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Wells Fargo Fraud Case Recently, Wells Fargo gained a lot of media attention due to its illegal sales practices scandal. In order to understand the fraud, it is important to shed light on how it all started.
Employees at Wells Fargo were forced to meet impossible sales quotas or else lose their job. They were asked to hunt for potential customers, even at bus stops and retirement homes.
In 2014, the bank held a meeting in Florida to scold lower-level managers for opening accounts for nonexistent people. However, one manager in the room believed otherwise and urged her employees to ignore the bosses and increase sales at any cost. Thus, selling more products to meet aggressive sales targets
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Yet, John Stumpf, CEO of Wells Fargo, denies that the bank’s culture is obsessed with nonstop selling. According to him, the scandal resulted because some employees did not honor the bank’s values (Glazer). It was recently disclosed that Wells Fargo fired 5300 employees in the past few years, including the manager who forced employees to meet sales targets (Peck). Yet, questionable sales tactics persisted and were an open secret in several of the bank’s branches. The branch managers regularly monitored the employees’ progress toward achieving sales targets and reported it to higher-ranking managers. Meeting targets resulted in hefty bonuses, which bankers used to compensate for low salaries. On the other hand, employees who failed were asked to open accounts for their mother, siblings or friends (Glazer).
Some employees reached sales goals by using wealthy, existing customers preselected for credit cards. These customers were called and told that Wells Fargo wanted to send them a new credit card in appreciation of their business with the bank. If a customer refused the card, he was told to cut and discard it upon arrival. However, they were not informed that issuing each new card required a credit check, which can lower a person’s credit score
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In 2011, Jabbari opened savings and checking accounts with Wells Fargo. However, after two years he found out that there were seven unauthorized accounts in his name. Soon, he started receiving notices for unpaid fees on those accounts. While some of the accounts had been opened with forged signatures, others were opened with no signatures at all (Hiltzik).
Heffelfinger had a similar experience. In March 2012, she opened a checking and a savings account with Wells Fargo. However, Wells Fargo had opened fake accounts in her name in January that year. She ended up with seven accounts, opened with forged signatures and fake Social Security numbers (Hiltzik). According to the lawsuit, bank employees at Wells Fargo were informed that an average customer tapped six financial tools. However, the employees were to push the customers to use eight products, because “eight is great” (Kelly).
In May 2015, the LA city attorney’s office declared a lawsuit against Wells Fargo for pressuring its retail employees to commit fraud, opening accounts for nonexistent people and charging customers for products without authorization. In response, the bank hired the consulting firm PricewaterhouseCoopers for an in-depth analysis. After almost a year, PwC employees confirmed the fraudulent sales practices
So just how did Scott Welch fit the profile of the average perpetrator? Based off the information reported by the Association of Certified Fraud Examiners’ (ACFE) 2010 Report to the Nation, Welch fit directly into the median for a perpetrator – he was male, between the ages of 46 – 50, had a tenure of at least 6 – 10 years, an executive position as a Vice President. According to the ACFE’s report a perpetrator’s position within the company, age, tenure, gender and education level all have a have consideration in a fraud. In the 2010 report, it is noted that 66.7% of all frauds are perpetrated by men, more than likely due to the fact that more men hold a position of authority. Of the cases studied, 74% of all managers and 88% of all owners/executives were men (Association of Certified Fraud Examiners (ACFE), 2010). The combination of Welch’s tenure and authoritative position may have exacerbated the losses suffered by Wachovia and may also have helped him hide the fraud from detection for an extended period of time of eight years (“Former Wachovia,” 2011). This period is well above and beyond the 24 months reported by the ACFE as the median time frame in which frauds perpetrated by executives/owners were detected (ACFE, 2010). Taking into consideration all the kn...
Wells Fargo account fraud scandal One of the most recent white-collar crimes 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 is involved in paying $185 million in fines and refunding $5 million to affected customers.
As Wells Fargo convicted all the requirements of fraud they are involved to the business crime called fraud, they are liable to their fraud crime. There was a false statement which respectively conducted to the injury to the alleged victim as a result. Wells Fargo has been ordered to pay $185 million in fines, but that's a pittance compared with the $5.6 billion the bank earned in just the second quarter of this year. Meanwhile, the bank's victims weren't just nickel-and-dimed with overdraft and maintenance fees. Many of them took "significant hits" to their credit scores for not staying current on accounts they did not even know about. They will likely have difficulty securing home and car loans at reasonable rates for years to come, simply because their bank decided to defraud
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
For Chase bank the mission and vision should always be clear to their customers. "At JPMorgan Ch...
In Wells Fargo “Vision and Values Guide Our Actions” each section has an “our standard” (2017, March) portion to help employees understand the expectations Wells Fargo has for them in their employment pertaining to ethical standards and the laws they have to follow. As stated in the Vision and Values Guide Our Actions handbook from Wells Fargo, the company states, “In order to maintain our reputation as a trusted ethical company, we must do our part to ensure that our values come alive through our actions” (2017, March). In this guide, the company has laid out blatantly how to respond and act ethically as a Wells Fargo employee, but this did not stop the company from performing illegal acts and starting the credit card and bank
on September 8, 2016 Wells Fargo’s unethical behavior was reveal when the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency fined Wells Fargo $185 million because over 2 million credit card and bank accounts were fraudulently open or applied for in customer names without their knowledge (Blake, 2016).
In 1852, as a response to the California Gold Rush, Henry Wells and William Fargo created Wells Fargo & company. Initially, the purpose of the company was to provide express and banking services to California. Shortly thereafter, Wells Fargo experienced rapid growth and unpredictable changes. Today the company is viewed as a nationwide, diversified, community-based financial services company with over $1.8 trillion in assets. Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through 8,700 locations and 12,800 ATMs.
Almost all customers that enter a bank expect to hear questions like "Would you also like to get a mortgage or an auto loan? Would you like to open another account? A savings account?" Most of the time, people say no, and this can hurt the bank 's infrastructure, especially since the number of people that physically go to the bank is gradually decreasing. In order to make sure enough accounts are created, branch managers will sometimes set goals for the employees. Since the number of products sold affects the salary of the branch manager, their goals may sometimes be very demanding. Most of the time, the employees are not able to reach that goal while sticking with Wells Fargo 's values: ethics, what 's right for
The Wells Fargo scandal started in 2016 when it came to light that starting back in 2011 employees created over 1.5 million fraudulent bank
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”
Report to SSB Board of Directors Antonio Collins MEMORANDUM TO: Super Secure Bank (SSB) Board of Directors FROM: Antonio Collins Cryptographer Computer Security Divisions DATE: October 5, 2014 SUBJECT: Suit stating that transfer of money was made by forged email. Facts: Super Secure Bank (SSB) and bank manager Bob are co-defendants in a recently lawsuit filed by one of Super Secure Bank (SSB) high net worth customers, Alice. Alice opened one of her monthly bank statements and noticed there was a $1,000,000 debit transferred out of her account.
Wells Fargo surfaced in 2013, and it was confirmed Wells Fargo employees were under the gun to make impossible sales quotas to cross sell other bank products to existing bank customers. Wells Fargo violated bank policy, corporate and personal ethics and the law by opening accounts in existing customer’s names including funding these accounts with yet other customer’s money. Wells Fargo is not just a case of unethical behavior, but a dishonorable culture from the senior management all the way down to the lowermost employee. The scandal of Wells Fargo culture has so far concentrated on the high-pressure sales environment that drove employees to generate as many as two million false accounts.
Recently, three individuals were awarded $170 million for helping investigators gather a record $16.65 billion penalty against Bank of America. Based on their action of inflating the value of mortgage properties and selling defective loans to investors. By influencing the market falsely is unethical and wrong. That is also why their punishment was so harsh. Firms today warn their managers and employees that failing to report unethical behavior and violations by others, could get them fired.
...et up illegitimate credit card accounts, bank accounts and other accounts – this is called identity theft.