By now almost everyone has read or heard about Wells Fargo creating over two million fraudulent checking and credit card accounts from 2011 to 2015. Wells Fargo fired 5,300 bank associates who were part of the scheme and paid a $185 million fine. The CEO, John Stumpf, has been testifying in front of Congress.
My question: “It sounds really bad, but will customers punish Wells Fargo for their misdeeds?”
I can only hope so. Otherwise, other companies will continue to take advantage of customers too. If you can’t trust a bank; who can you trust? Wells Fargo is the third largest bank in the US and was founded in 1852. When bank associates opened up millions of fake accounts, the credit ratings of Wells Fargo customers could have been negatively impacted. Good credit is a precious asset. It’s difficult to maintain and can take up to seven years to rectify and remove a mistake. Wells Fargo did not fire all the associates involved in the scam at one time. The bank dismissed approximately 1,000 associates over a four-year period. They knew about the issues long before the public or government regulators understood the breadth and severity of the problem.
Let’s examine the penalty, $185 million. It sounds like a great deal of money. Additionally, Wells Fargo was forced to set aside $5M for customers who were affected; that’s approximately $20 per customer, an amount that doesn’t amount to anything. According to the latest quarterly financials, Wells Fargo made $5.7 billion or the equivalent of $23 billion on an annual basis. The fine is less than 1 percent of their profits. Congress is grilling the CEO, as well they should. They want him to take a reduction in pay, but I guarantee that whatever the decrease, Mr. Strumpf’s lifestyle will not have to change. He will not need to search the Internet for a new position in order to support his family.
In preparation to write this post, I looked at Wells Fargo Values, the mission statement on their corporate site. It certainly got my attention!
Wells Fargo: Our Values
We have five primary values that are based on our vision and provide the foundation for everything we do:
- People as a competitive advantage
- What’s right for customers
- Diversity and inclusion
Banks keep valuable assets protected in the vault. Apparently, Wells Fargo’s Values must have been stored away, far away, where no one could see or follow them. Number two – Ethics; number three, What’s right for customers and the last, Leadership all get failing grades.
We live in a society where industries must be regulated, including banking. Regulations act as guidelines and deterrents. In this instance, neither were followed. Wells Fargo coerced their associates to throw customers under the bus so that they could keep their jobs. I’m not blaming the associates. The blame is squarely on all senior level executives who not only were aware of the subterfuge, but condoned it.
The lesson to be learned? My hope is that current and prospective customers will only do business with institutions that value the customer as their number one asset. I often say, “I’m not sure what they were thinking!” In this case, Wells Fargo executives were only thinking, “What’s in it for me?”
Do you think the consumer marketplace will penalize Wells Fargo or will all be forgotten?