Wells Fargo Crisis Management 

Wells Fargo is the world’s leading financial service-providing American multinational company. A scandal broke out in 2016 and it accused the company of opening up fake accounts on behalf of customers without their knowledge and consent. The large-scale scope and controversy jeopardized the trust and confidence of customers and the general public. Today, we’ll discuss Wells Fargo crisis management; crisis events, strategic, and legal consequences; and lessons learned from the Wells Fargo crisis communication strategy case study. 

Crisis Event to Wells Fargo

The CFPB (Consumer Protection Financial Bureau) concluded 3 separate investigations in 2018 and confirmed the scandal of 1.5 million fake accounts on customers’ behalf without their knowledge and consent. Wells Fargo’s employees created accounts for customers without their knowledge and consent in order to meet unrealistic sales targets. 

After creating customers’ accounts, they started selling financial services to particular customers without their knowledge. The revelation and confirmation of the fake account scandal jeopardized the trust and confidence of customers and shocked the entire financial industry. 

Investigation Result

LA City Attorney’s Office, Office of the Controller of Currency, and Consumer Financial Protection Bureau conducted a joint investigation to study the malpractices of Wells Fargo. The investigation showed the following results; 

• Opening millions of fake accounts of customers without their knowledge and consent over the years 
• Selling the financial services to the customers without their consent and then charging them for it 
• Brought heavy fines and settlement fees worth billions of dollars 
• Top executive resigned from their position and faced criminal charges against them 

Strategic Approach of Wells Fargo Crisis Management 

Some of the main strategic approaches of Wells Fargo crisis management and Wells Fargo crisis communication are as follows; 

Denial & Dismissal 

The rumors of the fake account scandal have been circulating in media and financial circles since 2013. The leadership of Wells Fargo remained quiet in the early stages of the crisis; when the LA City Attorney’s Office filed a lawsuit against the company, the bank immediately denied all the charges. 

Delayed Acceptance

In 2016, when three departments concluded their investigation and had sufficient evidence to confirm the accusation; Wells Fargo had no other choice but to acknowledge the investigation’s results and the fake account scandal. However, the bank’s management underestimated the scale and scope of the crisis; they sent one email to all the customers stating whether they were satisfied with the bank’s services or not. 

Unclear Apology 

CEO Stumpf apologized to the public and customers, but he maintained his statement that their objective of cross-selling was to improve the relationship with customers. 

Resignation of CEO and Top Executives 

The negative media coverage and declining stock price led the bank Wells Fargo to force its CEO and top executive to resign from their position. It was the first step when the bank decided to resolve the problem by holding the questionable employees accountable. 

Open Communication & Transparency 

In order to rebuild the trust and confidence of customers, Wells Fargo started an open communication, transparency, and accountability strategy. It started with correcting the mistakes and resolving the problems within the company. The objective was to ensure the bank’s ethical compliance and make the company more accountable and transparent. 

Marketing & Advertisement 

Wells Fargo launched a massive marketing and advertisement campaign to rebuild the trust and confidence of customers. It focused on the company’s strong commitment to responsibility, accountability,, and compliance with ethical business practices. 

Legal Consequences to Wells Fargo Crisis Communication 

Some of the main legal consequences of Wells Fargo crisis communication strategy in the fake account scandal are as follows; 

• OCC and CFPB imposed heavy fines of 185 million USD against the bank for the malpractices and jeopardizing the trust of customers 
• Different top executives of the company faced criminal charges under the fake account scandal 
• Attorney’s office charged the bank with making false statements to the regulatory department, conspiracy to fraud
• Heavy fines and settlement fees increase the financial burdens on the bank to a great extent 

Lessons Learned from Wells Fargo Crisis Management 

Some of the main lessons learned from Wells Fargo crisis communication are as follows; 

• Preferring short-term profit by compromising business ethics is not a good business strategy 
• Immediately recognizing the unethical behaviors and resolving it before it becomes a scandal and goes public 
• Taking accountability and responsibility for the wrongdoings and implementing the transparent strategic approach 
• Protecting the interests and confidence of customers, rather than taking steps without their consent
• Launching an open and transparent communication channel to clear the air and remove all types of misunderstanding and misconceptions 
• Conducting regular audits to ensure compliance with ethical practices 

Conclusion: Wells Fargo Crisis Communication | Strategy Crisis Management Strategy Wells Fargo Case Study 

After an in-depth study of the Wells Fargo crisis management; we have realized that Wells Fargo is the world’s leading financial institution. If you are learning about Wells Fargo crisis communication; then you should keep in mind the abovementioned crisis event; strategic approach, legal consequences, and lessons learned from the Wells Fargo fake account scandal.