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The Wells Fargo scandal

May 12, 2020

As we´ve gone through different aspects of HR in respect to HR´s role in building an effective and competitive culture that can coupe with changing business environment.  We now go into the Wells Fargo cross-selling scandal. The reason this particular scandal is a great example is because it provides us with a unique view of large multinational corporation´s desire to make profit with a poor human resource strategy. Needless to say, that the reasons for this or any other scandal is diverse. It´s never as simple as black and white. With that said in this article we will go through the corporation operation, the scandal and its effects on Wells Fargo corporation.


Wells Fargo

Henry Wells and William G. Fargo founded the Wells Fargo company in 1852 to provide express and banking services to California. The name is linked to six-horse stagecoach running across the American West, loaded with gold. The 160 years of history is rich in details. Hence is a part of American history from the times of the gold rush to wars and depressions. Fargo has earned reputation of trust due to its attentions to its customers. (Wells Fargo history 2020.)


Wells Fargo has enjoyed a reputation of sound management. The company purchased Wachovia during the height of financial crisis, forming what is now the third largest bank in the country. Fortune magazine praised the company for a history of avoiding its peer´s dumbest mistakes. American banker magazine called Wells Fargo the big ban with least of scandals and reputational crisis. In 2013 it named Chairman and CEO John Stumpf banker of the year and Carrie Tolstedt, who was responsible of the retail banking division as the most powerful woman in banking. (Tayan 2019.)


Vision for baking giant is to satisfy customers needs and help them succeed financially. Wells Fargo emphasizes on building a lifelong relationship customer at a time. Company success has been tied to organization culture of proactive leadership. The CEO John Stumpf described his job as the guardian of the organizations culture. (Tayan 2019.)



The scandal and cross-selling

Cross-selling is a sales tactic used to get customer to spend more by purchasing a product that’s related to what’s being bought already. Wells Fargo set the target to eight products per person. The responsibility to reach this goal was on the employees. Putting them under extreme pressure to meet the needs of their managers. Hence, pushing employees to lean on tactics that where not only unethical, but more importantly unlawful. Cross-selling is not a new phenomenon. Banks discovered that the more products customer has the less likely they are to change to another bank. (Egan 2016a.)


Wells Fargo admitted to firing 5,300 employees for engaging in these tactics. According to Wells Fargo the company had put in place an ethics line to which employees could contact and enquire about issues that puzzles them. This is also what the CEO said in his testimony before senators. However, numerous employees came forward with evidence that is contrary to mr. Stumpf´s testimony. For instance, one employee had observed an ethical dilemma for which he contacted ethics hotline and as a result he was laid off for tardiness. Even though, the company says they have policies that protects informers. However, former employee’s ague that Wells Fargo would retaliate heavily, one former employee even said, “they ruined my life”. (Egan 2016b.)


Horror stories of the employees that had worked for Wells Fargo continue to come up. More than a dozen of former employees describes the work culture as unrealistic sales targets a relentless pressure. These unethical behaviors and demands from employees are also mentioned in a lawsuit filed by Los Angeles against Wells Fargo. This enormous pressure comes from the company´s target goal of selling at least eight products per customer. The reason for eight products is not strategical or based on statistics, rather the number comes because according to the CEO of Well Fargo eight rhymes with great. And, for that reason countless of employees suffered tremendously. (Egan 2016c.)


Criminal investigations were called upon, after revealing the bank employees had opened millions of fake bank and credit card accounts. Fourteen U.S. senators urged attorney general Loretta Lynch to hold Wells Fargo accountable and hold individual executive leaders responsible for unlawful conduct. As a result, civil penalties of 24.1 million dollars were announced against the company. In another settlement against the Justice department 4.1 million dollars was agreed upon. (Fox news 2016.)


The scandal had a national outrage resulting in congressional hearings, countless investigations and the retirement of the CEO John Stumpf. Customers opened class action lawsuit against the bank for opening the fake accounts. However, the bank tried to derail this lawsuit that was filed in Utah by forcing these customers to resolve their claims quietly behind the close doors. During the presidential campaign Hillary Clinton said, “We can’t let corporations like Wells Fargo use these fine print `gotcha´ to escape accountability”. (Egan 2016d.)


The cost has been heavy on Wells Fargo´s reputation and on the company´s pocket. From 2012 to 2016 the company´s employees used fraud to meet impossible sales targets set by their managers. The company has agreed to pay 3 billion dollars to settle criminal charges. (Flitter 2020.) The bank now admits, that it pressured employees to meet impossible sales targets, that lead to thousands of employees opening millions of accounts, under false pretenses or without customers permission. (Kelly 2020).


Human resources can be used efficiently to produce incredible results. And, every business is in the business of making profit. However, motivating and mentoring employees for the them to reach company´s target goals is much more complex than simply telling them to work harder. HR study´s has provided me with eye opening perspectives and a respect for the field.





Egan M. 09 September 2016c. Workers tell Wells Fargo horror stories. CNN business. URL: Accessed: 12.05.2020


Egan M. 21 September 2016b. I called the Wells Fargo ethics line and was fired. CNN business. URL: Accessed: 12.05.2020


Egan M. 22 September 2016a. 'Wells Fargo isn't the only one': Other bank workers describe intense sales tactics. CNN business. URL: Accessed: 12.05.2020


Egan M. 25 November 2016d. Wells Fargo tries to kill fake account lawsuit. CNN business. URL: Accessed: 12.05.2020


Flitter E. 21 February 2020. The Price of Wells Fargo’s Fake Account Scandal Grows by $3 Billion. The New York Times. URL: Accessed: 12.05.2020


Fox new 06 October 2016. Senate Democrats call for criminal probe of Wells Fargo. URL: Accessed: 12.05.2020


Kelly J. 24 February 2020. Wells Fargo Forced To Pay $3 Billion For The Bank’s Fake Account Scandal. Forbes. URL: Accessed: 12.05.2020


Tayan B. 06. February 2019. The Wells Fargo Cross-Selling Scandal. Harvard Law School. URL: Accessed: 12.05.2020





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