Choose a recent news/media article that has been published within the last 3 months that concerns a business ethics issues and discuss about it.
The report will discuss in detail about the recent surrounded scandal of Wells Fargo and the important lesson it teaches about running an ethical business. The company was also trying to function or run on an ethical business, despite the biggest mistake (Ayres and Ayres, 2012). The company has completely side-lined the pitfalls and challenging investments that have actually plagued many other banking institutions.
Summary of the article
Many years ago, the company took a decision that it was not performing up to the mark in operations like cross-selling. The process of cross-selling actually means getting more and more potential consumers who use single service, like checking or using many other services like savings or credit cards. The company worked to create a particular strategy to motivate cross-selling which also involved the workforce in communicating the consumers about many other services and products offered by the bank (Banaugh et al., 2012). To further motivate the workforce to grow the program, the company hired the time-honoured strategy of giving certain incentives to the workforce who got success at the time of cross-selling. The problems started from this point for the bank. The workforce not just answered to the incentive by the process of cross-selling but they also produced many fake accounts in the name of current customers of the company. The problem went out of hand and in order to handle the issue the first reaction of the bank is to fire more than five thousand employees and further lost the CEO of the company. The bank here made a lot of errors consisting not acknowledging the issue publicly enough and also not appointing proper control that can timely detect the fake accounts (Baumgart, 2015). However, the unique thing is that the issue is that so many members of the workforce were part of the scandal.
Key ethical issues
The Bank Wells Fargo account fraud case is constant controversy and it was brought up by the development of so many, in fact, millions of frauds checking and savings accounts on part of the client of the banks because taking their permission. There is a number of regulatory bodies, like Consumer Financial Protection Bureau also called as CFPB has fined the organization which was combined with $185 million as an outcome of illegal actions and the organization also faced added suits in criminal and civil court (Florencio and Herley, 2012).
The fraud came to notice when the clients of the company started to realize the fraud right after being charged for unanticipated fees as well as getting unexpected debit or credit card. Starting reports have also blamed people Wells Fargo branch employees and the management of the issue and sales incentive related to selling different solution or products. the blame was later moved to top-down pressure from high-level managers to open any number of accounts as possible via the function of cross-selling (Hiltzik, 2016).
The company took some risk in the years which lead to the financial crisis of 2008, which further led to some image of the stable on Wall Street as well as in the world of finance. The stable reputation of the company was obviously got a huge blow and tarnished because of this widespread fraud and so many coverages. In April this year, other allegations against the bank came into the picture, consisting forcing the clients to buy unimportant policies like auto-insurance, with an option of added one billion dollars of fine.
Has the most appropriate ethical decision been made? If so why? If not why not?
The scandal actually erupted from efforts in cross-selling where the workforce developed so many new accounts in the name of the clients with their permission like new credit card accounts just to meet the goals. The company is taking a lot of efforts to prove that the company is still doing operating an ethical manner to the best of their capacity. The ad campaign of the company communicates the message of a new turning point of the company by communicating and right expressing how the bank is now fundamentally a different organization (Mathes et al., 2014). The company also says in its promotional message that the progress of the company is solid and yet they identify the work they further need to do to make it better for the customers and the market.
The bank is running its campaign on TV all across the country and is also covering print and digital platforms along with mobile channels where the analytics of the campaign says that the complete promotional campaign will cost them a lot of money, maybe in millions.
The first commercial released by the bank after the scandal is named as Trust which is actually recalling the origin of the organization in 19th century as they were considered as trusted carrier of gold as well as many other goods based on stagecoach by noting that message of the company which says we always find the way until we actually lose it. The message was clearly in reference to the controversy. The company is claiming through their promotional message that they are making a whole recommitment to the consumer, fixing all the problem and further making things correct and putting an end on product-sales objectives for branch bankers so one can pay attention the level of satisfaction (McCormick and Jaffe, 2013). The company also communicated they realise their mistake and trying to find and fix problems in a proactive manner, since earning back the trust is considered as the first priority of the bank.
However, the bank’s campaign faces headwind consisting that consumers try to read as well as hear about the controversy of the company. For example, the bank also agreed that to pay $480 million to establish a class-action lawsuit which was filed by the stakeholder who claimed and blamed the organization of fraud in securities associated to the scandal. Also, recently, the federal regulator also hit the company with one billion dollars of penalty for many other kinds of abuse that damaged the company and other auto-loan borrowers.
Ethical decision-making process aligning the opinion by recognizing the most important of the seven moral philosophies outlined.
Following are the steps that must be taken in ethical decision-making procedure: –
Conclusion
The case of Wells Fargo clearly shows the power of payment as aligned with performance. It is sad, that it also shows the power to make payment for the performance when paying for the wrongdoings. The system of the performance of many companies are the supervised hostages of the fortress of HR. managers who want to be ethical and efficient, companies require to further tear down the walls developed before actually becoming the part of silly conversations (Yan, 2013). It is very important for any organization to avoid the sort of ethics-based crisis that the company has to face while taking charge of the company’s reward system. It is also important to leave the company with a great source of impact on the workforce that lies in the hand of the bureaucracy of the company
References
Ayres, I. and Ayres, I., 2012. Studies in Contract Law. Foundation Press.
Banaugh, M., Potter, D. and WOOD, G.L., Wells Fargo Bank NA, 2012. Method and apparatus for integrated payments processing and decisioning for internet transactions. U.S. Patent 8,204,826.
Baumgart, M.D., First Data Corp, 2015. Methods and systems for online fraud protection. U.S. Patent 8,943,549.
Florencio, D. and Herley, C., 2012. Is everything we know about password stealing wrong?. IEEE Security & Privacy, 10(6), pp.63-69.
Hiltzik, M., 2016. How Wells Fargo exploited a binding arbitration clause to deflect customers’ fraud allegations. The Los Angeles Times.
Mathes, C., Hall, B. and Toth, M., Wells Fargo Bank NA, 2014. System and method for detection and prevention of computer fraud. U.S. Patent 8,695,097.
McCormick, M. and Jaffe, F., Wells Fargo Bank NA, 2013. Fingerprint check to reduce check fraud. U.S. Patent 8,582,838.
McCormick, M. and Jaffe, F., Wells Fargo Bank NA, 2016. Fingerprint check to reduce check fraud. U.S. Patent 9,305,413.
Silver-Greenberg, J.E.S.S.I.C.A. and Craig, S., 2013. Madoff aside, financial fraud defies policing. The New York Times, p.A1.
Yan, S., Wells Fargo Bank NA, 2013. System and method for detecting account compromises. U.S. Patent 8,600,872.
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