2016 turned into a nightmare for Wells Fargo Bank as a corporation, they were involved in a millionaire scandal that changed the perception of many customers and marked the before and after for this bank. Wells Fargo was one of the most solid banks in the United States for years, this was a true challenge for the company that they faced and had enormous consequences.
The discovery that the bank had been creating fake accounts in the names of its customers without their knowledge or consent was a major blow to its reputation and financial stability.
Many consumers at the time closed their accounts with the institution for fear of having their identity compromised. It was a major issue since many customers also sued the bank. After this scandal, Wells Fargo had to work diligently on gaining the trust back of the customers who stayed and also recuperating the trust of those who left the institution, and to create also a new clientele.
The overall customer perception was really bad, I was part of the Wells Fargo clientele and even though I did not close my account I opened a second account in a different institution, moving most of my money to the new account.
Overall, the Wells Fargo fake accounts scandal led to a substantial loss of trust, and reputation, and a big financial consequence that had a lasting impact on their brand’s image and overall perception.
After the scandal in 2016, Wells Fargo had to pay $185 million in fines in lawsuits. They paid $3 billion to settle criminal and civil investigations; $1.7 billion in civil penalties due to mismanagement; $1 billion to settle a class-action lawsuit; $2.1 billion fine for actions during the subprime mortgage crisis; reputation damage; CEO and other executives’ resignation; among many other lawsuits and implications.
Some of the things that Wells Fargo should have done to avoid this scandal were:
Listen to their employee’s concerns; the bank ignored many of the employees’ concerns at that time about the high sales target they requested from them.
Set realistic sales targets; The employees were asked to obtain impossible sales targets making them do what they did.
Foster a culture of accountability; Back then some employees tried to report the fraud but they were ignored or retaliated proving that a culture that fosters a culture encouraging good behavior is important for a company.
Prioritized ethical sales practices; employees should be encouraged to prioritize customer’s needs over sales targets and reward them for doing so.
Set an effective monitoring system; regular audits and review of employees’ activities to prevent any type of misuse of policies and procedures.
- References:
- Wells Fargo Agrees to Pay $3 Billion to Resolve Criminal and Civil Investigations into Sales Practices Involving the Opening of Millions of Accounts without Customer Authorization. (2020, February 21). https://www.justice.gov/opa/pr/wells-fargo-agrees-pay-3-billion-resolve-criminal-and-civil-investigations-sales-practices
- Learnsignal. (2024, February 20). The Wells Fargo fake accounts scandal: A comprehensive overview. Learnsignal. https://www.learnsignal.com/blog/wells-fargo-fake-accounts-scandal-overview-2/
- Lenzner, R. (2018, June 29). Wells Fargo stages a reputation comeback. Can it convince the Fed it’s changed? Forbes. https://www.forbes.com/sites/robertlenzner/2018/06/29/wells-fargo-stages-a-reputation-comeback-can-it-convince-the-fed-its-changed/?sh=709d065da15a
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