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Wells Fargo was found in 1852 by Henry Wells and William Fargo in San Francisco, California. The company offered banking where consumers could buy and sell gold and paper bank drafts. In the 1860’s, they opened offices in other cities of the West and “earned a reputation of trust by dealing rapidly and responsibly with people’s money.”
- Since 2011, Wells Fargo employees have created fake checking accounts and credit card accounts for existing customers without their consent. Using forged signatures, phony PIN’s and fake e-mail addresses, the company was able to accomplish this. The bank also charged customers at least $1.5 million in over-draft and maintenance fees for these fraudulent accounts.
My suggestion would be for the greedy, manipulative executives to stop setting the bar so high for their company’s cross-selling numbers when it isn’t going to ever be a reality. There is no way the average American needs 8 bank accounts and there is no way for your lower level employees to sell that many products to them. The problem started with this absurd proposal from top level executives.
This was done due to the high “cross-selling” expectations led by senior executives of the company. Cross-selling refers to selling a different product or service to an existing customer. Basically, the average number of bank accounts a person needs is 2-3 accounts, where Wells Fargo was setting that number between 6-8. This put a huge burden on employees to make sure they meet the sales quota. By executives throwing in incentives such as compensation, this makes for an even more pressured work load.
The two main reasons are corruption within the supervisory and executive level employees and the fine print rules Wells Fargo trapped their customers into. The execs and supervisors saw this fraud occurring but disregarded it due to million-dollar bonuses and the rise of investment in false-advertised Wells Fargo stock. In order to make the most capital, they risked their customer’s money and credit scores, as well as the jobs of lower level employees. Also, Wells Fargo had written in fine print on every contract that their customers signed that they were forbidden from partnering with others to file a lawsuit against the bank, they were only allowed a private arbitration. A private arbitration is where a third party is selected to hear the dispute of the two, which is usually selected by the bank in the first place and whatever decision that third party makes is completely legal and must be upheld. There is no jury present and no appeal allowed.
Currently members of Congress are working on laws that will make it harder for Wall Street businesses and banks to commit crimes such as these. But, no one from Wells Fargo executive administration has been incarcerated or fired from their position.
The main people hurt in this scandal were the investors/shareholders, the consumers and the low-level employees of Wells Fargo.
5,300 Wells Fargo low-level employees were fired for this scandal.
Carrie Tolstedt ran the community banking division of the bank, which included its retail banking and credit card divisions, during the entire period in which the customer abuse was alleged. Toldstedt had been planning to retire and once the scandal was uncovered, she finalized her retirement taking with her $126.4 million dollars.
Although Wells did have to pay $185 million to the Consumer Financial Protection Bureau, its shareholders will ultimately have to swallow the cost of that settlement.