/Wells Fargo Scandal Valued at $190 Million

Wells Fargo Scandal Valued at $190 Million

The following two tabs change content below.

Tejasree Seelam

Latest posts by Tejasree Seelam (see all)

In early September, one of the America’s largest financial services companies revealed a scandal with a price tag of $190 million. With the notorious Warren Buffet as the company’s largest stock holder, Wells Fargo is headed by CEO John G. Stumpf. Seemingly, it was under his direction, or indirect pressure, that employees at the company created approximately 2 million unauthorized bank and credit card accounts in the past couple of years.

To do so, the employees simply transferred small amounts of money from an existing customer’s account into a new account under the same customer. While one would expect persons committing a professional crime to take greater precaution, it seems the employees at Wells Fargo did not think further about robbing their clients. Since additional accounts incur additional fees, the phony accounts billed the customers for annual, overdraft protection and insufficient funds fees. The customers who received the bills were shocked, as any reasonable person would be. One such customer, Brian Kennedy, inquired the company of an unfamiliar account under his name. In response, the bank simply terminated his checking account and shook its hands clean.

The primary motive of the employees was in fact to exaggerate sales figures with the counterfeit accounts and thereby earn bonuses. However, not all the blame can be thrown onto to the middle class employees. Unfortunately, that is exactly what their employer did and fired 5,300 employees. Infuriated at the unjust accusation, two employees, Alexander Polonsky and Brian Zaghi sued the company and announced that they were wrongfully fired because they did not meet the unreasonable quotas. Their fate was illustrated as the circumstance to any other employee who did not meet the requirements. It was under that pressure and the additional insinuations that the 5,300 employees effectively robbed their customers. Such an uncovering begs to question the extent of the upper level involvement in the scandal.

At the Senate Banking Committee, it was revealed through CEO John G. Stumpf’s interrogation that the company only dismissed lower level employees following the investigation. None of the senior executives were punished in any form and it was made obvious that the company was attempting to sacrifice their waged workers in order to continue engaging in their criminal behaviors.

To fight the unmerited treatment, employees of Wells Fargo are now filing various lawsuits, and the cites of Los Angles and Chicago, as well as the state of Illinois are suspending the company’s services for year. NJIT itself also has only Wells Fargo ATM machines on campus, however the university has not issued a statement in response.