Running head: UNETHICAL BUSINESS PRACTICES 1

UNETHICAL BUSINESS PRACTICES

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Unethical business practices

Unethical business practice are practices carried out in a business that lie below the

minimum standards for business code of conduct. There are various companies and

organizations which have practiced unethical business practices. In this essay we are going to

focus on Wells Fargo as an organization with unethical business behavior.

Wells Fargo was founded in March 18, 1852 by Henry Wells and William G. Fargo

to built an innovative start-up to help build business and manage money in a rapidly changing

world. Wells Fargo operates 12 museums. Wells Fargo is an American multinational

financial services organization whose corporate headquarters are based in San Francisco,

California and operational headquarters in Manhattan with managerial offices all over the

United States and overseas. The firm’s primarily subsidiary is Wells Fargo Bank which is a

national. There has been a massive scandal after one another at Wells Fargo. The fake

account scandal case on September 2016 at Wells Fargo was on of the unethical business

scandal at Wells Fargo. 1.5 million fake deposit accounts were created and more than

500,000 credit cards which were fake were made with customer’s names but without their

permission. This led to a fine of $ 185 million fine from the consumer financial protection

bureau, (Glazer, 2016). More than 5300 low-level employees were fired for creating these

accounts. The CEO John Stumpf was fired and this led him to be compensated with 41

million. These led the company to pay $142 millions to the affected customers, (Mims, 2017).

In September 2016 the department of justice slapped Wells Fargo’s wrist for

improperly repossessing the cars of members of the military. They failed to obtain court

papers prior to repossessing cars. These led the bank to pay over $20 millions in fines to the

OCC and made restitution of over $10 million to the wronged service members. And in April

2017, OSHA ordered Wells Fargo to pay $5.4 million to their former wealthy manager who

was fired in 2010 after he reported all fraud cases to a hotline. In august 2018 Wells Fargo
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was forced to pay a fine of $2.1 billion after the allegations that the Wells Fargo had

improperly represented mortgages it had sold to investors during the housing bubble. Wells

Fargo being the last bank to deal with these issues, these was unethical business scandal,

(Cavico, & Mujtaba, 2017).

According to the study on Wells Fargo unethical behaviors, the unethical behaviors

led other employees to be fired. Firing employees is not an ethical behavior since the process

will not solve the unethical practices in the firm. Taking a case of whistleblower who was

fired in 2010 won his case and got paid some money. This shows that firing employees is not

justifying. To rectify any issues in the firm, a wise decision will be made concerning the

punishment one who involves himself in unethical practices to be justified. The scandals

which faced Wells Fargo due to unethical business practices led the banks to lose trust both

internally and externally shareholders. Customers also lost trust towards Wells Fargo

business. It is difficult for a firm to identify unethical business practices carried out in the

corporate since the unethical practices makes a firm to gain profits hence it will be difficult to

realize unless another firm audits the corporate or firm’s operation. The unethical business

practices led to conflict in the firm which led employees to be fired. Taking the case of Wells

Fargo firing of whistleblower to report the matter which at long last made Wells Fargo to lose

the case and was forced to pay whistleblower some cash as a form of compensation, (Elson &
Ingram, 2018).

To conclude, Wells Fargo faced major banking scandals due to the existence of

unethical business behaviors in its management practices and decisions made in employee

priorities. The scandals led to a massive loss to the Wells Fargo company in terms of finance.

A business may not determine or detect unethical behaviors in the firm. Some punishments

which relate to unethical behavior are not the solution to solve the unethical business

behavior.
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Reference

Cavico, F. J., & Mujtaba, B. G. (2017). Wells Fargo's fake accounts scandal and its legal and ethical

implications for management. SAM Advanced Management Journal, 82(2), 4.

Elson, R. J., & Ingram, P. (2018). Wells Fargo and the unauthorized customer accounts: A case

study. Global Journal of Business Pedagogy, 2(1), 607-639.

Glazer, E. (2016). Wells Fargo to pay $185 million fine over account openings. The Wall Street

Journal, 8.

Mims, J. H. (2017). The Wells Fargo scandal and efforts to reform incentive-based compensation in

financial institutions. NC Banking Inst., 21, 429.