems extremely far-fetched, there must have been a larger push from management to reach goals in potentially unethical ways.

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Philip Westwood
10/25/2016 02:43:24 am

I really enjoyed this article and found it insightful as to shedding light on Wells Fargo scam incident. This is concerning to me since I have family who hold accounts in Wells Fargo. Definitely, there was a corrupt internal structure even before this incident happened, thus, this unfortunate event followed.

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