|"Nightly News" segment of Wells Fargo Scandal|
Since 2014, when the policy was made available, the companies Prudential and Wells Fargo have found themselves in hot water. As early as January 2015, three Prudential employees who were supervisors of the Investigative Division of Prudential's Legal Department filed a hefty law suit against the financial institution. The three former-employees uncovered that Wells Fargo employees had been signing up customers for the low-cost Prudential life insurance without their knowledge or even their permission. Through deeper analysis, the three also found that some insurance products that were owned by Wells Fargo customers were accompanied by obviously-fake home addresses and phony email addresses. It has been stated that "Wells Fargo bank employees had created at least two million fraudulent bank accounts" which led to "nearly $200 million in fines and to the termination of 5,000 employees" (Bloomberg). The creation of these false accounts and the impermissible actions by Wells Fargo employees was driven by unrealistic sales goals and the fear of being terminated for not meeting quotas, that were set by Wells Fargo.
|John Stumpf: Former CEO of Wells Fargo|
The ethical theory of Individualism is defined as, "Business actions should maximize the profits for the owners of a business, but do so within the law." (Salazar 17) Analyzing this case, the company and employees did act ethically with one part of individualism. In their efforts to maximize the company's profits, employees tried everything to increase their sales and the number of MyTerm policies they sold. However, in the act of trying to achieve sales goals and maximizing profits, the employees and the company Wells Fargo broke the law. By creating fake bank accounts, going behind customers back and signing them up for life insurance plans they had no or little knowledge about, Wells Fargo and Prudential fail the ethical theory of individualism.
|Former Customer, Kevin Pham, protesting Wells Fargo|
Under the Kantian theory of ethics, one must act in such a way that respects individuals and their choices. You must not lie, cheat, or manipulate to get your way, but rather use rational and knowledgable consent. In Wells Fargo's situation they clearly do not act ethically under Kantianism, due to the fact they committed fraud by creating fake accounts and stealing people's money. However, Kant's theory uses a technique called, the Categorical Imperative, to decide whether the action was permissible under the theory's principles. In the Categorical Imperative, Kant uses the "formula of humanity" as the formal test. This "formula" states that it is morally wrong to use people as mere means to get what you want. For this case we analyze Wells Fargo's actions in the "Formula of Humanity." In the end, the employees and Wells Fargo fail the formula of humanity because they used their customers, without their knowledge, to achieve their sales goals and receive their commission on the transactions. There were spikes in sales near the end of each quarter for MyTerm policies (Law.com) which shows that employees were desperate to achieve their sales target and receive their bonuses/commissions. Thus, they went to irrational means to try and achieve the high expectations that the company set. The company uses the customers as mere means to drive up profit and therefore is seen as unethical according to kantianism.
|Wells Fargo and Prudential filed a lawsuit for their actions|
Justified Ethical Decisions:
Looking at all the contributing factors in this case study, it is clear that Wells Fargo and Prudential did not act ethically in this situation. Based on the drive to achieve unrealistic sales goals and receive bonuses/commission, the companies led their employees to act unethical and unlawful. The fact that the company did commit a crime (fraud), makes it unethical from almost all theory perspectives. The creation of over 2 million fake accounts and thousands of reports of unauthorized purchases of Prudential's MyTerm policies makes this an easy decision that the companies did not act ethically in their actions.
- Pettersson, Edvard, and Laura J. Keller. "Wells Fargo Scandal Hits Prudential as Whistle-Blowers Sue." Bloomberg.com. Bloomberg, 10 Dec. 2016. Web. 29 Jan. 2017.
- Egan, Matt. "Wells Fargo Scandal Spreads to Prudential Insurance." CNNMoney. Cable News Network, 12 Dec. 2016. Web. 29 Jan. 2017.
- Dow Jones Newswires, Emily Glazer. "Wells Fargo to roll out new plan to replace sales goals." St. Paul Pioneer Press (MN) 8 Jan. 2017, St. Paul, Business: D1. NewsBank. Web. 29 Jan. 2017.
- Lee, Thomas. "Wells needs big change, not just a quick fix." San Francisco Chronicle (CA) 22 Jan. 2017, Advance8, Business: D1. NewsBank. Web. 29 Jan. 2017.
- Meyerowitz, Steven A. "Wells Fargo Fraud Extended to Prudential Life Insurance Policies, Whistleblowers Allege." Law.com. Law.com, 11 Dec. 2016. Web. 29 Jan. 2017.
- Broderick v. Prudential Insurance Co. Superior Court of New Jersey Law Division. N.d. Law.com. N.p., 11 Dec. 2016. Web. 29 Jan. 2017.