Sample Business Studies Paper on Wells Fargo Unethical Actions

Ethical issues are not always apparent, and this makes it difficult to assess whether an action is morally acceptable or not. This is especially the case when the action has been done unintentionally. Over the years, Wells Fargo, the third largest bank in the US by total assets, has been faced with several problems that amount to a violation of the ethical standards in the banking industry. In addition to other breaches of the code of ethics, in 2016 it was established that the company was involved in one of the biggest cross-selling scandals for the last few decades (Corkery, 2016). Certainly, the Wells Fargo cross-selling scandal clearly demonstrates the need of organizations to be aware of and carefully evaluate their dealings, particularly as regards the ethical considerations and requirements within their specific business environments.

The cross-selling scandal by a section of Well Fargo employees became one of the most significant breaches of banking ethics in the US for the past twenty years. It involved the opening of millions of fake bank accounts for fraudulent purposes. According to Tayan (2019), John Stumpf, the Wells Fargo CEO from 2011 to 2016, issued various directives to the company’s employees to increase productivity. For instance, he introduced the ‘eight is great’ mantra that was supposed to motivate employees to upsell the company’s products to the customers. The mantra implied that employees were required to sell at least eight of Wells Fargo’s banking, insurance, and courier services (Blake, 2016). Meeting these quotas, however, eventually proved burdensome, and some employees resorted to underhanded means of meeting the quotas to satisfy their demanding managers. The employees created more than 1.5 million unauthorized deposit accounts and issued close to 500,000 credit cards. More importantly, they used actual personal information of the bank’s customers to open these accounts without obtaining consent or even inform the customers that there were new accounts linked to their names (Corkery, 2018). As a result, the cards and the fictitious bank accounts racked more than $3 million in maintenance charges, monies that were deducted from the clients’ real accounts. The report by RepRisk (2017) ranked the cross-selling scandal alongside mega banking crises such as the Subprime Mortgage Crisis.

An organization may find itself in an unethical situation that it did not deliberately brought about, as the Wells Fargo cross-selling scandal demonstrates. Wells Fargo may in fact rightfully argue that its employees were solely responsible for the unethical actions and that the company had nothing to do with the unethical act. For instance, a mere directive meant to increase productivity resulted in a large-scale fraud and, as employees took it upon themselves to meet the management’s demands, was subsequently met with a full-blown scandal regarding the entire company’s business ethics. This seemed like reasonable excuse and was likely to get accepted, especially when considering the remedial measure the bank undertook after the scandal (where the bank fired 5300 employees whom it claimed were responsible for the unethical acts).  And yet, the explanation that the employees, and not the bank, were responsible remains grossly untenable since the bank is legally obligated to be aware of all of its ongoing operations, which entails monitoring and detecting any irregularities that may occur. It was the company’s failure to do so that enabled its employees to seek unethical means in order to meet their quotes which has raised the numerous questions and concerns regarding the company’s ethics.

Client’s consent is an essential consideration in the banking industry, and banks are legally required to obtain written consent from the customers whenever dealing with anything to do with their accounts. For instance, Wells Fargo would have been required to obtain unequivocal consent from the customers when the employees created accounts in their names. Moreover, as the bank stands in a fiduciary position to the customer, it is required to ensure that its actions do not harm the client in any way. Thus, by creating fictitious accounts and charging the clients monies for their upkeep, the bank’s employees acted in the company’s best interests (making profits by any means), while inadvertently harming its customer base. However, Wells Fargo failed to uphold its fiduciary duty imposed on it by exposing its customers to rogue employees who violated the expected code of conduct of a multinational bank. Arguably, Wells Fargo did not intend for this to happen as the directive to drive sales did not imply the use of illegal means to achieve the quota, but the employees decided to use underhanded means due to the pressure from above. Although Wells Fargo, as a company, did breach the code of ethics and gravely harmed their customers by charging underserved fees, its management distanced itself from the scandal and, to prove their innocence, fired 5300 employees who, the company claimed, were responsible (Egan, 2016).

Yet, an organization such as Wells Fargo should be able to protect its customers from rogue employees at all times. Every banking organization should have in place proper quality control mechanisms and efficient systems of detecting and resolving irregularities, something close to a policing unit, as banking fraud represents a highly complex and sensitive case. In the Wells Fargo case, the bank failed to notice and address the unethical actions of its employees which was the main reason why it was held responsible for breaching the duty of care and fiduciary duty it owes its customers, even in cases where it can rightly claim not to have intended it.  Certainly, crises such as these ones have to be avoided at all costs since they affect not only the banking institution and its customers but also the entire banking industry, as they create an aura of distrust and lack of confidence in the sector, which may have severe consequences. In this regard, banking institutions, and in this case, Wells Fargo should be extra-vigilant in their operations to avoid such scandals. However, according to Wells Fargo, the scandal that emerged as a consequence was inadvertent, at least from the executives’ point of view, since the unethical actions were conducted without the knowledge of the senior management (Egan, 2016).

Organizations need to evaluate their operations continually to ascertain that they are not only efficient but also free of any compromise that may result in inadvertent unethical crises. When organisations focus too much on profit taking, they may be oblivious to illegal and immoral actions that happen within the organization, as Wells Fargo cross-selling scandal demonstrated. Therefore, firms should have efficient quality assurance departments that streamline productivity without using underhanded means. Also, organizations should take responsibility for the unethical actions of their employees at all times, regardless of whether the corporation intended them to occur or not.



Blake, P. (2016). Timeline of the Wells Fargo accounts scandal. Retrieved from

Cancialosi, C. (2016). Wells Fargo and the true cost of a culture gone wrong. Retrieved April 18, 2019, from Forbes:

Corkery, M. (2016). Wells Fargo fined $185 million for fraudulently opening accounts. Retrieved from

Egan, M. (2016). 5,300 Wells Fargo employees fired over 2 million phony accounts. Retrieved from

RepRisk. (2017). RepRisk Report – 2006-2016: Ten years of global banking scandals.  RepRisk. Retrieved from

Tayan, B. (2019). The Wells Fargo cross-selling scandal. Stanford Business.