Case Study- Ethics and Fairness in Wells-Fargo

Case Study- Ethics and Fairness in Wells-Fargo

Wells Fargo has been in the news for bad reasons over the recent years, and things seem to be still worse. Wells Fargo is an American multinational corporation dealing in financial services. It is headquartered in San Francisco, California. Wells Fargo, in recent years, was under a big scandal of opening millions of fake accounts in customers” names without the knowledge of customers and signing account holders up with credit cards and bill of payment programs. The company forged signatures and transferred customers’ money (Tayan, 2019). This scandal led to lawsuits by the Security and Exchange Commission against the company, and it was fined $3 billion in 2020 for opening and operating fake accounts.

As that was not enough, Wells Fargo has been found to have another scandal over alleged fraud in recent months. The office of the U.S. Attorney General for the Southern District of New York City and the FBI recently filed a lawsuit against Wells Fargo. In this suit, they alleged that Wells Fargo violated the Financial Institutions Reform Recovery and Enforcement Act (FIRREA) by fraudulently overcharging hundreds of customers who used foreign exchange services (Sherman, 2021). The law indicates that Wells Fargo defrauded 771 customers by charging them higher markup on foreign exchange transactions. The bank concealed the overcharges by misrepresenting and using deceptive practices (Sherman, 2021). Wells Fargo recently accepted to pay $72.6 million to settle this suit, with half of this money going to the defrauded 771 customers and the remaining half to the U.S. government as civil penalties.

This recent incident at Wells Fargo is one of the best examples of the concept of ethics and fairness. Well-Fargo unfairly overcharged its customers and went ahead and concealed the information to deceive them. In other words, Wells Fargo violated the corporate ethical principles that require firms to act morally (Sherman, 2021). The company knew very well that overcharging customers was an unfair practice, but it ignored the ethical principle and continued with the vice. Ethical principles require business firms to exhibit honest in their dealings so that they can do clean business. It also requires business firms to be fair in their dealings and not to take advantage of the customers or other stakeholders (Sherman, 2021). The ethical principles area requires business firms to be law-abiding entities. Wells Fargo failed to adhere to these business ethics; it acted unfairly by intentionally overcharging its customers. Wells Fargo failed the ethical principle of honesty by overcharging customers and hiding information from them, which is an act of dishonesty. Moreover, this bank violated the FIRREA law meaning that it is not a law-abiding entity.

Override Personal and business ethics can easily be overridden in the decision-making. Many firms make decisions that they regret, forgetting to act ethically as they make the decisions. Many companies, such as Wells Fargo, have incurred high costs in terms of fines because they failed to act ethically while making some decisions. While many companies may forget to consider the ethical principles as they make decisions, some are very aware of these principles, but they deliberately make decisions that contradict them. Wells-Fargo is a good example of a company that violates ethical principles deliberately without considering the loss or the costs that will come with such unethical behaviors. Therefore, Wells Fargo is not a firm where ethics could be subconsciously overridden in decision-making. Understandably, ethics can be overridden subconsciously (Sherman, 2021). However, Wells Fargo is a big financial institution that has been in business for many years and, thus, cannot claim to forget about ethical standards. Its previous scandals and the current scandal prove that it is not a law-abiding firm because its unethical act was more deliberate.

It is a fact that Wells Fargo’s image is soiled greatly, which implies that the company needs to reclaim its image to rebuild customers’ and investors’ trust. The first thing Wells Fargo can do to clean its name in public is to launch positive campaigns. The positive campaigns can involve engaging in charity work where the company sponsors charity works or scholarships for needy students (Masterson, 2018). Charity work usually makes the public see the company positively, and through these campaigns, the company can turn its negative perception into positive perceptions. Positive campaigns can also involve engaging and promoting environmental protection through cleaning the environment and recycling.

Wells Fargo can reclaim its image after all the scandals and use social media to influence public perception. The company should create many profiles on different social media platforms where the audience can congregate to offer positive public information about the company. The company may use these social media profiles to build a bigger audience where people will be asking questions online and be answered. Social media can be the best way to reach potential customers and investors since the company and the customers have a platform to communicate (Masterson, 2018). The company can review customers’ and investors’ feedback reviews through social media. Goring through these reviews can be the best way to get information from customers and investors, and this information can be of great help in decision-making.

Another way in which Wells Fargo can renew its public image is by giving a public apology. The apology can be aired on radio and television newspapers. The purpose of the public apology is to inform the public that the company regrets what happened (Masterson, 2018). Additionally, the apology should guarantee the customers and the investors that the management is doing what it takes to ensure no more fraudulent activity will be tolerated in the company.

 References

Masterson, K. (2018). How to Improve Your Company’s Image After a PR Disaster. Retrieved from https://www.lifehack.org/articles/work/20-ways-describe-yourself-job-interview.html

Sherman, E. (2021). Wells Fargo Gets Into Trouble Yet Again Over Alleged Fraud. https://www.forbes.com/sites/eriksherman/2021/09/28/wells-fargo-gets-into-trouble-yet-again-over-alleged-fraud/?sh=4edec7f83572

Tayan, B. (2019). The Wells Fargo Cross-Selling Scandal. Retrieved from https://corpgov.law.harvard.edu/2019/02/06/the-wells-fargo-cross-selling-scandal-2/

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Provide enough background information about your selected company to convey its size and prominence in society, and then explain in detail the alleged fairness and ethics violations. Conclude your paper by choosing to support the allegations or refute them, and explain your reasoning based on what you have learned. In your discussion, be sure to include the information below.

Case Study- Ethics and Fairness in Wells-Fargo

Summarize the concept of fairness as it relates to decisions.
Explain how personal and business ethics can be subconsciously overridden in decision-making. Does your selected business exemplify this?
Describe how the company could improve its image regarding fairness and ethics in decision-making.
Your paper must be a minimum of three pages in length, and it should contain at least two academic references (one may be the textbook). Please use APA formatting and citations.