In the last year there has been an alarming trended of fraudulent business practices by some of the biggest companies in the business world. In Sept 2013, JP Morgan was hit with a multi-Billion dollar fine for home loan scandals involving Fannie Mae and Freddie Mac. In the most recent mega corporation settlement American Express (AMEX) settled its latest of two cases over the last 16 months for deceptive billing practice. Why are companies knowingly deceiving the American public for financial gain? Could this practice be lucrative enough that companies will assume the risk of fines and damaging their corporate reparations? We will examine the details of the AMEX case, and determine what type of crime has been committed and at why these companies continue to take advantage of the consumers that serve.
We must understand the differences between White and Blue collar crime. Stated on the FBI website (2013), White Collar crime is synonymous with the full range of frauds committed by business and government professionals. These crimes are not victimless and they can be devastating to the families and business. Past examples that are well known to the American public were ENRON, Bernie Madoff, Martha Stewart and WorldCom. Blue collar crimes are typically referred to as street crimes. They are committed by a lower class of people and examples of these crimes and kidnapping, thief, murder, rape and vandalism.
In this case American Express is clearly conducting White-Collar criminal activity, as defined above. Let us examine the details of the case to determine how criminal law was applied. In 2012 the Bureau of Consumer Financial Protection (CFPB) filed and claim against American Express (AMEX) taking issue with how AMEX ...
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... I believe that large corporations will continue to fraudulent billing practices taking advantage of the consumers as long as it is still lucrative to do so. If the government put a face to the criminal activity these practices would at a minimum slow down!
Works Cited
Abrams, R. (Dec 24, 2013). American Express to Pay $75 Million over Credit-Card Practices. Retrieved for this paper Dec 27th, http://dealbook.nytimes.com/2013/12/24/american-express-to-pay-75-million-over-credit-card-practices/?_r=0
FBI website (2013). White-Collar Crime. Retrieved from Dec 27th, http://www.fbi.gov/about-us/investigate/white_collar
Prial, D. (Dec 24, 2013). American Express Units Settle Charges Over Deceptive Practices. Retrieved for this paper Dec 27th, http://www.foxbusiness.com/industries/2013/12/24/american-express-units-settle-charges-over-deceptive-practices/
One year ago, on September 8, 2016 the Consumer Financial Protection Bureau(CFPB), the Los Angeles City Attorney and the Office of the Comptroller of the Currency (OCC) fined Wells Fargo Bank $185 million, alleging that more than 2 million bank accounts or credit cards were opened or applied for without customers' knowledge or permission between May 2011 and July 2015. This essay will discuss the Wells Fargo scandal by explaining how the event happened and describing how the organization approached handling a response to the crisis. This will be seen, firstly by describing the how the scandal happened, and what were the causes, secondly by discussing the reaction of the company in front of the situation, how they dealt with the crisis and then
White collar crime is a term created by Edwin Sutherland in 1939 that refers to crimes committed by people of higher social status, companies, and the government according to the book “White-Collar Crime in a Nutshell” by Ellen Podgor and Jerold Israel. White collar crimes are usually non-violent crimes committed in order to have a financial-gain (Podgor and Israel 3). A very well known white collar crime that has even been taught in many history classes is the Watergate scandal. This is a white collar crime that was committed by government authorities. Watergate was a crime that shocked the nation.
E.). There are various costs of white-collar crime, although an accurate measurement is not easy, they are hard to asses as well as very complex. There are enormous financial losses, sometimes physical damage as a result of negligence, as well as social costs: weakened trust in a free economy, confidence loss in political organizations, and destruction of public morality. “White collar crime could also set an example of disobedience for the general public, with citizens who rarely see white-collar offenders prosecuted and sent to prison becoming cynical about the criminal justice system” (Conklin, J. E.). White-collar crime is undeniably a crime and often encompasses elaborate
In order to coherently understand the meaning of white collar crime, Friedrichs (2010) states that it must be approached in stages. The first stage is polemical, and is related to the definition. The second and third stages are typological and operational. As previously mentioned, white collar crime has been quite heavily debated, and currently there is no definition that is generally accepted by criminologists. Some argue that the term white collar crime should be abandoned altogether, and another issue is where it is appropriate to draw the line between legal practices and illegal practices (Hayes & Prenzler, 2012; Dobovšek & Slak, 2015). Throughout time, the scope of white collar crime has broadened to include many other typologies of white collar crime, due to the fact that technology has and continues to advance. The most common types of white collar crime include occupational crime, corporate crime, state crime, financial
One of the most recent white-collar crime involved Wells Fargo, a banking and financial services provider. In 2016 San-Francisco based bank Wells Fargo (WFC) employees secretly created millions of unauthorized bank and credit card accounts without permission of their customers. Opening about 1.5 million fraudulent deposit accounts and submitting 565,443 credit card applications allowed Wells Fargo employees to boost their sales targets and receive bonuses. Consequently, customers were wrongly charged fees for accounts they did not know existed. In this business crime scenario, Wells Fargo involved to pay $185 million in fines and refund $5 million to affected customers. Also, around 5,300
His main contention being that the very permissive attitudes within society allow for this type of crime to continue to flourish without consequence; but, research has shown that Americans do in fact condemn white collar crime. There has been a lot issues with the true definition of what white collar crime is. The most common white-collar crimes include fraud, bribery, Ponzi schemes, cybercrime, copyright infringement, money laundering, identity theft and forgery insider trading, labor racketeering, embezzlement. Although Sutherland defined it first, the FBI defines it with a more narrow approach: "those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence" (1989, 3). The crimes committed which fall under the title of white collar crime are entirely dependent upon the identity of the offender; their occupation, their environment, and their opportunities are significant factors in relation to their
Imagine working over thirty-five years with a successful company; faithfully contributing to your own retirement. Only to find out those two weeks prior to your first retirement vacation your account has been depleted. This crime is known as white-collar crime. White collar crime was coined in 1939, by a man named Edwin Sutherland. Sutherland defines white collar crime to be a crime committed by the perpetrator during the course of his or her occupation( S. Rosoff, H. Pontell, R. Tillman). White collar crime is happening every day. In general terms, non-violent crimes for financial gain were stated in this subject as well. White collar crime is what many in society fail to express as other would if it was street crime. If society as whole were to become more knowledgeable and understanding of the magnitude behind white collar crime, then they too would realize and immediate affect behind a violent act is not more harmful than one such as white collar. White collar crime which often time take affect years
Marilyn Price and Donna Norris” (Perri, J.D., CFE, CPA, 2011, p. 23). Even though white collar crimes do not seem as violent as someone that commits murder there is still major damage done. For example, a fraud victim goes through a lot of hardship. They can be harassed, have their identity stolen, and lose everything. This, in many cases, can be looked at as a serious crime.
In this paper I will identify and analyze the Wells Fargo scandal as it pertains to the breakdown of leadership and ethics. I will first identify and analyze the event and discuss the challenges and conflicts the scandal presented. Then I will evaluate the issue by explaining why the issue has interest and concern to stakeholders followed by discussing the challenges presented to individuals and/or organizations around this case. Lastly, I will recommend action steps that should be taken to those involved as well as discuss what I have learned from exploring this topic.
During the past year Wells Fargo, a well-recognized bank of the United States, has been trying to clean its name and the mess it got itself into, when it was brought to the public that the bank was involved in generating fraudulent checking and savings accounts for its clients without their knowledge or their authorization. “The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent”
In the twentieth century, White Collar and Organized Crimes have attracted the attention of the U.S. Criminal Justice System due to the greater cost to society than most normal street crime. Even with the new attention by the Criminal Justice System, both are still pretty unknown to the general public. Although we know it occurs, due to the lack of coverage and information, society does not realize the extent of these crimes or the impact. White Collar and Organized is generally crime committed by someone that is considered respectable and has a high social status. The crimes committed usually consist of fraud, insider trading, bribery, embezzlement, money laundering, identity theft or forgery. One person would not normally commit all of these but likely one or the other.
During the summer and fall of 2014, Sirius XM, an American satellite radio broadcasting company, was found guilty of consumer fraud. The company’s means of fraud included, but was not limited to, misleading advertisements and unfulfilled promises. After many consumer complaints, the issue was taken to court. There, 45 United States Attorney Generals announced that Sirius XM Satellite Radio was guilty of misleading, unfair, and deceptive practices which violated state consumer protection laws (Hood, 2014). During the act of defrauding customers, the company also engaged in unethical business behaviors. Due to the fraudulent and unethical decisions and actions made by Sirius XM, the company will most likely forever be looked at through a different
White collar crime was first defined by an American sociologist from Nebraska, Edwin Sutherland, in 1939. He defined it as “A crime committed by a person of respectability or of high social status in the course of his occupation”. Now days, it is defined as “A crime that is financially motivated non- violent and committed by business or government professionals.” White collar criminals do not use violence to obtain the money but instead they use deceit and concealment, they misuse their power and trust. It is often seen as a less serious crime although we hear about these types of crime in the news all the time. The most common types of white collar crime are embezzlement, tax evasion, money laundering.
Imagine losing your retirement funds or being a victim of a mortgage fraud because money from your bank account disappeared overnight! The 1996 report of the National Criminal Justice Commission estimated that the annual cost of white-collar crime is between $130 billion and $472 billion, seven to twenty-five times greater than the cost of conventional or street crime (Conklin, 2010, P. 71). White-collar crime in America is considered larceny committed by the wealthy, respected, and legitimate enterprise which is not set up or intended to go out of business like an ordinary fraud or con game. White-collar crime offenses may involve forgery, embezzlement, or fraud involving massive amounts of money. Offender’s commit fraudulent acts in the course of normal business practice, but is considered unethical and violates accepted accounting principles and mainly public trust. To help better understand the issue the essay will explain several incidents which are involved with white collar crime and how it hurts many individuals from families to businesses. Even though white-collar crime offender’s gain an increase in salary and may go unnoticed, the criminal justice system should continue to take a stance on white collar crime. Because mainly white collar crime is a serious invincible crime, laws that regulate white collar crimes are necessary, and impacts society's way of life. Additionally, a proposed suggestion will be presented to counter the identified problems and conclude final thoughts on white-collar crime. At the end of the day the goal to continue law regulations against white collar crime while maintaining public protection will be the driving emphasis behind this essay.
White-collar crimes and organizational structure are related because white collar-crimes thrive in organizations that have weak structures. According to Price and Norris (2009), the elites who commit white collar-crimes usually exploit weaknesses in organizational structure and formulate rules and regulations that favor their crimes. Makansi (2010) examines case studies to prove that white-collar crime is dependent on organizational structure. For example, the financial crisis that Merchant Energy Business faced in 2001-2002 occurred due to the liberal Financial Accounting Board, which failed to provide a standard model of valuing natural gas and fuel. Moreover, a financial crisis that rocked the securitization market in 2008 was due to fraudulence in the pricing of securitization products. These examples ...