Tuesday, November 24, 2015

Alleged Fraud by Wells Fargo Employees (2015)

Wells Fargo logo
Wells Fargo is the largest bank in the world and is the second largest bank in deposits, home mortgage servicing, and debit cards. During this last year, lawyers are coming forward to file a lawsuit against Wells Fargo and how they violated many laws in California and the U.S. The Lawsuit filed on May 5th of this year claims that Wells Fargo the largest California-based bank violated state and federal laws by misusing confidential information and failing to notify customers when personal information was breached (FoxNews.com) Wells Fargo would push employees by strict sales pressure to issue unwanted credit cards and open unauthorized accounts that charged customers fees and damaged their credit. Wells Fargo has blamed the problem on a few rogue employees who have been disciplined or fired and said it would defend itself. One customer that was affect and came out publicly was Frank Ahn, who owns a convenience store and a coin-operated laundry in the San Fernando Valley, said he was repeatedly pressured over four years to open additional accounts at Wells Fargo. When he declined, the bank opened three savings accounts in his name anyway, Ahn said. (FoxNews.com) After he complained and told them he was going to contact a lawyer, the accounts were deleted, only to reappear again months later, he said. “I just feel like every time I go to the branch, it's a battle with them," Ahn said at the news conference. "I've had more than 10 accounts at Wells Fargo. I only need one." (FoxNews.com) On June 9th of 2015 Wells Fargo argued in its effort to toss out the consumer protection lawsuit the city brought against it. (LATimes.com) Wells Fargo’s argued that because of Laws dating back to the National Bank Acts, adopted in 1863, it means banks like Wells Fargo are accountable only to federal regulators. On Friday July 17th Wells Fargo & Co won the dismissal of the lawsuit filed by Los Angeles that accused them of violating the federal Fair Housing Act by engaging in predatory lending practices. U.S. District Judge Otis Wright said the "undisputed facts" show that Wells Fargo did not violate the FHA during the two-year statute of limitations period.

The stakeholders in the Wells Fargo case include the employees, customers, customer’s families and Wells Fargo’s top officials. Wells Fargo’s affected customers are the most direct stakeholders because they were the ones being treated unethically. The next stakeholder in the case are the employees doing the dirty work for Wells Fargo. The employees were forced to make illegal transfers within customer’s bank accounts, they were also forced to ruin the customer's credit score to make more money for Wells Fargo, and finally they were forced to get their own families involved in this mess. The last stakeholder in this case are the top officials. Top officials are supposed to watch over the managers to see what they are doing. CEO John G. Stumpf looks bad in this case and could ruin his reputation and others as well. It should also be noted that Wells Fargo’s image and reputation is a stakeholder in this case.

John G. Stumpf, former CEO of Wells fargo
Viewing Individualism from Milton Friedman’s stand point, who claims that the only goal of a business is to profit within the constraints of the law. (Salazar, PPT#2). Under Individualism, Wells Fargo was acting ethically, because that fulfilled their primary goal to make a profit and that a few employees were to be blame for the fraud. Another reason way Individualism would a prove Wells Fargo’s actions is because on July 17th of 2015, U.S. District Judge Otis Wright said the "undisputed facts" show that Wells Fargo did not violate the FHA during the two-year statute of limitations period. (Reuters.com) which claims Wells Fargo was acting within the law, even though they stole over $5 million over the two years.

Utilitarianism theory by John Stuart Mill (1806-1873) looks at the ethical behavior of companies actions in the stakeholder’s eyes. The definition of Utilitarianism is to maximize happiness in yourself and other people. Utilitarianism main point and goal is to maximize happiness for everyone affected and to minimize unhappiness for everyone affected. Under Utilitarianism Wells Fargo would be found to be un ethical because Wells Fargo didn’t follow Utilitarianism because they didn’t maximize happiness for everyone affected and they increased unhappiness for everyone affected.

Protestors against the Wells Fargo fraud

Developed by Immanuel Kant, Kantianism focuses on being rationality and having Good Will. Kant claimed that it was wrong to trick and fool people for their own personal gain. For that is what Wells Fargo did to the customers they stole from. They Lied to and Manipulated their Customers in order to open unwanted accounts and in the process stole over $ 5 million. And that is way Wells Fargo would be found unethical under Kantianism.

Virtue Theory
In the eyes of Aristotle’s Virtue Theory Wells Fargo would be determine to not be virtuous, because they violated three main virtues like Courage, Honesty, and Justice.
  • Justice (fair practices): Wells Fargo was not just to their customers, due to the fact that they claimed it was not their fault, and stole their money they worked for.
  • Honesty (employees): Wells Fargo alleged that unspecified employees of Wells Fargo Bank in unspecified branch offices at unspecified times opened the unauthorized accounts that ruined customers credit.
  • Courage (stand up for what’s right): they drive their employees by strict sales to issue unwanted credit cards and opened unauthorized accounts that charged customers fees and damaged their credit. In the process they kept the money that was stolen from there customer, instead of giving it back.

Justified Ethical Evaluation
My point of view the way that Wells Fargo and its employees acted is so unethical that it’s not even funny. The Fact that this wasn’t on TV and how no major news station didn’t tell the public about this is unethical on their behalf. Instead of the news telling us that Wells Fargo cheated out over 50,000 citizens in California, we had a summer full of deflated footballs. The thing that upsets me is that for all of the victims that were affected by this will never have justices and will have to live their lives knowing that. They were cheated out of their money, had their credit ruined by Wells Fargo, and they will never get that money back because as usual our court system finds another criminal not guilty. But if someone like you or me were to steal $5 million, like they did, we’d end up in jail.

Reckard, E. Scott. "Wells Fargo Says Federal Law Bars L.A. from Suing over                                           Abuses." Los Angeles Times. Los Angeles Times, 9 June 2015. Web. 21 Oct. 2015 http://www.latimes.com/business/la-fi-wells-fargo-feuer-lawsuit-20150608-story.html

 "Wells Fargo Wins Dismissal of Los Angeles Predatory Lending Lawsuit." Reuters.                                 Thomson Reuters, 17 July 2015. Web. 21 Oct. 2015. http://www.reuters.com/article/2015/07/17/us-wellsfargo-losangeles-lawsuit-idUSKCN0PR28120150717

 "Los Angeles Sues Wells Fargo, Alleging Fraud by Employees." Fox News. FOX News                          Network, 6 May 2015. Web. 21 Oct. 2015. http://www.foxnews.com/us/2015/05/06/los-angeles-sues-wells-fargo-alleging-fraud-by-employees/

"Los Angeles Sues Wells Fargo, Alleging Fraud by Employees." Fox News. FOX News                           Network, 6 May 2015. Web. 21 Oct. 2015. http://www.foxnews.com/us/2015/05/05/los-angeles-sues-wells-fargo-alleging-workers-opened-unauthorized-accounts-that/

Salazar, Heather. "Business Ethics PowerPoints" Business Ethics. Online. 21 Oct. 2015. Lecture.
2. Business Ethics and Economics and Individualism
3. Utilitarianism and Business Ethics
4. Kantian Business Ethics
5. Business Ethics and Virtue

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