An Evaluation of Ethical Practices at Wells Fargo Bank

1
AN EVALUATION OF ETHICAL PRACTICES AT
WELLS FARGO BANK

2
Executive summary
This study has focused on the business ethics issue of Wells Fargo
bank. The scandal of this bank regarding the opening of fake accounts has
led them to face legal and ethical issues. Besides, they have faced
financial distress after this incident. Their brand image has been
hampered and they failed to pay value to customers’ trust. The aim of this
study was to assess all aspects of unethical practice in this bank by using
appropriate methods. This paper has reviewed detail information
regarding the scandal to understand the reasons behind the issue and its
impact on the business. Case study research method has been considered
suitable for this research and it has helped in getting reliable outcomes.
10 authentic sources have been found for collecting secondary
quantitative data.
Findings of this research have revealed that Wells Fargo has faced
legal, ethical and financial issues after the scandals. This incident greatly
influenced the performance of this organization. Both customers and
employees of this company were dissatisfied due to the unethical
practices. They have doubted the intention of this company and have
taken legal steps. However, this company has taken many initiatives to
control the situation and is gradually reviving.
This study has recommended that this organization needs to develop
ethical practices and train their employees to follow those practices. It is
important to engage communities within the business to support future
growth. It can help them to improve their brand image and enhance
customer base.

3
Table of Contents
1.0 Introduction 4
1.1 CompanyBackground 4
1.2 Projectresearchproblem 4
1.3 Significance ofthestudy 5
1.3.1 Purpose ofthestudy 5
1.3.2 Benefitsof research 5
1.4 Researchdesign 5
1.5 Structure ofthestudy 6
2. Orientation: related literature, case organization, and issue oftheresearch 7
2.1 Literature review oftheproject 7
2.1.1 Importance ofethical practices 7
2.1.2 Impact of ignoring corporatesocial responsibility 7
2.1.3 Recommended strategiesoforganizations 8
2.2 Caseorganization 8
2.2.1 Companyoverview 8
2.2.2 Explainingtheproblem 9
2.2.3 Impact ontheorganization 9
3. Researchmethodology 10
3.1 Different kindsof methodologies 10
3.1.1 Casestudymethod 10
3.1.2 Quantitative and qualitativedatamethods 11
3.1.3 Data sources: PrimaryandSecondary 11
3.2 Datacollection 12
3.2.1 Process ofcollectingdata 12
4. Findings anddataanalysis 13
4.1 Dataanalysis 13

4
4.1.1 Impact of unethical practices on thefinancialcondition 13
4.1.2 The effect of the unethical scandal on consumers ofthebank 13
4.1.3 Legal issues faced by Wells Fargo after the scandal offraudulentaccounts 14
4.1.4 Response of the bank to control the situation and improvebrandimage 14
4.1.5 Present status ofthecompany 15
5. Implicationsandrecommendations 15
6. Conclusion 16
7. Referencelist 17
8. Appendices 21
1.0 Introduction
Ethics is about understanding the right and wrong in every situation
and it is an important aspect for business. Maintaining business ethics
helps organizations to increase job satisfaction in employees, and the
level of customer satisfaction increase accordingly. The utilitarian theory
helps in understanding different aspects related to business ethics.
According to this theory, business operations are determined based on
the profit of stakeholders (Fok, Payne & Corey, 2016). Due to this reason,
stakeholders of the business are responsible to assume the result of
action before performing. The utilitarian theory guides a person to
determine the appropriate action that needs to be performed as per
situational needs. It allows evaluating both possible bad and good
consequences that can take place after performing an action. Wells Fargo
has been fined for creating fake accounts and ethical issues of this
company have been found. As per this theory, this behaviour of Wells
Fargo is ethically incorrect.
1.1 Company Background
Wells Fargo is a multinational banking firm, which was founded on
March 1852 by Henry Wells and William Fargo. The first office of the bank
was inaugurated in 1852. At present, it operates on 8600 locations all over

5
the world. Approximately 269000 employees work in these companies
worldwide (Wellsfargo.com, 2019). It is one of the leading financial
services companies that provide small and personal business banking,
investment banking, retirement plans and management of treasury. The
bank is generally operated by a board of directors, which consists of 15
members. Wells Fargo has been ranked 26th in 2017 fortune ranking of
America's largest financial corporation (Wells Fargo 2019).

6
1.2 Project research problem
The main problem in this study is unethical practices within an
organization.
Unethical practices in a firm can lead to different issues like security of
consumer information and protection of consumer interest (Kahane,
Everett, Earp, Farias &Savulescu, 2015). In Wells Fargo, it can be seen
that around 565,000 credit card accounts have been opened without
proper permission from customers. In addition, 15 million deposit
accounts were also opened that was also not authorized by the customers
(Forbes.com, 2016). This has caused legal procedure against this
organization and about $185 million have been levied as fines (Blake,
2016). Moreover, many employees have lost their jobs due to the creation
of fake accounts without proper authorization. This is a major issue that
needs to be eliminated by maintaining business ethics. Manager in an
organization must take proper decisions ethically that may not create any
legal or ethical issue in future. This issue in the bank has forced the CEO
to take an early retirement, provide citation which has impacted on the
reputation of the banking firm (Fox, 2016).
1.3. Purpose of thestudy
The purpose of this project is to evaluate possible reasons behind
unethical practices within Wells Fargo. This study is exploring different
unethical practice in t6his bank including unethical employee
management system and opening of fraud account for achieving
sustainable development. Findings of this research can help this firm to
implement ethical practice within the business to ensure customer loyalty
and improvement in sales performance.
1.3.1 Benefits ofresearch
The benefit of this research is that this company is getting
information about possible processes to implement ethical business
practices. As stated by McMurrian&Matulich (2016), maintaining ethical
business practice satisfies the needs of both internal and external
stakeholders. This practice can improve the performance of employees in

7
Wells Fargo. Outcome of this research can help this firm to avoid fines in
future for unethical business issues.

8
1.4 Research design
Qualitative research design has been adopted in this study. This
method is adopted because it can help to explore in-depth knowledge
about the subject area of business ethics. In addition, quantitative data
have been collected for this study. Different sources of data such as
business magazines, company annual reports have been explored to gain
knowledge about the firm. Additionally, the case study method has also
been implemented in this research, which has helped to access the impact
of the identified issue of business ethics.
More information on the methodology is included in section 3 below.
1.5 Structure of the study
In this report, section 1 above, a brief introduction has been given
that includes the problem statement, company background, and
significance of the study. Section 2 comprises a literature review. This is
also done through the help of different literature that were collected from
relevant sources. Discussion from information retrieved from literature
can help to build an understanding of the subject area. After this, the next
section involves an explanation of the methodology, which can help to
conduct the study in the right direction. Data collection and findings and
analysis are other essential parts of this report which is outlined in section
4. In the end, conclusion and recommendation have been done that can
help to mitigate the identified issues.