Wells Fargo Fake Account Crisis
A crisis is defined as the perception of an unprecedented event/incident that threatens shareholders’ valuable expectations in relation to economic, health, environmental, and safety issues (Coombs, 2014). Since organizations operate in a challenging and highly competitive environment, they are likely to undergo crises. An example of an organization that has experienced a crisis in the recent past is Wells Fargo. The company recently experienced a scandal relating to fake accounts, which has plagued its operations for approximately a year. Given that the crisis is still ongoing, Wells Fargo needs to develop a suitable crisis management plan that will help resolve the issue. This paper focuses on examining the crisis using the three-stage approach articulated by W. Timothy Coombs.
Factual Summary
Wells Fargo fake account crisis is an ongoing scandal regarding the creation of millions of fake savings and checking accounts on behalf of its clients, but without their consent. Wells-Fargo, the third-largest bank in the United States, opened 3.5 million fraudulent accounts from 2009 to September 2016 (Dugan, 2017). Based on a summary by an auditor, the number of opened accounts during this period exceeded the previously estimated 2.1 million accounts by the bank, which represented 70% increase. The company also admitted to have opened fraudulent accounts from 2002 to 2009. As a result, Wells Fargo has been under investigations by several regulatory agencies including the Consumer Financial Protection Bureau, which fined the bank a combined $185 million due to its illegal activities. Since the company is still under investigation, it faces more criminal and civil lawsuits. For instance, Wells Fargo is facing a pending $32 million civil class-action settlement lawsuit for its engagement in illegal activities by opening fraudulent accounts (Dugan, 2017).
The bank responded to the crisis through admitting its wrongdoing, which has deepened its woes. However, an explosive report conducted on Wells Fargo by Pricewaterhouse Coopers did not include its fraudulent accounts that were opened between the years 2002 and 2009. This was primarily because of the difficulties in conducting a comprehensive analysis for this period of time. The bank has been accused of potentially lessening restitution for customers through...
References
Conti-Brown, P. (2017, August 31). Why Wells Fargo Might Not Survive Its Fake Accounts Scandal. Fortune. Retrieved October 9, 2017, from http://fortune.com/2017/08/31/wells-fargo-fake-accounts-scandal-2017-tim-sloan/
Coombs, W.T. (2014). Ongoing crisis communication: Planning, managing and responding (4th ed.). Thousand Oaks, CA: Sage Publications Inc.
Corkery, M. (2016, September 9). Wells Fargo Offers Regrets, but Doesn’t Admit Misconduct. The New York Times. Retrieved October 9, 2017, from https://www.nytimes.com/2016/09/10/business/dealbook/wells-fargo-apologizes-but-doesnt-admit-misconduct.html
Dugan, K. (2017, August 31). Wells Fargo is Still Holding Back on its Fake-accounts Data. New York Post. Retrieved October 9, 2017, from http://nypost.com/2017/08/31/wells-fargos-fake-accounts-scandal-just-got-worse/
Morrell, A. (2017, January 6). ‘Without Fraud, the Math Didn’t Work’: Wells Fargo’s Cutthroat Culture Was Reportedly Simmering for Decades. Business Insider. Retrieved October 9, 2017, from http://www.pulselive.co.ke/bi/finance/finance-without-fraud-the-math-didnt-work-wells-fargos-cutthroat-culture-was-reportedly-simmering-for-decades-id6765571.html
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