Question

How did the Wells Fargo scandal affect the company financially?

Answer 1

Wells Fargo is an American MNC that deals in providing services related to investing, banking, mortgage, personal and commercial financing, etc.

Wells Fargo scandal was related to the creation of UnAuthorized accounts by the employees of the company on behalf of customers. They have been issuing credit cards in the name of customers without their consent. The idea behind thsi was that the company had its employees complete the targets of opening more and more customer accounts and if they failed to do so they were either fired or were not satisfied with the pays or their jobs. For having their targets completed, employees started opening forged accounts in the name of customers by using forged signatures. This carried on from 2002-2016.

Company admitted to have opened as many as 3.5 Million fake accounts in customer's name by 2017.

Following the lift of the scandal approx 5000 employees were fired.

Financial Affect of the scandal on company:

* Fine of $185 Million was imposed on company.

* Criminal lawsuits of $2.7 Billion were faced.

* Consumer Financial Protection Bureau fined $100 Million in 2016.

* They paid refunds of 2.5 Million to Customer

* $6.1 million for wrong fees and charges to customers.

* $142 million for compensating customers for class action settlement.

* $480 million for class action lawsuit.

It lost its major investors and California suspended its relationship with the bank. Following this Chicago also disinvested from the bank.

In 2018, it was announce that it had already paid 3 billion iin settlement.

Following this the company in 2019 launced a few Ad Campaigns to show that they have a new working environment and policies.