Wells Fargo Creates Corporate Fiasco

Situation:

In September 2016, a scandal broke within Wells Fargo. It was discovered that employees were creating fake accounts and had been doing so since 2011.

An investigation revealed that over 1.5 million accounts were created using fake emails and PIN numbers without customer knowledge or consent. Employees did this to boost their figures and therefore increase their pay and bonuses.

To add to the disaster, Wells Fargo was guilty of firing employees who tried to call out the company on ethics regarding the creation of fake accounts.

Since then, the company has been involved in various court cases and settlements involving the employees as well as customers of the bank. Other scandals have surfaced as well, creating a PR nightmare for the company.

What did PR do?

As their initial response, Wells Fargo fired 5,300 employees who were involved with creating these accounts and the company fined a hefty $185 million.

A few weeks after the scandal broke loose, head executive, Carrie Tolstedt, was the first to step down. Tolstedt was the head of the department which created the fake accounts.

The company also promised to stop promoting unrealistic sales goals – saying that these goals lead employees to create fake accounts.

In early October, the CEO, John Stumpf, stepped down and announced his immediate retirement.

In March of 2017, Wells Fargo announced a settlement of $110 million for customers whose information was used for fake accounts. The settlement later increased to $142 million.

The company has paid more fines in other cases involving different areas as well.

PR for Wells Fargo has had to work hard for a company with many internal ethical issues. Have they taken the right steps?

As an added PR bonus, Wells Fargo released a video on how they will earn trust back.

Analysis:

It has been almost two years since the scandal broke, and Wells Fargo is still paying for it (literally). From what I have learned, the timeline of scandals and amount in fines charged to the company, alone, shows that public relations can only do so much for a company with substandard behavior.

Image result for wells fargo

I think that within the first few months of the break, Wells Fargo performed all the normal and necessary procedures such as firing all guilty employees, paying the fine and having the CEO step down. The greater problem is that illegal activity and scandals kept being uncovered. Over the next year or so, the company was accused of various illegal practices over and over and it didn’t seem to stop. Not only were the employees involved in illegal practices, but top executives in the company were involved as well. This tells us that ethical practices and their corporate social responsibilities were largely ignored. Good ethics in public relations is important, especially in regards to corporations and companies.

It seems as though Wells Fargo is going to have to keep paying fines and take part in settlements until the internal workings of the company are fixed, otherwise they will keep losing customers. I can imagine that I would want to switch banks and take part in the settlement if my information and account was used. This scandal really is a PR nightmare and I think there a lot of lessons to be learned from the company’s mistakes.

It takes years for a company to build credibility and a good reputation and just one moment to ruin it all. Wells Fargo and its public relations are going to have to work to the bone to regain the trust of their customers and will need to for a long time.

Sources:

http://money.cnn.com/2018/04/24/news/companies/wells-fargo-timeline-shareholders/index.html?iid=EL

http://money.cnn.com/2016/09/08/investing/wells-fargo-created-phony-accounts-bank-fees/index.html?iid=EL

https://www.barrons.com/articles/wells-fargo-growth-on-hold-1525967026

 

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