Essays on Wells Fargo Fake Account Scandal Case Study

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The paper "Wells Fargo Fake Account Scandal" is an outstanding example of a business case study.   High-quality communication skills are essential when dealing with the media and the public. Excellent communication skills ensure accurate and informative message. Public administrators or company leaders use media outlets to keep the public informed about issues that are crucial to them. Company leaders use the media to address issues affecting them. For instance, scandals that maim a company’ s image or reputation require good public speaking. Public speaking entails a process of designing and delivering a message concerning a given subject matter.

Effective public speaking entails the comprehension of the speaking goals and audience, selection of components for the speech that will keep the audience engaged and skilful delivery of the message. One of the most common challenges that managers face is communication management skills, particularly during a scandal. Lack of effective communication management skills during scandals makes the firm to fail to regain public confidence. This essay focuses on the Wells Fargo fake accounts scandal. Drawing on communication management theories, the paper describes the incidence and provides an assessment of the way in which the company addressed the scandal. In the contemporary world, people are regularly bombarded with good and bad news.

Everywhere in the world, people are exposed to numerous news concerning scandals from the media. For instance, in 2016, the public was exposed to the news that Wells Fargo employees had created fake accounts in the names of their customers. The company’ s executives sought to fuel growth by mounting pressure on its workers to hit sales quotas. In response to this, employees deceptively opened fake customers’ accounts.

Although most of the fake accounts were closed before clients could notice, some customers were hit with linked fees that affected their credit ratings. Following the scandal, the bank was compelled to return over 2.6 million dollars in the fraudulent fees and pay over 185 million dollars in fines to the government. Besides, the high fines, the scandal negatively affected the firm’ s image and reputation. The government and the media spent so much time condemning the company for its swindle. The scandal did not only destroy the reputation of the firm but also led to job loss for many of the company’ s employees including CEO John Stumpf (Matthews & Heimer 2016).

Evidently, the company fired 5, 300 employees over the two million fake accounts. The phoney accounts were created since 2011 with clients paying fees for these accounts. The employees involved in the scandal created fake pin numbers and email addresses in order to enrol clients in online banking. As a result, the accounts earned Wells Fargo unwarranted fees besides allowing the firm’ s employees to increase their sales figure and make more money at the expense of their customers.

The fraud accounts allowed the employees to hit their sales target and obtain bonuses. The scope of the Wells Fargo scandal was shocking to its customers and the public. An assessment conducted by a consulting firm concluded that the employees of the bank opened over 1.5 million unauthorised deposit accounts (Belvedere, 2017). The involved employees moved money from the existing accounts of their clients into the fake accounts without the consent or knowledge of the customers. As a result, clients were charged for overdraft or inadequate funds are given that there was not sufficient money in their original accounts.

In addition, the involved employees also submitted 565,443 applications for credit card accounts devoid of their customer's consent or knowledge. Approximately, fourteen thousands of the fake accounts incurred increased fees amounting to 400,000 US dollars that included overdraft-protection, interest charges and annual fees (Belvedere, 2017). As a result, the bank was slapped with a big penalty of 185 million dollars besides 5 million dollars to refund clients. Although the image and reputation of the firm were greatly hurt, the basic earning power of the company was not hurt in any material way.

However, the scandal was bad news for the firm and its stakeholders. The bank, as a result, faced more lawsuits and government investigations. The board of the directors of the bank decided to get money from the then CEO John Stumpf and Carrie Tolstedt, the former head of community bank unit. This is because investigations into the scandal demonstrated that the CEO and the head of the community bank unit were in full knowledge of the unethical conduct.

More so, the two initiated an incentive system that induced the wrong thing.

References

Adler, G.(2012). Management communication: Financial times briefing. UK: Pearson.

Belvedere, M.(2017). Warren Buffest says the fake account scandal at Wells Fargo hurt its reputation. CNBC. Retrieved from http://www.cnbc.com/2017/05/08/warren-buffett- says-fake-account-scandal-wells-fargo-hurt-reputation.html.

Bryan, B.(2017). Buffett: Wells Fargo made 3 huge mistakes during the fake account scandal but one dwarfs all the others. Yahoo Finance. Retrieved from https://finance.yahoo.com/news/buffett-wells-fargo-made-3-145340690.html

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Matthews, C.,& Heimer, M.(2016). The 5 biggest corporate scandals of 2016. Fortune. Retrieved from http://fortune.com/2016/12/28/biggest-corporate-scandals-2016/.

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Shen, L.(2016). Wells Fargo former CEO may have been warned of phony account fraud as early as 2007. Fortune. Retrieved from http://fortune.com/2016/10/18/wells-fargos- former-ceo-may-have-been-warned-of-phony-account-fraud-as-early-as-2007/.

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