Wells Fargo, was accused of illegal activities by US officials. The bank is accused of having employees make thousands of fake bank and credit accounts. This happened between 2011 and 2015. The goals of these fake accounts was to hit internal targets and collect transaction fees. After this came out the bank agreed to pay 185 million USD in fines and fired 5300 employees related to these illegal activities in response.
Former employees told CNN that management knew about these activities and turned a blind eye when laws were broken. Sabrina Bertrand, a former employee said hat employees were pressured to open up dual checking accounts even when not necessary. The pressure she felt from management to hit the high targets was unbearable.
The goals which were set by management were unrealistic as they wanted to sell 8 financial products per customer. District managers would meet 4 times a day in order to discuss each branch and employee´s sales. Sales staff would use fake accounts and emails to create extra accounts or sales without the client´s knowledge. The California lawsuit alleges that upper management knew about these practices and encouraged them. Going as far as saying that Wells Fargo created a fee-generating machine and that this wasn´t some individuals fault but rather the corporate culture. This has also been confirmed by ex-employees. (CNN, 2016)
A month after the bank was fined, Wells Fargo CEO John Stumpf was in front of a panel of US senate members. The bank had opened over 2 million fraudulent accounts. Stumpf said he was deeply sorry and he should have acted faster. Senator Warren, a long time critic of the US banking industry didn´t believe in his apology. She puts all responsibility at the CEO and upper management. Later saying he should resign. So far Stumpf has ignored the calls for him to step down. Wells Fargo said it will be contacting every customer affected by this fraud. Also saying that extra steps would be taken in order to prevent this. Stumpf did say: “We recognize now that we should have done more sooner to eliminate unethical conduct or incentives that may have unintentionally encouraged that conduct.” (BBC, 2016)
Bill Bado a former employee of the company was terminated for calling their ethics hotline. His reason to call the hotline was: him realizing fake accounts is immoral and illegal. He refused to open fake accounts.
Retaliating against whistleblowers is unethical and a breach of trust. These hotlines are meant to prevent illegal activity from happening within the company and firing people who report these activities not only goes against the point of a moral hotline but creates a environment of distrust. This wasn´t an isolated case. One former wells fargo Hr-employee said that there was a structured way on how to handle whistleblowers and firing them. Reasons for firing used to get rid of an employee could be as minor as being 2 minutes late. Bogus claims would also be used and bullying tactics trying to stop people from calling the hotline or as retaliation. (Matt, E. 2016)
The high sales pressure also lead to harsh and illegal punishment’s when the targets for the day weren´t met. Employees who didn´t meet the daily targets were forced to work overtime without getting paid. This overtime consisted of making cold calls in order to get more sales. Allegations of this policy go back to 1999, the policy in question allegedly contains a rule where employees wouldn´t get compensated for more than 40 hours per week. Federal law says that overtime should be compensated 1,5X the normal pay. Wells Fargo denies these allegations stating that every employee must register all their hours in an online system. However multiple employees have stated they aren´t allowed to enter any hours after 17:30. This negates the entire purpose of the online system. Forcing people not to log their actual hours is illegal. When employees complaint, managements response was: ” deal with it or leave”. Employees who complained would also face retaliation, with the company fabricating fake allegations which were used as a way to fire people. The banking industry in general is known for a high work pressure and as a competitive environment to work in. Wells Fargo went above and beyond with their illegal practices. (Egan, M. 2016)
As of October 2016 John Stumpf resigned as chief executive from Wells Fargo. Following the fraud scandal and subsequent mishaps becoming public. Wells Fargo stated earlier that Stumpf wouldn´t get any pay during the internal investigation period. Stumpf is being replaced by their chief operating officer. This might not be a good idea as the company culture needs to change drastically in order to fix the issues. Lastly, the banks head of retail operations has forfeited his 19 million dollar bonus and has left without pay-off. (BBC, 2016)
Wells Fargo was forced to pay 1.2 billion USD as a result of their malpractices. Now the company has reached a settlement with attorney generals from every state. This settlements of 575 million dollar is to settle lawsuits stemming from an investigation. Further the company has also create teams which will review and respond to customer complaints. (Mindock,C. 2018)
Egan, M. 9.9.2016. Workers tell Wells horror stories. CNN Business. URL: https://money.cnn.com/2016/09/09/investing/wells-fargo-phony-accounts-culture/index.html. Accessed 9.12.2020
Egan, M. 21.9.2020. I called the Wells Fargo ethics line and was fired. CNN Business. https://money.cnn.com/2016/09/21/investing/wells-fargo-fired-workers-retaliation-fake-accounts/index.html. Accessed 9.12.2020
BBC 20.9.2016. Wells Fargo boss urged to resign over accounts scandal URL: https://www.bbc.com/news/business-37419968 Accessed 9.12.2020
Egan, M. 30.9.2016. Wells Fargo made me work overtime — without extra pay. CNN Business. URL: https://money.cnn.com/2016/09/30/investing/wells-fargo-workers-wage-theft-overtime/index.html Accessed 10.12.2020
BBC 12.10.2016. Wells Fargo boss John Stumpf steps down URL: https://www.bbc.com/news/business-37639648 Accessed 10.12.2020
Mindock, C. 29.12.2018. Wells Fargo agrees to pay 575 million to settle lawsuits stemming from fake accounts scandal. Independent. https://www.independent.co.uk/news/business/wells-fargo-settlement-575-million-us-attorneys-general-fake-accounts-a8702736.html. Accessed 10.12.2020
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