The Wells Fargo e-mail which went to customers. This is one of the "actions" taken by Wells Fargo in the wake of the discovery that Wells Fargo staff was financially incentivized to open as many accounts as possible, and a culture of cheating developed. Staff opened accounts for customers without the customers knowing about it. To participate in this online discussion, you must first read the pages in additional attached files. They are roughly in chronological order. Most of them are from the New York Times newspaper, which had a reporter assigned to following it. You can find a good deal more online and I strongly suggest that you explore that resource. We may use this for discussion purposes this week. Take note of the material specifically in Units 2 and 3 of the textbook. Note the graph which is reproduced as part of the following material along with other related items which may guide your analysis. Briefly, it appears that over 5000 Wells Fargo employees, noting that their compensation would increase if they opened new customer accounts, took current customer's information to create a new account, without the customer knowing about it. This could easily happen where the customer is older or has poor eyesight. When a customer receives a new credit card or debit card in the mail, most would assume it's a replacement for an existing card or an "offer" from the bank to open an account. Some people don't review their bank or credit card statements every month. It took a long time for the "victims" to figure this out, and for it to get reported to the authorities who finally determined it was a "pattern" which was widespread. In many cases, as soon as an employee got credit for opening an account, the employee then closed the account - so many customers didn't have much or any notice. Consider who was, or will eventually be hurt. Some customers were now paying fees on their new accounts, many without knowing they had a "new" account. The employees were getting additional pay so they could provide for themselves and their families. The bank was looking like it had more customers on the books. Here are some of the discussion points you may write about: Is repayment to customers who paid a fee and the apology by e-mail enough? Is a penalty appropriate? ($185 million) Why did Wells Fargo decide to pay incentive fees for opening accounts without putting into place safeguards to assure cheating wouldn't happen? Would you, if you had been a Wells Fargo employee, been tempted to open bogus accounts to get more pay? If so, would you have succumbed to the temptation? What could Wells Fargo have done to incentivize employees to get new accounts yet minimizing the possibility that the employees would cheat in such a fashion those clients would be hurt? Do all of us monitor our bank and credit card statements so carefully that we would know if this had happened to us? Speculate as to whether the employees looked for clients who would be least likely to carefully monitor statements. Note this Wells Fargo incident is not yet over even though it began a few years ago then came to light in late summer 2016. Recall what is likely to happen as time moves along this chart. Banks are already highly regulated by several federal agencies. 

QUESTIONS that need to be ADDRESS: Will this incident allow the government to let yet another agency be born, or a current agency to have more power over the banks, or employers generally? Will that be good for business? Will it be good for customers? Will the cost of running a bank go up if that happens? Who, in the end, pays for higher costs? Should the errant employees be punished? Should the person who designed the incentive plan be punished? Should the head of the bank be punished? Should the shareholders of the bank's stock be punished? Will you pay higher taxes if the government decides to spend more in regulating banks or other businesses? Is what you read about people in congress discussing this simply "grandstanding" like politicians do, or are they really concerned enough to pass more laws or order government agencies to step up audits of banks or increase penalties? Should people go to jail? If so, should the employees who opened the false accounts go to jail? Should they be required to write apologies to all the people in whose name they opened bogus accounts? How would customers react to that? Would that run the bank's stock price further into the ground? Will the shareholders (pension plans, insurance companies, etc.) bear all the pain or will people like you and me bear part of the pain of a reduced stock price? (Don't forget that UNT-Dallas is partly funded by a State owned investment fund which may well have Wells Fargo stock, and if you work and have a 401K or IRA, you may well also be a shareholder through mutual funds or exchange traded funds in those portfolios.) At the end of the commentary, answer the following: If you had been head of the bank, you didn't know this was going on, and you read about it in the news one morning, what would you have done?

Answer rating: 100% (QA)

The Wells Fargo scandal raises a myriad of ethical legal and business questions that merit careful consideration Lets address some of the key points raised in the discussion Repayment and Apology Repa... View the full answer