As often discussed, a company’s most critical threat is no other than its own employees. IT Security threat is most likely to come from within whether it is negligence, honest mistake or intentional wrongdoing. All of these will lead to one result, data breach which in turn can cause extraction of information, financial loss or system manipulation. In the case of Wells Fargo’s incident occurred this week, the financial giant had to let go 5,300 of its workforce for financial fraud orchestrated internally. According to CNN’s Matt Egan in “5,300 Wells Fargo employees fired over 2 million phony accounts,” Wells Fargo employees submitted applications for more than 565,000 credit card accounts without their customers’ knowledge or consent from which interest charges and overdraft-protection fees, the author states.
Who knows for how long this scam has been really going on? Regardless the time, I give Wells Fargo a lot of credit for uncovering something like this as that proves at least the organization has business/IT governance and security in place against fraud. It can be difficult and time consuming to investigate crimes of this nature. IT and business controls obviously need to be reviewed and improved as they should on regular basis, but at least something exists already to help catch the bad guys. However, that does not prevent Wells Fargo’s reputation from being hurt, loss a lot of money and probably will have to deal will many lawsuits in the process. A much closer monitoring system should be implemented to avoid such an un unfortunate circumstance.
Article can be accessed via:
http://money.cnn.com/2016/09/08/investing/wells-fargo-created-phony-accounts-bank-fees/
Hello Mauchel/class- This type of situations are completely outrageous. I can’t believe Wheels Fargo didn’t noticed about this nation-wide scam before, let alone getting rid of only 5300 people.
I am so glad that i don’t have this as my bank but we should look close to those we have businesses with and see of something like this or similar already happened and how we can prevent it from happening again.
Have a great weekend all.
Thank you,
Roberto.
Wow, one and a half million dummy accounts, over $400,000 in fees, and 5300 employees. How can a bank of this magnitude have such weak internal controls. Knowing that this bank has so much control over a person’s financial record is outrageous. Opening bank accounts and credit cards requires some very sensitive information like SSN, and driver’s license number, and with the bank being able to do it without a customer’s intervention is identity theft on a grand scale. This is exactly why I never bank with them constantly monitor my credit and financial information on a regular basis.
This is definitely more than a wake up call for WF. On thing I know is that there are always another side to the story. We shall see how this is going to develop. WF’s image will take a big hit regardless the nature or direction of the new twist. A positive way to look at it is that how do we know multiple other banks don’t have something similar going on and incapable to even uncover that? At least WF develops some sort of effort to do so.
This is really shocking. If Wells Fargo couldn’t protect their company internally, how could we trust them to control our capital? This will definitely affect WF’s reputation and financial. 5300 employees fired over 2 million phony accounts, who knows 5300 are all the people involved, if there are still some people left in the company they can continue to do the same thing. I don’t know how they going to fix this, but it will be a serious crisis for Wells Fargo.
I used to have a Wells Fargo account, but because they charged me 2 bogus fees I ended up closing the account. What Wells Fargo did is nothing short of stupid. However, I am not going to blame the actual employees that did this. I will blame the lack of IT controls, ethics, and low morals that this company promotes.
These kind of issues start at the top. Many of these employees were pressured by management to meet quota for account openings. In order to save their own jobs, they had to resort into opening these phony accounts. As taken from article below: “Managers constantly hound, berate, demean, and threaten employees to meet these unreachable quotas,” and “When I worked at Wells Fargo, I faced the threat of being fired if I didn’t meet their unreasonable sales quotes every day,”
Obviously, the company culture is the biggest problem here.
http://theweek.com/articles/647873/mindblowing-stupidity-wells-fargo
I am wondering how this could be done without anybody noticing this. When I saw this on the news I was shocked that this was happening. If they have individuals make phony bank accounts, then how can we have faith in them to protect our money.
I won’t comment much on this since I work in the financial industry, but I will suggest you look up Enron. I have a friend who was an Enron energy trader and from what he has said and what I’m reading now there appear to be some similarities.
Wade
This to me almost sounds like a bad policy that was put in place and was interpreted in a way that people found a way to make money for themselves in the way of bonuses. What the article did not mention was how much money they made by moving the money vs fees for insufficient funds and overdraft fees. 200M in fines vs ?. Some businesses are greedy enough to say catch me if you can.