Wells Fargo has had many scandals throughout their company with employees making fake accounts for costumes to meet their company quotas. This was a big scandalous problem that all began in 2016 with them signing them up for loans and ruining their customers credits. This all became one of the biggest issues in banking history in 2020 because they had to pay 3 billion dollars in fees. Ethical theories would look at Wells Fargo as very unethical. Individualists theory would look at all of the manager’s and their ethical responsibility. They are supposed to increase the wealth of the owners within the law. An individualist wouldn’t hold Wells Fargo responsibility for the ethics fallout. They would hold them responsible for the capital they lost due to their stupidity that they performed on customers. Utilitarians are to require people maximize happiness for the most people. They would view Wells Fargo's issues as unethical on two problems. One problem is the lack of risk that they had when opening the accounts, and the second problem is that they had a lack of consideration for the stakeholders when they all opened up these accounts. Kantians would use actions by the way people make decisions. Also by people analyzing the motivations behind each one. Virtue Theory would cite the vices of a lack of moderation, disrespect, self-interest, greed and dishonesty. Particularly in Wells Fargo they had to pay 3 billion dollars in legal fees for their consciences of the issue that they had started.
The Case Controversy
Wells Fargo Company has fired 100-125 employees for going against the U.S. Small Business Administration (SBA) for taking out loans to help small businesses. There was another company that had the same issues with employees falsely taking out loans for Small businesses during COVID-19, this company was JPMorgan Chase. This source also talks about other additions to funding like the 670 billion dollars for the Paycheck Protection Program (PPP) to keep small businesses afloat. The federal government's CARES Act allocated another 10 billion dollars to the existing Economic Injury Disaster Loan (EIDL) program also. JPMorgan chase had also fired 500 employees for similar acts like Wells Fargo have had.
Borrowers are now suing Wells Fargo for placing their home loans in forbearance during the coronavirus without their permission. Forbearance is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is "holding back". So what Wells Fargo was doing was they were putting the customers in this forbearance when they would call the bank if they were experiencing stress during covid and not being able to afford their monthly mortgage payments even when the customers didn't ask them too. During the coronavirus the federal Coronavirus Aid, Relief, and Economic Security Act would allow borrowers whose mortgages are backed by government-sponsored entities to opt for forbearance by requesting so from their banks. But the law doesn’t allow banks to do it for the.
Troy Harlow, a man that always paid his mortgages on time he never missed a payment he said that “he pays it because he knows it needs to be paid”. He had to get a kidney transplant at the beginning of the Covid pandemic so with this it has halted his working and it also got affected by the Covid Pandemic. So what he did was contacted the bank of Wells Fargo and asked if they could stop it and they had other plans for him. This was they Wells Fargo has wrongly claimed that borrowers asked to pause their mortgage payments in forbearance plans. The lawyers have also found that the bank put through secondary requests for forbearance on behalf of homeowners who had asked to participate in the program initially but who no longer wanted to. In some cases, the bank withdrew the improper forbearance notifications after borrowers' attorneys alerted them to the errors. But Wells Fargo didn't take responsibility for the mistakes as the court documents show. This also talks about how in 2017 the bank was accused of having made unauthorized changes to some borrowers' mortgages. Then it goes on and talks about other customers' loan issues.
Wells Fargo is one of our nation's fourth largest banks and is paying a 3 billion dollar fine to the Seattle civil lawsuit on the fake account scandals. These scandals were taking place all the way back to 2016 when they were opening up checking and saving accounts in the customers names. They were doing this so that they could meet their sales quotas, this all lasted for over a decade. It also had been carried out by thousands of employees there that ended up leading to multiple terminations. They were doing things like forging signatures and didn't let the other employees contact them for the surveys on how they liked it. It also says in the sources that none of this money that is being paid to the government is being given to the customers for compensation. Wells Fargo has separately made efforts to compensate victims for potential losses such as fees they might have been charged or harm to their credit ratings. The Justice Department agreed to not criminally prosecute the bank during the three-year term of the agreement only if Wells Fargo continues to cooperate with government investigations. Once the agreement was reached with the bank itself not with any individuals responsible for the fraud. But last month, the bank's former chief executive, John Stumpf, was fined 17.5 million dollars.
Wells Fargo website talks about all of the outcomes that happen to a person when they give out their information or have these phishing emails that are sent to the email and click on them because they think they are real. It tells you what wire transfers are, Money transfers, and checks are. These three things you should always look out for when you are reading a tempting email about your bank info because you couldn't just lose your money you can lose more valuable information. It also tells you what debit card and credit card scammers are doing and how they are getting into your accounts. You would read the source and ask yourself why are they telling us all this but still stealing peoples money and all their information.
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Wells Fargo to resume making emergency small business loans
Stakeholders
There is a future that is going to depend on how Wells Fargo's relationship with customers will have to increase. With all of the issues they had with the customers and taking their information from them they will need to work on their customer service and the security of the business. The people that were involved in the case are the CEO who resigned when all of the news broke out. The other people that were involved were the 100 plus employees that have gotten fired or asked to leave. The people that got most affected were the customers that are suing Wells Fargo for the fraud that they did and put them all in debt.
Individualism
Wells Fargo employees were stealing from their owners through this failure. “Friedman argued that management was responsible for maximizing business profits and any action taken without considering profit is stealing from the owners of the company” (Salazar 17). The biggest failure in a company's business is when you are failing your customers and stealing their information to “maximize profit”. Wells Fargo wasted so much money in the long run with them stealing money, they added to the long-term damage to their banking company. They wanted to meet their loan quotas; they did this by stealing other people's information. This is the failure to individualism by keeping the proper checks and balances was unprofessional to the company. The company has to pay about 3 billion dollars in law fees because of all of the fake accounts that they had set up for multiple people.
This was unethical in all means because they were trying to beat out other banks by stealing information and making fake accounts. They had a lack of safety breaches that should be looked over so this doesn't happen again. The checks and balances should be overviewed by Wells Fargo so that they don't let this too keep happening in the company or eventually they will not have any customers that want to work with them with loans or any credit that they need help with. An individualist would be ethically responsible for wasting money by setting up fake accounts and putting people on a forbearance on mortgages. This will be ruining customer relationships by misleading their customers and wanting to go elsewhere because they were trying to “maximize their company profit”.
Utilitarianism
A utilitarian wants to maximize their happiness in Wells Fargo there by doing the opposite of that to their customers. The would view this Wells Fargo incident by looking over the ethical issues by the consequences of the company. Before Wells Fargo's controversy like right at the beginning of it they had employees that wanted to do the right thing and look into some of the people's accounts but the higher ups would tell them not to worry about it. How this works with the utilitarian: the employees wanting to do the right thing wanted to maximize the happiness and not watch customers get screwed over. This would also go against a utilitarian because they don't care about how the customers feel if they are doing this to them; they only care about the “profit and happiness” that the company was gonna have. In your case manual you said on page 17 that “Business actions should aim to maximize the happiness in the long run for all conscious beings that are affected by the business action”. The company should have wanted to maximize pleasure and minimize pain with a complete stakeholder approach. This is one of the main approaches in utilitarianism in my opinion.
Actions surrounding these fraudulent acts caused the company to lose lots of employees. They have lost about 100-125 employees during all this including the CEO. They have had many lawsuits filed against them which are losing way more money in the long run for the company. So far they paid about 3 billion dollars in lawsuit fees. What a utilitarian wants to do is avoid short sighted thinking that will boost their profits momentarily but leads to a huge loss in the long term. Wells Fargo did the opposite of this that's why they would be going against a utilitarian.
Kantianism
Kantians would be concerned about the entire scandal that the bank that the bank did, they would also be concerned about the customers as well. There was a lack of informed decision making on all sides of the Wells Fargo scandal and when the incident hit social media they tried to eliminate it by firing lots of employees. The difference between a Kantian and utilitarian they would view on the issue by looking at the consequences. A Kantian would make a decision based on the consequences of the act. They like to make their decision in this case the CEO of Wells Fargo at this time. When Wells Fargo started to perform the scandalous acts they were going against many laws and they tried to hide it by not letting other people ask the “customers” for feedback on their accounts. In our textbook it said that “Kant tells us that we should act only according to those maxims that could be universally accepted and acted on” (DesJardins 38). In Kantianism this is the primary rule that they follow, they also use this as a question to themselves when they try to figure out consequences.
They could have stopped all of these scandals by letting their people actually look at these acts and not let their boss or CEO scare them from looking into the issues. I think if they did this it would be impossible for a banking customer to sue a company. If this was put into play they wouldn't have to worry about the bank closing down in the near future for no one wanted to take out loans or open accounts. They also would have to pay so much in legal fees for all the mistakes that they have made.
Virtues Theory
Virtues Theory usually follows the same approach as a Kantian would they like when people are focusing on others. The only difference they focus on the ending more than a Katian would. In Wells Fargo for virtues theory they would care too much about the outcome of the issues they want it to come to the end with the right possible outcome. In your case manual you said “Act so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits”. Wells Fargo had a terrible act with this because they were stealing the information of their employees to meet their mean.
Wells Fargo had numerous violations to the Virtue Theory with the scandals that they performed on others. They were very unethical and unprofessional in business by trying to meet their quota deadlines. There was a lack of people wanting to take out loans and the bank felt like it was falling apart so they decided as a company to do the false acts. What comes into play here is the selfishness of their customers. When opening these accounts without the proper legal way they acted out of their own self-interest with zero respect for any of their stakeholders. Honesty and trustworthiness were also impacted here. Honesty was broke because they didn't let any of their employees find out that they were doing this and they wouldn’t let them investigate. Trustworthiness was affected because the people that gave them their information too actually opened up real loans for them; they used it to open up fake accounts for them and forged their signature. If you want to have a successful company and not have a bad reputation you want to build trust with customers now that you did all this too then they are going to refuse to sign up or tell their friends about the bank.
Action Plan
Wells Fargos has many problems that they are facing with being sued, legal fees, and firing employees. How the company can be ethical is they can follow the four values in a business these are Excellence, Empathy, Customer Well-being and Trust. With Excellence you can do things like work on how you are sending out the information to people so they know what you are trying to achieve and how it can benefit them. With empathy you can also work on the relationship with the customers in Wells Fargo they would send people feedback on how their accounts where and how they like the bank. I think that this was a good way to stay in good touch with the customers. What they can do to improve their feedback is ask them to recommend people that would be a good fit and get in contact with the bank to start a new relationship. The customer's well-being they need to work on how to fix what the customers don't want and improve on how the customer gets their information. If they can build more trust they shouldn't ask for more information than they need, I know you need to have a lot of information but once you get it made it disclosed so now one can get into it without a customer pin. How they can increase their profit is by not saving so much information they can give them pins so no one can log in besides them. This will help with the security and then more people will open up accounts and they will meet quotas and make more money in the long run instead of losing. This plan will be very confusing but with the pin being needed to open up someone's account that no one has besides them and their computer systems will really help with the security. This will also help with more people opening accounts because they will know that their information is going to be in a safe place and they won't have to worry about fraud.
Self evaluation
This case has brought out many issues for the Wells Fargo company. I believe that it was morally and unethical of them to perform the stunts they did. I say this because they were taking other people's information and ruining their loans or putting them where they don't want to be. I believe in the near future that Wells Fargo will go bankrupt because of these acts, people will stop showing up and they will go to another bank that is better and has more secure issues for them.
Reference
Desjardins, Joseph. An Introduction to Business Ethics. New York City: The McGraw-Hill Companies Inc, 2014.
Morgenson, G. (2020, July 19). Troy Harlow has always made sure to pay his mortgage on time. Wells Fargo had other plans for him. Retrieved November 16, 2020, from https://www.nbcnews.com/business/personal-finance/troy-harlow-has-always-made-sure-pay-his-mortgage-time-n1233635
Salazar, Heather. The Business Ethics Case Manual. N.d.
Sonnemaker, T. (2020, October 14). Wells Fargo has fired more than 100 workers for lying in order to get COVID-19 relief funds. Retrieved November 16, 2020, from https://news.yahoo.com/wells-fargo-fired-more-100-222700075.html
Staff, T. (2020, August 31). Wells Fargo Sued Over Mortgage Forbearance Policy. Retrieved November 16, 2020, from https://therealdeal.com/2020/08/31/borrowers-sue-wells-fargo-over-forbearance-policy/
Williams, P. (2020, February 22). Wells Fargo to pay $3 billion over fake account scandal. Retrieved November 16, 2020, from https://www.nbcnews.com/news/all/wells-fargo-pay-3-billion-over-fake-account-scandal-n1140541
(n.d.). Retrieved November 16, 2020, from https://www.wellsfargo.com/privacy-security/fraud/bank-scams/
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