Wells Fargo's Reputation Crisis Deepens, Fake Accounts And Sexual Harassment

Many traditional banks around the world are struggling to catch up with more tech-savvy companies quickly digitizing financial services. The industry’s fintech race requires overhauling the banks’ shady reputation, investing in a more inclusive company culture and guaranteeing online services will be trustworthy.

Despite investing heavily in fintech innovation, Wells Fargo is struggling with trust and transparency on multiple fronts.

According to The New York Times, thousands of Wells Fargo customers were enrolled in online bill payment services without consent, possibly as many as 528,000 cases. Wells Fargo reportedly said it will refund customers for unauthorized enrollment to the tune of $910,000, covering their extra account fees and charges. To make matters worse, an internal review found there were 67 percent more potentially fraudulent bank accounts than Wells Fargo previously estimated. The review found 3.5 million suspicious accounts.

Wells Fargo is currently embroiled in ongoing investigations with the Justice Department and state attorney generals, since the company acknowledged earlier this summer that thousands of employees created unauthorized accounts with customers’ names. Sometimes, customers only discovered the misconduct after being charged unexpected fees.

“We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank,” Wells Fargo CEO Tim Sloan said in a statement. “To rebuild trust and to build a better Wells Fargo, our first priority is to make things right for our customers, and the completion of this expanded third-party analysis is an important milestone.”

Bloomberg reported the bank plans to pay $10.7 million in addition to previously established lawsuit settlements for customer compensation.

Beyond retail banking, Wells Fargo has another scandal to deal with regarding its company culture. Former mortgage loan processor Jessica Nibert claims Wells Fargo took no action when she reported sexual harassment from her manager. The Charlotte Observer reported Nilbert’s lawsuit cites examples like the manager asking her to cook for him in the nude, calling her after hours and saying he likes to think of her in the shower, as well as asking her to wear skirts to work so he could “sneak her into a storage room.”

Local Wells Fargo managers were allegedly aware of the issue, but told Nilbert to just ignore it. Nilbert said she was eventually fired in 2016, after a text message from her boss told her to start looking for work elsewhere.

So far, the bank has been quiet about this controversy. Tom Goyda, Wells Fargo senior vice president for consumer lending communications, declined to comment on Nilbert’s case in an email. Instead, he offered International Business Times a generic quote about striving for a company culture where people feel respected and “empowered to speak up.” He offered no comment on new plans, policies or efforts to achieve that goal. Nor did he condemn the type of behavior described in the lawsuit or offer explicit support sexual harassment victims.

On a broader scale, both scandals reveal systemic problems. Wells Fargo employees made those fraudulent accounts under pressure to meet aggressive quotas. Plus, as the response to Nilbert’s case shows, Wells Fargo is hardly rushing to make any bold moves or statements regarding emotional well-being in the workplace.

Although Wells Fargo recently became the first major American bank to appoint a female chairman, some reports have criticized disparate punishments doled out to the former head of community banking, Carrie Tolstedt, compared to her male peer involved with the fraudulent account scandal, former CEO John Stumpf. Transparency is about more than just reimbursing customers and firing culprits after crisis strikes.

Meanwhile, the San Francisco fintech startup Blend is teaming up with Wells Fargo to help the bank offer mobile mortgage applications. This type of online loan support is long overdue. But the recent move is overshadowed by ongoing controversies regarding online retail banking accounts and personal stories from employees behind the scenes. The bank's public statements have focused on customer support, while plans to address issues with the company culture remain glaringly absent.

As a result of that reputation, the Santa Fe New Mexican reported some city councilors were reluctant to renew their city’s partnership with Wells Fargo this week, because the company’s corporate culture might not align with the local community’s values. The bank’s financial support for the Dakota Access Pipeline was particularly controversial. “It’s impossible to ignore the national issues, the corporate issues that have occurred,” Councilor Joseph Maestas told The Santa Fe New Mexican. The city’s four-year contract extension eventually went through, but it could still be cancelled by either party with 60 days notice.