Wells Fargo Scandal Essay Example

Wells Fargo is a banking and express company that serves customers and communities all over the world. The need for express services led to the opening of the company. Although express services were a risk, the customers were willing to take risks. Wells Fargo was considered to be more reliable in early years, and for this reason, they attracted more customers. Banking was an essential part of Wells Fargo's business. People were confident with the Wells Fargo's services, and this helped the company to build the business globally in towns and cities throughout the world, this played a vital role in people's lives. The company connected many families and businesses over a wide range of distance. They would expand their business to follower their customers and ensure that their customers would readily access the company. People loved the company for its reliability, and this gave the company the morale to expand and open branches in other parts. Their agencies were found even where postal services could not reach, and Wells Fargo services were dependable. However, in the recent past, the Wells Fargo's company have been faced with allegations whereby employees have been opening bank accounts on behalf of the clients without their permission due to the pressure by the company to see more units to get higher pay.

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The Wells Fargo account fraud is one of the allegations brought about by opening and creation of millions of saving and checking account on behalf of the clients without their approval. According to Curtis (Verschoor 2016), the process of creating this accounts involved even shifting of money from legal accounts. The employees created the accounts to make more sales to earn a high salary. The employees were under intense pressure to make more sales. The company's clients noticed the fraud when they were charged with unexpected fees. Wells Fargo's reputation was tarnished because the fraud spread to extensive coverage. The company's employees were encouraged to use clients contact information to fill out requests to prevent the discovery of the fraud by the customers. The encouragement of employees' misconduct points out that even the management of the banking company was unethical. In 2018, customers of the company were being forced to buy unnecessary insurance policies which had additional fine. The customers also accused the company of making unauthorized changes to mortgages, a practice that some borrowers said that it made them bankrupt. Another group alleged the Wells Fargo's company credit policies as discriminatory.

All these scandals had an impact on the entity and the society. With the kind of misconduct they were alleged with, Wells Fargo's reputation was tarnished. At first, the company was known to be reliable, and this helped in the building of trust with the customers, but the misconduct broke the assurance that the customers had with the company. This meant that even the customers who were at first interested or attracted by Wells Fargo's services withdrew their interest after hearing about the scandal. Only a few people would risk joining a company whose reputation is tarnished. Even those who were members withdrew their membership after the allegation. Due to these allegations, the company lost customers who were already their members and even those who were willing to join. This means that their profits dropped with a given percentage gradually. The rate at which new accounts were opened dropped compared to the rate of opening before the scandal. The bank was forced to close down some of its branches. A relatively large number of employees were fired because of the sales that involved deception and discontinued sales in some branches. Wells Fargo had to pay customers whose names were used to open accounts without their permission. Generally, the company spent a lot of cash to clean up the mess done by the scandal.

The Wells Fargo scandal violated some ethical principles. Ramierz (2016) highlights transparency among the compromised principles. The company did not keep their customers informed about the opening of the new accounts as a way of making more sales. They opened the accounts without the clients' permission. This way they violated their rights regarding the services offered to them. Reliability- the bank did not clear and understandable information to the customers within the frame of mutual trust during their operations. Neutrality- some clients alleged the company's credit policies were associated with discrimination. The employees who failed to open accounts using clients' information without clients' permission were demoted, and others were fired, a step of encouragement that was given by the company. Information abuse- instead of protecting the information of clients, they used the information to open accounts without clients' permission.

Conclusion

Wells Fargo as a banking company should have complied with banking code of ethics and even talk with their clients about the opening of the new account. That would have created an excellent reputation for others who were willing and were attracted by their services to join the company. Customers' participation and trust in a company are crucial in a company's success. When customers build trust in a company, they are likely to attract others by showing them the advantage of being a member of that specific company. Mostly, customers can build a company's reputation either positively or negatively. It's upon the company to treat its customers in the right way without violating its ethics to ensure that the relation between them is good. This way customers will have no reason to withdraw their membership.

Reference List

Ramierz, S.A., 2016. Diversity, Compliance, Ethics & In-House Counsel. U. Tol. L. Rev., 48, p.465.

Verschoor, C.C., 2016. Lessons from the Wells Fargo scandal. Strategic Finance, 98(5), pp.19-20.