A few years back, Wells Fargo was involved in a scandal. It is the third-largest bank in the nation. The reputation of the bank had been severely hampered due to the Wells Fargo fraud department.
The fraud case of Wells Fargo has diminished the reputation of the company. The scandal included accessing more than 2.1 million credit and deposit accounts. What happened after the Wells Fargo fraud scandal? Did the bank overcome the stain? This article will answer all these questions. So let’s start the article.
What is Wells Fargo Fraud?
After the scam, the Wells Fargo fraud had to settle the charges by paying $185 million. The bank later fired more than 5000 employees who were accused of fraud. Wells Fargo settlement also involved the compensation prices with the fines. It had agreed that the bank took the 570,000 car loan on auto insurance without informing the clients about it. It had to pay around $5 million directly to the customers who were connected with the bank.
Wells Fargo had to go through many difficult question answering sessions in front of the 20th Senate Banking Committee session.
According to the historical record, Wells Fargo encourages the staff to cross-sell products to the customers. Many say that the bank has many stories in the journey of becoming the leader of banking market. The CEO of Wells Fargo has invented the cross-selling strategy.
The Bank encouraged the employees to open new accounts. It used to provide targets to the workers to meet the goal of sales. The staff also used to earn more bonuses for new accounts.
The company emphasizes the importance of the commission and pay to make sure that the customer has a positive experience. They focused on the risk of poorly designed structure. Wells Fargo mainly focused on strong customer service and portfolio growth. It also provides the incentive to the users for great teamwork, accomplishments, and portfolio quality.
Some history of Wells Fargo
Wells Fargo was founded in 1852. It used to provide the services by Pony Express, stagecoach, steamship, and telegraph. The merchants, ranchers, and pioneer miners in the West used to take financial services from Wells Fargo to buy or sell the gold, transfer the funds, traveller checks, and others. The banking system has survived the Great Depression period and two World Wars. Over a long period of time, it has gained much confidence from the citizens. It also provided consumer banking, easy home loans and small business lending without any complex security.
Wells Fargo Fraud Settlement
After the government raises questions about the Wells Fargo Fraud, they were as follows:
- Did the board know about the employee’s incentives and the company culture?
- Was the company more focused on e-commerce and disconnect from the consumers?
- Did the board conduct any controls to detect the widespread fraud?
The advocate of the Public Citizen, Bart Naylor shared that: either the business model of the bank was designed as such a way to do the fraud, in that case, the higher ranking people should go to prison. Or the company has gotten so huge that the higher authority could not even manage to look after the broken levels.
He added that Wells Fargo is more focused on cross-selling and limiting bank sale goals.
It is sad to see that in countries like the United States such big bank frauds are occurring. India has also started the zero balance account to provide privilege to the lower income people. The bank officials are making 1 rupee deposit in the clients’ accounts. This structure will help to protect and gain consumer’s trust. The Smart Campaign includes incentives for the staff to the financial service providers.
Hopefully, the bank system will be more careful regarding its policies and services. The goal should be to increase more security for the client’s finances and the institutional culture.
And with that, this is a wrap of the blog. Do write to us and share your thoughts about the article. If the blog was helpful and informative then share it with your family and friends.
- Jonas Taylor is a financial expert and experienced writer with a focus on finance news, accounting software, and related topics. He has a talent for explaining complex financial concepts in an accessible way and has published high-quality content in various publications. He is dedicated to delivering valuable information to readers, staying up-to-date with financial news and trends, and sharing his expertise with others.