Wells Fargo’s Crooked Cross-selling
Wells Fargo is currently under investigation after 5,300 employees were fired. The Company admitted that around 1% of their employees had been fired because, “more than 2 million bank accounts or credit cards were opened or applied (by them) . . . between May 2011 and July 2015 of unsolicited checking accounts.” (abc) Currently, it is unknown exactly how many of their customers have been harmed, but the number has been estimated to be in the hundreds of thousands. The employees’ actions have been accredited to a recent quota. The quota is called “cross-selling” where employees strive to get new customers to buy eight new Wells Fargo products such as savings accounts, credit cards, and checking accounts. This unrealistic expectation caused many employees, in fear for their jobs, to create false accounts to meet these new requirements.
Wells Fargo was forced to pay a fine of One hundred eighty-five million dollars in fines and five million dollars to repay their customers on September 8, 2016. Wells Fargo was later pressured by the public and the government into removing the cross-selling quota. Shortly after, the FBI and federal prosecutors released that they had started their investigation of Wells Fargo, and the day after, The House of Representative’s Financial Services Committee opened their own investigation.
C.E.O. and Chairman of Wells Fargo, John G. Stamf, has been held accountable for this scandal as he and the leadership of Wells Fargo have benefited greatly from their employees actions. He defended himself before the U.S. Senate Committee on Banking, Housing and Urban Affairs by writing, “I do want to make very clear that there was no orchestrated effort, or scheme as some have called it, by the company. We never directed nor wanted our employees, whom we refer to as team members, to provide products and services to customers they did not want or need.” His defense fell on deaf ears and he was reprimanded by Senators (at that time), as he refused to step down in either of his positions he held at the company or return the bonuses which he and the other the executives were payed during this time. He has since caved on both issues from continued public and goverment pressure into resigning from his role as C.E.O., and he has stepped down from his role as a chairman. Stamf has also forgone any bonuses since, his salary, and forty million dollars to regain the trust of the public launching a private investigation of their own. Along with him, Carrie Tolstedt, was held responsible for her role with cross-selling and the financial gain she acquired through the quota. Ms. Tolstedt has, according to ABC News, “left the company, (and) . . . was slated to leave at ‘year’s end,’ according to a retirement announcement.” She will not be receiving any bonuses or severance pay.
While the investigation continues, Wells Fargo is desperately trying to regain trust. Regardless of what happens, the government is evaluating its effectiveness in identifying these types of problems.
As a writer for the American Government Class C3 Group 2 I’ve learned and practiced an extensive range of skills. I have never had do a group project for a significant grade, for so long, or with a group this size. It was an interesting experience in which I learned that there should be strong leadership from the start, and meeting with your group becomes harder as the year goes by. My group found many stories which I would have never found, and they were very interesting to read and talk to them about. A great example of this was our first story which Nick wrote about government owned property rights being sold to the private sector which was totally off my radar. I also discovered many articles while researching topics that I would have never found if not for this assignment. I learned that in group projects, prioritizing them is important as they affect others and you never know what is around the bend. I really enjoyed this class and this project. To our readers, I wish you a Merry Christmas.
Blake, Paul. “Timeline of the Wells Fargo Accounts Scandal.” ABC News. ABC News Network, 3 Nov. 2016. Web. 06 Dec. 2016.
“An Examination of Wells Fargo’s Unauthorized Accounts and the Regulatory Response.” U.S. Senate Committee on Banking, Housing, and Urban Affairs. N.p., 20 Sept. 2016. Web. 06 Dec. 2016.