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Unethical Behavior in Wells Fargo

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Unethical Behavior in Wells Fargo

Wells Fargo is an American corporation that offers financial and banking services in the US. It has a large client base consisting of individual customers and institutions. Its recent scandal has placed ethical issues in the corporate world into perspective. In particular, its new policy for promoting cross-selling has ruined its reputation. Cross-selling is a conventional practice of convincing clients to adopt another service by the same firm. For example, one might opt for credit card usage rather than sticking with the checking option. Incentives offered to employees for scaling up such operations facilitated their wrongful creation of fake accounts using the real identities of its customers, which resulted in the making of illegal payments by these clients without their knowledge. Adoption of deceptive behavior by Wells Fargo employees and unfair surcharging of the firm’s clients eroded the trust that such people had in the business because it is unethical and wrong.

Firms are obligated to always seek consent of all their clients whenever they would like to use their details (Pastin). The actions of a large segment of the Wells Fargo employees amount to identity fraud which is a punishable offence. It was wrong for the more than 5,300 officials to open such accounts without the clients’ knowledge because it subtly obliged them to make certain statutory payments. Their names and addresses were adversely exposed and easily placed insolvent victims in danger of breaching their credit worthiness levels. Such embarrassing scenarios had the risk of exposing the affected individuals to ridicule and even limiting their access to credit facilities. Exposure of this scandal was the right thing to do because of the breach of all known privacy regulations by the company’s workers. It was illegal for the employees to assign the names of their clients to fake accounts and keep such actions a secret because this was an intrusion of their privacy and could have been used for other ulterior motives.

Banking institutions survive on the trust that customers have about the firm. Wells Fargo prides itself in the charging of minimal transaction fees. It also constantly reminds people that it does not have any hidden costs for all operations. The extra charges that were credited to the fake accounts disavow this notion and reinforce the belief that such a large organization is capable of fraudulently obtaining money and making huge financial profits off its customers. Individuals and corporations that use its services thought that their money was safe and the balance statements were accurate. This scandal highlighted the firm’s breach of such trust (Gini and Marcoux 29). In fact, it facilitated the questioning of its dedication to the sacred fiduciary duty that binds it. The humongous profits announced by Wells Fargo exhibit a negative pattern of companies adopting deceptive behavior against their customers. This is an immoral practice especially for a business that handles people’s finances because most clients struggle to make such savings.

Conventional wisdom demands that workers should always be truthful in their acts and avoid the commission of illegalities. It also dictates that all employees should constantly update their superiors whenever they carry out their responsibilities. Their only motivation was qualifying for the large bonuses and commissions that accompanied a higher rate of cross-selling. Such behavior went against their contractual obligations and ruined the company’s reputation. Their lack of honesty in the generation of these fake accounts is tantamount to sabotaging the corporation. Under such circumstances, they could not justify the hefty allowances awarded to them by the management. In fact, this scandal raises suspicion on the veracity of any other activities conducted by the same officials. It breeds enmity between junior workers and the senior members of staff, which is a wrong premise for building a healthy corporate culture.

Contractual regulations shepherding the appointment of managers envision a scenario where such individuals supervise lower-level staff in order to streamline the firm’s operations in accordance with the law, company policies and natural best practices. The lack of such supervision in this case is worrying. It reveals that such people could not fulfill their obligations to all Wells Fargo stakeholders. For instance, it is a betrayal of the trust given to them by the clients, the board, the government and investors (Gini and Marcoux 58). This indictment portrays the corrosive culture inherent in the firm that allows executives the luxury of absconding their duties. It is unacceptable for the said officials to regularly endorse the work of junior members of staff without proper verification of the different activities undertaken by the latter. In fact, it shows that executives at Wells Fargo placed a higher premium on the increment of the corporation’s bottom-line at the expense of the affected customers.

Ethical standards demand that wrongful actions are punished in order to be a deterrent for any repetition of the mistakes. John Stumpf was a highly respected CEO of Wells Fargo and upon the discovery of these immoral actions, he was fired along with the 5,300 employees guilty of these anomalies. Such drastic action is commendable because it enhances the commonly held belief that castigation of serious offences is vital. The backlash that followed the revelation of the scandal is understandable and the ruined reputation of Wells Fargo is justified because of the breakdown of trust amongst the stakeholders. The firm is highly recognized especially in the banking sector and it owes all concerned parties its fidelity to the law, safety of people’s cash and rightful means of profitability. Wells Fargo should also rethink its internal control mechanisms by adopting a proactive approach in the actions of its employees (Pastin). It should recruit workers who are competent and committed to enhancing integrity in all their operations. The scandal exposed the nature of corporate greed that exists in businesses. It however reinforces the notion that companies rely on the trust of their customers for survival. There is need for such entities to maintain this status quo. Wells Fargo has a diverse clientele who strain to earn the money they bank with the institution. Intrusion of their privacy by unknowingly using their identities in the opening of fake accounts and illegally obtainment of their finances is an unethical practice. The Wells Fargo scandal exhibits improper behavior of its employees and the breakdown of trust amongst its clients is proof of the unethical actions of the said officials.

 

 

Works Cited

Gini, Al, and Alexei M. Marcoux. Case Studies in Business Ethics. Pearson Prentice Hall, 2009.

Pastin, Mark. “The Surprise Ethics Lesson of Wells Fargo.” Huffington Post, 20 January 2017, https://www.huffingtonpost.com/mark-pastin/the-suprise-ethics-lesson_b_14041918.html. Accessed 23 October 2017

 

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