Wells Fargo, the most known company that deals with finances were caught up in the trap of engaging itself in unethical practices that were directed to its customers. On its run to cross-sell its more profitable products to its esteemed customers, it also decided to engage in practices that made the company sink into a quagmire (Sternberg 18). Wells Fargo was reportedly affected in terms of its practices regarding credit crunch. A problem occurred when Wells Fargo was blamed for fraudulently creating multiple accounts for customers and later closed bank accounts cancer-causing a financial crisis.
According to Sternberg (26), the bank was experiencing a credit crisis and was consistently making records of losses as a result of the credit crunch. The Wells Fargo Company compelled its workers to hit sales quotas. The workers responded by opening as many fraudulent customer accounts as possible and later closed the accounts in a mysterious way. The closure of the accounts before its clients noticed was arranged and resulted in associated fees on the credit ratings of its customers.
Effects of Wells Fargo's Unethical Behavior
In the realization that Wells Fargo company had behaved unethically towards its customer base, the government intervened and laid several fines on the company to cover up that effect it had caused its customers. The fraudulent acts made the company to lose a lot in paying fines to the government and compensating the customers that were affected. Wells Fargo company was compelled to return $2.6 million to the accounts it had obtained from bringing it back to the initial position it had before attempting such unethical practice. Also, the company was forced to pay a massive penalty of up to $186 million to the government.
The effect was not only paying fines and refunding the money to its customers but also made the company to face objection and criticism from its competitors who continue slamming the company hence destroying its reputation to the client base. Also, the government and the media criticized Wells Fargo for its acts of fraud. The behavior made the CEO of Wells Fargo, John Stumpf to lose his job from the company. Ethics is a moral concern that has portrayed to be a challenge in Wells Fargo. Wells Fargo has been reported to engage in unethical practices that about the alteration of a given set of good behavior or accepted practices. Wells Fargo participated in several dishonest and fraudulent activities which were disrespectful to its clients. The aspect challenged and compromised the rights of a given the clients subscribed to the organization. The ethical malpractice is connected to an effect on corporate social responsibility. Wells Fargo unethical practices deprived the business' its esteemed and enthusiastic customers, and the company was subjected to heavy fines by the government.
Ethical conduct relates to the aspect of working with integrity. Ethics behavior in accounting involves portraying reasons beyond doubt to be trusted with finances about a particular organization. According to Chen (4), ethics in accounting involves individual demonstrating trustworthiness and proper conduct while dealing with accounting. The recommendation for preventing unethical practices relating to financial base should be done by enhancing the separation of duties. Separation of duties and performance of frequent audits will prevent the occurrences of unethical practices in an organization.
Chen, Anthony Moung-yin. "Critique of Contemporary Accounting Research Methods." Accounting Research 4 (2007): 04.
Sternberg, Elaine. "Ethical Misconduct and the Global Financial Crisis." Economic Affairs 33.1 (2013): 18-33.
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