Tuesday, November 24, 2015

Wells Fargo: Customer Account Abuse (2015)

Case Study
Wells Fargo logo

On May 6th, 2015 a lawsuit was filed against eight Wells Fargo employees on counts of conspiracy to commit bank fraud and various bank fraud charges. The employees said that they were told by upper management to do whatever it takes to meet the companies monthly sales quotas or they will get fired. When the employees could not meet the quotas, they were forced to do the only option they had left, and that was to commit bank fraud. The employees would transfer money from authorized customer accounts, to unauthorized accounts so the customer would be charged with more account fees. Some employees were caught forging signatures of customers so they could open more accounts. But it did not stop there, in court the employees admitted accessing their personal information; date of birth, social security numbers, and driver licenses numbers from customers’ accounts, after they would make fake IDs and impersonate these people and open up new accounts without the real person even knowing. When these employees were charged with the fraud three men out eight ran off and are still not found. Also they paid each customer affected by the fees, $2500 for each violation that they had on their account.

The main stakeholders that were hurt in this situation were the people who were victims of this fraud, the stockholders, and the employees convicted of this fraud. The victims had money stolen from them, by the people they trusted with it, and some of their credit scores were affected by this situation. The stockholders were also affected by this situation because they had to pay out $1.4 million in the lawsuit. For the eight employees convicted of committing fraud, they face a maximum penalty of 30 years in federal prison, also each employee is charged with at least one count of aggravated identity theft, which carries another two years in prison.

According to individualism when a person does an action for a company that they know are only benefiting the company and not the customer, they are being unethical. In the Wells Fargo case these eight men and the company are seen as unethical. It starts with CEO John Stumpf, because he is the one telling the employees to do meet these outrageous monthly quotas. From an individualistic view point the company was already unethical to start with under his control, because he is setting this high quotas to make more money instead of thinking about the company’s customers. In turn it led to eight employees stealing money from customers. The employees made transactions in California, Minnesota, and Nevada so they could meet the company’s sales quotas.

John Stumpf, former CEO of Wells Fargo
Utilitarianism states that an action is considered ethical if it can maximize happiness in the most people it can affected by a business. Happiness and pleasure are the two intrinsic values that everyone should feel, if they can. In this case the customer, employees, and stockholders were treated unethically. The employees did not have a choice when doing this, it was either make the sales quotas or get fired. This makes them not happy nor pleased because they have to do really well each month and if that cannot happen they are pushed towards breaking the law to open unauthorized accounts in order to meet these quotas. The customers were unhappy and not pleased as well because they had money stolen from them by their own bank, their credit scores were affected and because of it customers left Wells Fargo. The stockholders were treated unethically because they had to pay out the $1.4 million to the customers, for the fault of the eight employees.

Protesters vandalize Wells Fargo ATM
Kantianism states that rational decisions need to be ethical. Decisions need to be motivated from your job and not self-interest. Being ethical means that people need to follow the rules of a practice. Businesses are not exempt from these standards. A business should always be honest and loyal to their employees and customers. Wells Fargo was unethical in this case because the decisions made by the employees to meet quotas, was unlawful and they were not honest or loyal. If they acted ethical these fraud accounts would have never been opened. Instead employees were in fear of losing their jobs and so they did what they had to do acting on self-interest, even though they knew what they were doing was wrong.
Virtue Theory
The virtue theory is made up of four characteristics. These characteristics must be met in this order to be considered ethical; courage, honesty, temperance/self-control, and justice/fairness. if Wells Fargo had at least one employee stand up and said what they were doing was unethical and should be stopped, it would be considered ethical. No one in the company stood up for the customers and just focused on the bettering of the company. The employees were not honest with their customers and did not tell them that they were opening accounts. Since the company was not fair it led to focusing on profits, making their employees have no self-control and breaking the laws to meet quotas. If there was temperance within the workplace justice would have been there as well because the employees would have been thinking of the people in mid instead of just the business.

Ethical Evaluation
I think that this situation with the unauthorized fees could have been avoided. The employees could have found alternatives to meet the sales quota instead of illegally opening accounts and charging their customers with fees. Reviewing how this situation was handled and the outcome, it is clear that the banking practice at Wells Fargo needs change.


Inskeep, Steve. "LA Lawsuit Alleges Wells Fargo Engaged In Fraudulent Conduct." NPR. NPR, 8 May 2015. Web. 23 Nov. 2015.
Kieler, Ashlee. "Class Action Suit Filed In California Over Wells Fargo's Alleged Customer Account Abuses." Consumerist. N.p., 14 May 2015. Web. 23 Nov. 2015.
Kim, Susanna. "Wells Fargo Bankers Accused of Fraudulent Behavior, Taking Advantage of Customers." ABC News. ABC News Network, 5 May 2015. Web. 23 Nov. 2015.
“Los Angeles Sues Wells Fargo, Alleging Fraud by Employees." Fox News. FOX News Network, 06 May 2015. Web. 23 Nov. 2015.
Reckard14, E. Scott. Los Angeles Times. Los Angeles Times, 14 May 2015. Web. 23 Nov. 2015.
U.S. Attorney's Office. "Eight People Charged in a Bank Fraud Scheme That Allegedly Used Information Stolen by Wells Fargo Employees to Access Accounts." FBI. FBI, 06 Oct. 2015. Web. 23 Nov. 2015.
"The Vision and Values of Wells Fargo." Vision and Values – Wells Fargo. N.p., n.d. Web. 23 Nov. 2015.

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