Where was the huge scandal in the Wells Fargo scandal?
(I put this question here because I’m focusing more on the financial aspect for consumers, not the political aspect for the government. Sorry if it’s not a perfect fit, but it seemed more appropriate to put it here than e.g. Politics.SE.)
My understanding of the Wells Fargo scandal that unfolded in the past year was that Wells Fargo ended up opening more bank accounts for people than they asked for.
Yeah, okay. That wasn’t nice of them. I’d have gotten very annoyed if this had happened to me.
But why was this SUCH a big deal? Why did everybody completely freak out?
I imagine it’s an annoyance for a customer to keep track of this and deal with the statements, sure.
And I guess customers may get hit with fees they didn’t expect, which is bad, okay.
But giving customers more paperwork than they can handle and hitting them with fees they don’t expect has been the modus operandi of all sorts of American companies (and especially banks here) for… as long as I’m aware, basically. And lawmakers don’t seem to have even batted an eye at this.
What suddenly made this event such a big deal? It’s not like they leaked your personal identity or something; everything seemed pretty contained and reversible as far as consumers were concerned.
Basically, customers ended up with 8 rows in their database instead of just 1 row. Is this that scary?
Even hacks of corporate databases containing personal customer information don’t seem to dominate press headlines as much as this one did, and those are the kinds of things that ruin people’s lives permanently. Yet you don’t see thousands of employees getting fired over that, yet somehow this resulted in the whole country freaking out. Why? What am I missing?
The Wells Fargo scandal was and still is a big deal because Wells Fargo opened over 1.5 million unauthorized bank and credit card accounts. The credit card accounts were opened without authorization, which means people’s credit scores and reports were pulled without permission. That is considered fraud and identity theft. Other than the legal side of it, by opening more bank accounts without authorization, it was showing “synthetic growth”, which resulted in an inflated number when quarterly and annual performance numbers were reported. This caused people to invest more in Wells Fargo stock, not knowing that the growth in stock was not organic. After the scandal was uncovered, stocks decreased. However, the root cause of this can be traced to the culture at Wells Fargo, where customer service reps (i.e. bank tellers, and store operations employees) were faced with the challenges of meeting quotas that could be considered a stretch. As a result, faced with pressure from upper management, they opened unauthorized accounts.
In addition, these unauthorized accounts cost consumers money either because credit cards had balances, or bank accounts did not meet a minimum balance. It is not about ending “up with 8 rows in their database instead of just 1 row” as OP wrote. It is about stealing consumer money and committing fraud and stealing the consumer’s identity.
*Suggestions and constructive criticism are welcomed in improving my answer.