The DOJ (Department of Justice) has charged and settled with a number of banks over “redlining,” the practice of defining geographies that banks want to rule out when marketing and granting loans and mortgages. Nonetheless, media reaction tends to be muted, and I’ve seen no evidence presented documenting resulting customer defections. Seems to be “shrug of the shoulders” stuff from the FI side. “Yeah, we got caught. So what?” And from the customer side, “So what. Everyone does it.”
But the explosion in the number of mortgages offered minorities and the risks created by some very dicey mortgage instruments, coupled with moving minority customers qualifying for prime mortgages into much higher interest, sub-prime packages, have taken customer abuse to an entirely new level. We’re about to see customer tolerance tested.
Will the market punish WF, and other financial institutions found to have done the like?
That’s the question I asked myself after reading a June 6th New York Times article featuring admissions of minority customer abuse from two former WF mortgage sales executives. These two former high-flyers were part of a special unit they say WF set up to target minorities in a thoroughly abusive manner – right up to using descriptive language describing black customers I won’t repeat here. I was repulsed.
These admissions came in conjunction with a civil rights suit against WF filed by the City of Baltimore that goes to trial later this month. Almost without question, the media will pick up this story and give it national attention, and the Huffington Post republished the article today. http://www.nytimes.com/2009/06/07/us/07baltimore.html?scp=1&sq=baltimore,%20wells%20fargo&st=cse
But will customers really care, especially customers outside the Baltimore area? Is our collective social consciousness high enough to punish companies the subject of seemingly credible accusations? (I’m asking about reaction here because rest assured, if WF believes it will lose the case, it will settle but with a gag order impeding further public communication).
Will be interesting to find out.
[side note: If you’ve been reading CT blogs long enough you may remember my post from several years ago, “Wells Fargo: Fifty Ways to Leave Your Customer.” After reading this NYT article, we’re now up to 100.]
Name your favorite social action issue: animal testing, environmental wrecklessness, race/age/gender/ethnic discrimination. We still buy products from the perpetrators because of convenience, price, or because long term, we don’t really think our individual buying decisions have impact on social change.
At least in my case, my boycotts aren’t logical. There are certain products I refuse to buy because of the vendor’s well-publicized positions on social issues (three products come to mind). But even though I was incensed at Exxon for their role in the Exxon Valdez oil spill, and boycotted their products for a few years, I buy gasoline from the company today. Sure Wells Fargo’s ethics are repugnant. You can make the same argument for rental centers and check-cashing services.
Some companies are simply easier to boycott than others. I’ll continue banking at Wells Fargo. But you’ll never see me having lunch at Denny’s.
Dick Lee – Andy, I think your take on this is very accurate. I guess I posed the question because there has to be a consumer threshold somewhere (doesn’t there?). Going back several years, I was astounded by the lack of consumer outcry over Ford’s cover-up of the Explorer tire pressure problem. Ford’s delay in owning up to the issue killed innocent people. That made me swear off Ford products (not that I was interested in them).
But I’m still waiting for the consuming public to rise up and say, “That’s it!”
Dick: the topic of how people reconcile their conscience, ethics, and morals with their consumer spending would be a very interesting study. As I thought about your blog, some other interesting ideas came to mind. If I was similarly moved about Ford’s improprieties, I might choose not to purchase a vehicle or accept billable work that would enable the company to operate more effectively. But would I:
1) divest any mutual funds that held Ford securities in their portfolio?
2) decline to have my kid participate on a sports team that was sponsored by a Ford dealership?
3) decide not to drive a Ford vehicle that was offered free as a promotion from a car rental company?
I don’t know the answers to these questions. My unschooled opinion is that if people vote their conscience with their consumer spending, it still comes down to “is it convenient for me?.” Author David Quammen’s observation (which comes to mind often) is that “not every crisp line represents a triumph of ethical clarity.”
Your Wells Fargo example connects to yesterday’s shooting at the Holocaust Memorial Museum in Washington. The boundaries of hatred are not easily delineated. When I know a company’s business practices promote hateful or discriminatory actions, I need to be more assertive about boycotting that company’s products and services.
Dick Lee – Andy, that was very insightful. For me, you framed that perfectly. I just wish that more consumer groups would pay more attention to social justice issues.
Best,
Dick
Dick
Surely companies still have the right to sell, or not to sell to individuals or groups of people of their choice? If a particular segment or geography of potential customers are not profitable, or have a high incidence of not paying their bills, (or worse), then I would not sell to them either.
It is clearly morally wrong if people are selected purely because of the race, colour or creed, but not if they are selected because of their buying behaviour, profitability or risk. The challenge clearly comes when the two overlap.
All customers are not created equal. Caveat vendor.
Graham Hill
Customer-centric Innovator
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