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Wells Fargo’s promise of “openness” is the height of hypocrisy

Screen Shot: Wells Fargo site

Wells Fargo employees opened 2 million fake bank and credit card accounts to pad their paychecks with bonuses, according to regulators. The bank will pay a $185 million settlement and has fired 5,300 people. “When we make mistakes, we are open about it,” the CEO said. Are they? Actually, it’s the opposite.

By any measure, this is a massive violation of customer trust. According to the Wall Street Journal, workers padded their bonuses by opening new accounts for customers without their permission, inventing accounts, and even issuing credit cards with no authorization. In many cases, customers didn’t even know they had new accounts or were being charged fees, but at least 1,000 had complained.

In an email to employees, CEO John Stumpf explained what happened (sort of). Here’s the part of that email explains how open and responsible Wells Fargo is.

The news will be widely reported, and I want to be sure you hear from me on where we stand and why we are taking these steps.

Specifically with today’s settlements, we have agreed to pay penalties and agreed to an independent review of our sales practices.

Our entire culture is centered on doing what is right for our customers. However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action. Today’s agreements are consistent with these beliefs.

That clear, simple, and admirable. But is it true? When 5,300 employees are fired, perhaps the culture is part of the problem. But let’s see if John Stumpf is true to his word. Let’s look at the substantive part of the press release from the company (I’ve highlighted the evasive and weaselly language):

Wells Fargo Issues Statement on Agreements Related to Sales Practices

SAN FRANCISCO–(BUSINESS WIRE)–Wells Fargo Bank, N.A., a subsidiary of Wells Fargo & Company (NYSE:WFC), reached agreements with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Office of the Los Angeles City Attorney, regarding allegations that some of its retail customers received products and services they did not request.

The amount of the settlements, which Wells Fargo had fully accrued for at June 30, 2016, totaled $185 million, plus $5 million in customer remediation.

The company issued the following statement related to today’s news:

“Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us. Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.

Our commitment to addressing the concerns covered by these agreements has included:

  • An extensive review by a third party consulting firm going back into 2011, which we completed prior to these settlements. The review included consumer and small business retail banking deposit accounts and unsecured credit cards opened during the period reviewed.
  • As a result of this review, $2.6 million has been refunded to customers for any fees associated with products customers received that they may not have requested. Accounts refunded represented a fraction of one percent of the accounts reviewed, and refunds averaged $25.
  • Disciplinary actions, including terminations of managers and team members who acted counter to our values.
  • Investments in enhanced team-member training and monitoring and controls.
  • Strengthened performance measures that are tied to customer satisfaction, loyalty and ethics.
  • Sending customers a confirming email within one hour of opening any deposit account, and sending an application acknowledgement and decision status letter after submitting an application for a credit card.”

The confirmation email in the last bullet is a positive step, given what happened. But the rest of this statement fails to own up to the problem. This is not a real apology, since it admits very little. The regulators’ and prosecutors’ statements are “allegations.” The agreement is “consistent with” its commitment to customers. They’re doing this “to [put] the matter behind us.” They express regret . . . but not for anything specific, only for “any instances” where customers were defrauded. And they defend something like 2 million instances of fraud by noting that they offered refunds to “a fraction of one percent” of all the accounts.

Even the statement in the press release a statement from “the company” and not the CEO.

This is a non-apology that admits little.

To top it all off, the statement links to a page on Wells Fargo’s site for consumers that says, in big letters:

When it comes to your finances, it feels good to know what’s going on

For millions of Wells Fargo customers wondering what actually is going on, that’s not going to be very reassuring.

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  1. This isn’t the best piece of PR writing, but also isn’t the worst. I worked in corporate communications for financial services companies (not Wells Fargo) and can understand why the statement is written that way. I’m sure it is because of the lawyers and the need to avoid additional legal liability. The release could be more direct and specific, but it does cover the basics — what happened, who’s affected, who’s responsible and what the company is doing about it. I am not justifying or minimizing the terrible fraud, theft and breach of trust, but given the likely legal limitations, how else would you suggest that Wells Fargo alter and improve its statement (aside from the passive voice and weasel words that you already noted)?

    1. Dan, it was absolutely clear to me that lawyers made them write this way.

      The problem isn’t really the release. The problem is that the CEO promises the employees that there is a culture of openness and taking responsibility, then fails to be open and take responsibility.

      If the statement included something like “I’d like to list out everything we did wrong, but for legal reasons, I cannot do that. However . . . ” that might help . . . a little.

  2. If there’s anything more ludicrous than “air quotes” around an apology that are not attributed, I don’t know what it is. Anyone notice the obvious missing component? An apology. I agree Josh, this only goes 25% of the way to being an adequate response.

  3. Also missing from the story:

    $5 million customer remediation: Customer account fee refunds totalled $2.5 million, so where did/does the other $2.5 milllion go, why and how will it be used.

    Wells Fargo says it fired more than 5,300 employees and managers over a 5-year period, but according to reports the lawsuit wasn’t filed until last year. So if they knew of the problem and had been taking action for 5 years, why did they wait to get caught? Why didn’t they self report? Talk about a trust killer.

  4. If you employ quotation marks it generally indicates that a real human being spoke the words and the words will be attributed to that human being. In this case there is no human being cited. Um, so why the quotes?

  5. I don’t understand this whole indignation around breaking customer trust (or trust killing) – Do reasonable, well-informed people still trust those institutions? Seriously? To me that’s like people getting their panties in a twist over privacy breaches with online services (namely, Facebook) – who in their right minds still have any expectations of privacy in a digital world? Or of trust in the current financial one?

  6. With admissions of guilt in recent years by both JP Morgan and, now, Wells Fargo no American bank can claim ethical purity. If it’s true that Wells discovered fraudulent activity as long as five years ago, one might have expected a lecture from its largest shareholder – Berkshire Hathaway’s Warren Buffett.