Wildingwells Fargo Cross Selling Scandal

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In an imperfect world, every winner has got to lose someday. Wells Fargo’s success is built on a cultural and economic model that combines deep customer relations and an actively engaged sales culture. How did Wells Fargo manage to truncate its over 150 years trust? As rumors have it, a Wells Fargo in Southern California was engaging in “aggressive tactics” to meet the daily cross-selling marks, also known as the root of the problem. As a repercussion, Wells Fargo fired nearly 30 employees and a statement from a spokesman was issued, “We found a breakdown in small number of our team members,’ another representative adding ‘This is something we take seriously. When we find lapses, we do something about it, including firing people” (Reckard).

When confronted one of the terminated employees said that “in some cases, signatures were forged, and customers had accounts opened in their names without their knowledge” (Reckard). This shows how unmanaged the corporate is. When corporate fails to monitor its program, employees will, in some cases, adopt their own version of “work smarter not harder” mentality however vicious it may be and in result hurt its customer and reputation. This scandal caused the Wells Fargo stock price to drop two percent. The Wells Fargo fraud scandal of opening around two million illegitimate customer accounts and credit cards began being investigated in September of 2016. However, the unethical practices have been occurring much longer than a few months. Wells Fargo’s CEO since 2007, John Stumpf, directly denied any knowledge of the scandal prior to 2013. The Wells Fargo scandal damaged company reputation of prioritizing customer service and cultural integrity. Some study shows that despite opening as many as 2 million unauthorized accounts, Wells Fargo also admitted to charging its customers for bills such as car insurance and even undeserved mortgage fees.

In the book Business Ethics: Ethical Decision Making and Cases, O.C Ferrell defines virtue ethics as ethical behavior that involves not only adhering to conventional moral standards but also considering what a mature person with a “good” moral character would deem appropriate in a given situation (147). When looking at the Midwest hardware sales representative, Sam Colt, from chapter 6, a somewhat similar case can be encountered. Mr. Colt is faced with an “ethical dilemma,” as he hopes to obtain a commission of $25,000 from a bridge construction. The only problem is his bolts has a three percent defect rates. The bridge on the other hand also has a 50% chance of being hit by an earthquake with a magnitude of greater than 7. Will he come forward with this information and possibly lose the sale to a competitor or hide the fact and take the money? Wells Fargo’s employees, on the same note, were presented with “an aggressive cross-selling sales quota,” if not met threaten their employment status.

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The employees turned to egoism to feed their own self-interest (staying employed) by taking “shortcuts” to meet such quotas. According to a Wells Fargo spokesman, “team members do have goals. And sometimes they can be blinded by a goal” (Tayan). This can suggest that Wells Fargo’s team members are often presented with unrealistic goals that the team will go to any length to fulfill, even if it means putting the company on the line. Although the employees were the ones who made the decision to engage in a fraudulent behavior, what does it say about the corporate culture? In the fifth chapter of the book, Ferrell points out that most organizations develop a set of core values that provide beliefs about appropriate conduct within the firm. Core values work as a central command to make sure an organization is functioning as it should. As a way to focus on positive outcomes which entail profits for the firm and society’s benefit (126). By initiating the cross-selling scandal, Wells Fargo’s employee chose not to embrace the full set of their core value as they only worked towards the profit of the company and themselves disregarding the society that was severely hurt.

The financial services industries depend on the public perception of trustworthiness for their success. For this reason, the scandal was more damaging to Wells Fargo than it might have been to a business in another industry. Although banks, like any other businesses, exist to make profits, they are also expected to be responsible stewards of depositors’ assets. Thus, when a bank appears to put its own self-interest above the interests of its depositors, the response is likely to be swift and devastating. Corkery (2017) reported that a year after news of the scandal broke, “new credit card applications were down 43 percent in the fourth quarter of 2016 from a year ago, and that new checking account openings fell 40 percent.” The public’s refusal to give its business to the bank was the surest indication that Wells Fargo had been compromised in the eyes of the public. As a way to show that they took misconduct seriously, Wells Fargo fired over 5300 employees, of which only 10% were senior officials. “If [employees] are not going to do the thing that we ask them to do—put customers first, honor our vision and values—I don’t want them here. I really don’t.

The 1 percent that did it wrong, who we fired, terminated, in no way reflects our culture nor reflects the great work the other vast majority of the people do. That’s a false narrative” (Tayan). Of the 2 million potentially unauthorized accounts, Wells Fargo claimed that only 115,000 accounts incurred fees, which can be estimated at 2.6 million dollars. One executive also claimed, “the storyline is worse than the economics at this point.” The process of not losing their customers and reestablishing their trust was set in motion as soon as the scandal hit the public. Multiple ads were ran showing their signature horse carriage and pledged to address customer concerns. The action went as far as initiating the retirement of the then CEO and chairman John Stumpf, effective immediately. Their newly appointed CEO, Tim Sloan reassured the public that Wells Fargo’s top priority would be to reestablish their lost trust.

Outside consulting firms were brought in to review all account openings since 2011 to identify potentially unauthorized accounts. Wells Fargo refunded $2.6 million to the victims of the scandal for fees associated with those accounts. They also developed new procedures to authenticate any account openings and introduced additional training and control mechanisms to prevent violations (Tayan). In a sense to wrap the whole scandal, Wells Fargo promised to pay $185 million to settle the lawsuit filed by the city and county of Los Angeles, taking the blame for opening the 2 million accounts without customers’ consent over a five-year period. Even though the fine was large, it was still smaller than penalties paid by other banking institutions to settle crisis-era violations.


  1. “Case Analysis 1 – Wells Fargo Scandal.” Scribd, https://www.scribd.com/document/368215451/case-analysis-1-wells-fargo-scandal Accessed 28 September 2018.
  2. Egan, Matt. “The Two-Year Wells Fargo Horror Story Just Won’t End.” CNNMoney, 07 September 2018, https://money.cnn.com/2018/09/07/news/companies/wells-fargo-scandal-two-years/index.html. Accessed 30 September 2018.
  3. Ferrell, O. C., et al. Business Ethics: Ethical Decision Making and Cases. 12th ed., CENGAGE Learning, 2017.Reckard, E. Scott. “Wells Fargo Accuses Workers of Opening Fake Accounts to Meet Goals.” LATIMES, 03 October 2013, http://articles.latimes.com/2013/oct/03/business/la-fi-1004-wells-fargo-firings-20131004. Accessed 30 September 2018.
  4. Tayan, Brian. “The Wells Fargo Cross-Selling Scandal.” Stanford Closer Look Series, 02 December 2016, https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-closer-look-62-wells-fargo-cross-selling-scandal.pdf. Accessed 28 September 2018.
  5. Tayan, Brian. “The Wells Fargo Cross-Selling Scandal.” Harvard Law School Forum. 19 December 2016 https://corpgov.law.harvard.edu/2016/12/19/the-wells-fargo-cross-selling-scandal/. Accessed 27 September 2018.
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Wildingwells Fargo Cross Selling Scandal. [online]. Available at: <https://writingbros.com/essay-examples/wildingwells-fargo-cross-selling-scandal/> [Accessed 22 Oct. 2020].
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