As an American international financial institute, the Wells Fargo is considered one of the largest banks in the world and is ranked second in deposits. As a financial institute that many had become loyal to enabling the company to grow, some of its personnel took advantage of their customers and earned themselves finances that were illegal. For the issue to become scandalous, fake bank accounts were opened using the names and details of the bank’s customers without their knowledge and consent. As a result, most of them incurred costs allocated by the banks without knowing they came to be and why. Besides, the individuals responsible for the opening of the accounts went ahead and applied for credit card accounts, activated and issued debit cards and enabled online banking services through the creation of emails all with customer information (Comrie, 2017). It is through this acts that Wells Fargo made millions of revenues before it was unveiled.
Ethical Theories
Ethical theories can be defined as the approaches used to reveal the moral beliefs and systems of individuals or a group. In identifying the ethical principles relevant to the Wells Fargo scandal, we must understand who the affected or involved stakeholders are. They include Wells Fargo’s senior officials, employees, customers and customer’s families. The egoism ethical theory in business is viewed as the rightful goals of any enterprise that expects them to make profits. Hence under this theory, Wells Fargo acted ethically since it fulfilled its business goal of making profits and earning revenues. Under the Utilitarianism theory, the company together with its key stakeholders must ensure that any act considered must maximize happiness to everyone involved hence minimize unhappiness to all the affected which was not the case to the multitude of customers and families that were affected.
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Deontology, on the other hand, bases the morality of an act on an individual’s roles and does not focus on the rightness or wrongness of the consequences of the actions. Hence, according to this theory, Wells Fargo was unethical because of their actions that were morally wrong. The categorical imperative is a theory that dictates businesses to treat customers as ends and not their means to earn exaggerated revenues; Wells Fargo failed to abide with this theory because it did directly the opposite. As highlighted by Salazar, Dofour, and Carpentieri (2015), virtue ethics is considered as the desired traits that may lie between two extremes. Some of the AICPA Code of Professional Conduct include exercising sensitive and professional moral judgments and serve the public with honor, integrity, trust, and commitment to other principles.
As a CPA, some of the actions I would have taken in response to the case facing Wells Fargo would include, reimbursing the affected customers who incurred unexpected costs. Through a court process, I would ensure all the fake accounts are closed since it is without a doubt no client would desire to keep it running. Lastly, I would ensure that security is maximized in the case of handling customer information. In reference to the business theories, the main ethical theory that supports my actions would be utilitarianism and AICPA Code of Professional Conduct.
Conclusion
As a financial institute, Wells Fargo is expected to protect its client from any form of fraud that might befall them. On the other hand, bank customers must feel secure to allocate their resources that are vital including their details. Hence the scandal of accounts broke the trust that any financial institute requires to have with its customers. Moreover, the actions in most cases may have developed mistrust to the extent that many affected customers walked out on the business relationship they had with Wells Fargo. While it is important for any business entities to be innovative and find ways in which they can enhance revenue growth, initiating scams and fraudulent methods that will cost its key stakeholders – the customers are one of the most unethical methods that can be deployed.
References
Comrie, H. (2017, March 15). Wells Fargo Fake Accounts Scandal . Retrieved June 8, 2017, from Seven Pillars Institute - For Global Finance and Ethics: http://sevenpillarsinstitute.org/case-studies/wells-fargo-fake-accounts-scandal
Salazar, H., Dofour, D., & Carpentieri, G. (2015). Alleged Fraud by Wells Fargo Employees (2015) . Retrieved June 8, 2017, from Business Ethics Case Analyses: http://businessethicscases.blogspot.co.ke/2015/11/los-angeles-sues-wells-fargo-alleging.html
