1. Running head: WELLS FARGO SCANDAL
Wells Fargo Scandal: How Will They Recover?
PR Counselor: Bri Olson
Grand Valley State University
CAP 320
Professor Rodarmer
December 6, 2016

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Wells Fargo Scandal: How Will They Recover?
Background
Formerly one of the most well-known banks in the U.S., Wells Fargo has gotten more
attention in the past three months than ever before but, not in a good way. On September 8, 2016,
Wells Fargo paid $185 million in fines for its employees’ wrongful practices. Those wrongful
practices refer to the estimated two million fake accounts created secretly by Wells Fargo
employees (Shen, 2016). Wells Fargo did not make a small mistake, the company did not do this
on accident; rather, leaders have knowingly involved their brand in unethical practice since 2011
(Shen, 2016).
The law firm group, Shearman & Sterling, are currently working with Wells Fargo to
attempt to prove that they are not worthy of serving jail time. Unfortunately, these investigations
have been estimated to take months to conclude. Since September 8th, 5,300 employees have
been fired and the CEO John Stumpf has stepped down and forfeited $41 million in unvested
equity (Gonzales, 2016). This bank crisis is in the reactive stage of the conflict management life
cycle because it is dealing with litigation and conflict resolution. This study will break down
Wells Fargo’s scandal using the RACE process while offering counsel when no information
about the case is available.
PR Problem
The Wells Fargo scandal shows many different ways that the company has been
unethical. The underlying cause responsible for this scandal is an employee relations issue. Wells
Fargo employees say they were under extreme pressure and expected to reach unachievable sales
targets by their supervisors. This is where counsel to quit Wells Fargo would come into play for

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employees. Although upper management is responsible and mostly to blame for the opening of
fraudulent accounts, the employees committed the act instead of knowing when to walk away.
The biggest problem they are faced with currently is fixing their mess for the benefit of
their affected customers instead of themselves directly. Once the company makes things right
with its affected customers through compensation, Wells Fargo can then begin to restore their
reputation. Instead, the researcher has found that Wells Fargo has acknowledged the issue and
apologized but has done nothing to fix it. A constraint to this study is not having the estimated
number of affected customers which is perhaps due to the long investigation process. However,
there has not been any personal effort by Wells Fargo to explain itself to customers. Instead,
Wells Fargo apologized to customers through the media when the former CEO John Stumpf said,
“I want to apologize for violating the trust our customers have invested in Wells Fargo. And I
want to apologize for not doing more sooner to address the causes of this unacceptable activity”
(Sullivan, 2016, para. 6). Using the media to apologize generically is not wrong but it should be
accompanied by some sort of personal apology to affected customers. With that being said, the
new CEO of Wells Fargo, Tim Sloan, said to “Expect more proactive customer outreach in the
next few weeks” (Glazer, 2016).
Going back to being unethical, Carrie Tolstedt, who managed the branch responsible for
the fake accounts, left this past July with a $125 million retirement package (Egan & Isador,
2016). In this specific case, walking away from customers who were wrongfully charged under
Tolstedt’s watch makes the scandal worse. Her “retirement” looks just as phony as the fake
accounts do and reflects negatively on the brand as a whole. She should have stayed to help clean
up the mess, forfeited her pay (as the CEO did) and acknowledged and apologized for her lack of

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a job well done. Instead, an unknown number of customers face the side effects that come with
having low credit scores and/or overage charges due to the fake accounts (Sullivan, 2016).
Research
The previous Chairman and CEO of Wells Fargo, John Stumpf, has said that he is
accountable, therefore he has publicly owned the crisis. However, he has not fixed it. Stumpf is
essentially the face of the Wells Fargo brand that has been tainted and viewed as untrustworthy.
Not necessarily using formal research, the bank has concluded that the majority of customers
want Stumpf to resign. Therefore, Stumpf has now been replaced by President and Chief
Operating Officer Timothy Sloan. However, Sloan has been with Wells Fargo for 30 years so it
is unclear whether he was behind the scandal as well. Sloan said he had no knowledge of issues
outside the retail bank and nevertheless, Sloan has apologized. However, it would be beneficial
to the recovery stage to survey Wells Fargo customers to determine whether all top level
executives should be replaced for a fresh start or only the top level executives who have been
proven guilty upon investigation.
Before that survey can take place, research must be done on who and how many impacted
customers there are. Wells Fargo needs to know their facts before they personally reach out to
customers individually which is probably why it is taking them so long to accomplish. They
should research how many fake accounts a customer has opened in their name (if any), how
much they have been charged in terms of overage fees, and when and how much Wells Fargo
plans on reimbursing them. Because it is taking Wells Fargo so long to identify the affected,
three Utah residents have filed a class action lawsuit against them which could have been
prevented had Wells Fargo released plans for compensation earlier.

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With customers aside, Wells Fargo did hold listening tours as a form of research in order
to better understand the roles of each member in management and what struggles they were
faced with during the scandal. From the results of the listening tours in 15 cities with over 1,500
team members, results must have inspired CEO Tim Sloan to come up with some internal ethics
surveys for employees. They also must have had to conduct similar research internally in order to
know which of the (roughly) 5,000 employees they needed to fire. Although some, but not all,
research has been done yet, Wells Fargo really struggled with being transparent in the beginning
of the scandal’s fall out. However, recently with Tim Sloan as newly appointed CEO,
transparency has been a stepping stone for recovery.
Objectives
Tim Sloan says his primary objective is to “restore trust in Wells Fargo, including pride
in our company and our vision” (Sloan, 2016, p. 13). Since Tim Sloan isn’t a public relations
professional, counsel to him should be provided about making this important objective
measurable. For example, Sloan needs to identify a deadline to reach this objective by and
establish a percentage to increase consumer trust by. Sloan should also cater this objective
toward the affected customers of the scandal instead of being broad. The new objective could
state, “Restore brand trust with affected customers and stakeholders by increasing consumer
satisfaction by 50% by March 2017.” With the change of this objective, primary research would
need to take place to measure current consumer satisfaction to consumer satisfaction after
appropriate strategies and tactics are carried out.
One executive asked how the scandal will measure its efforts to rebuild trust with
customers. Sloan says, the “main focus is measuring remediation and consumer sentiment toward
Wells Fargo” (Glazer, 2016, para. 14). There are a few other objectives Wells Fargo has set for

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themselves but similar to the objective above, it lacks all of the necessary components that make
a good objective. Therefore, the researcher created a series of objectives to that address being
more ethical in the future, regaining trust, and satisfying consumer/investor relations.
Objective 1
The first objective is to find out how many affected customers and/or investors there are
by December 2017 and apologize personally.
Objective 2
The second objective is, increase consumer trust by 50% by March 2017.
Objective 3
The third objective suggested is, improve employee relations and ethical training by
100% by January 2017. With these three objectives, the reputation and ethical practices of Wells
Fargo should be revived.
Strategies
Wells Fargo spokeswoman Jennifer Greeson Dunn said multiple investigations were
underway in regards to the scandal, including an internal review. With that being said, a strategy
the bank has proposed will “expand the internal review of accounts and refund process by two
years” (Egan & Isador, 2016, para. 1). This strategy means opening up the investigation to two
years prior to the fraudulent activity. This idea would hopefully bring justice to the members of
management who were in on the scandal, even if they were not caught and fired already. This
strategy would aim to reassure consumers who have a negative outlook on the bank and satisfy
Objective 2.
On Wells Fargo’s website, the company released a PowerPoint PDF on November 3rd
finally being transparent about their strategic planning. One of the strategies the company wants

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to focus on is improving customer experience by developing deeper relationships with them
which also aims to meet Objective 2. Another one is establishing enhanced coaching for team
members (employees) because there has been employee concern regarding the bank’s ethical
policies. Therefore, that strategy is useful for Objective 3. Along with fulfilling Objective 3 and
its need to improve employee morale, Wells Fargo’s Chief Risk Officer Michael Loughlin wants
risk employees to have “better coordination, earlier identification and faster escalation” (Glazer,
2016, para. 19).
To fulfill Objective 1, Wells Fargo decided to use outbound calling to confirm the
accounts they have on record are the accounts the customer is aware of and still wants opened.
Although the researcher suggested figuring out what accounts where fake and how much they
owe the customer before reaching out, perhaps company constraints would not be able to
indicate a fake account from a legitimate one. If that was the case, then this strategy is a step in
the right direction for identifying how many affected consumers there are. However, overall,
outbound calling should have been accompanied by an email or a text message because a lot of
people do not answer unknown calls nor are they able to answer the phone due to busy
schedules.
The last strategy Sloan has is to increase marketing efforts because as president of a bank,
sales are important even amidst a crisis. The bank has paid for more social media advertising
than usual in the next quarter (Glazer, 2016). Although this might seem selfish to be thinking
about sales, CEO Tim Sloan has acknowledged that he needs to make efforts to amend issues
with customers before he goes through with the strategy that will hopefully keep stakeholders out
of risk.

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Tactics
Objective 1
Wells Fargo contacted hundreds of thousands of customers with open credit cards to
confirm they need or want their card. To date, they have “refunded $2.6 million to customers for
any fees incurred by the potentially unauthorized deposit and credit card accounts” (Sloan, 2016,
p. 2).
Objective 2
Besides calling customers personally, Wells Fargo has now “implemented procedures to
send automated emails to customers after a checking or savings account is opened” (Sloan, 2016,
p. 2). This will hopefully reassure customers that this mistake will not be made again.
Additionally, the tactic of investigating a longer time period proves to customers that Wells
Fargo is truly devoted to addressing the entire issue to take preventative measures for the future.
Objective 3
In order for Wells Fargo’s risk employees to be equipped to recognize and handle
situations like this scandal in the future, the chief risk officer has hired 2,000 business-line risk
employees to watch over the corporate risk unit (Glazer, 2016). Also, to improve employee
relations Wells Fargo removed its harsh product sales goals that guilty employees blamed as
their motive for opening the fake accounts. The researcher suggests creating an ethical code
contract to be signed by employees from now on.
Evaluation
Wells Fargo still has to go through the recovery stage of the conflict management life
cycle. Objective 1 has already been met but it would be beneficial to email all the affected
customers to re-apologize, reassure and evaluate if the customer is now satisfied. To evaluate

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Objective 2, they should have surveyed the customers when they called in order to get
quantitative and qualitative feedback before the company attempts to restore its reputation any
further. After Objective 2’s deadline of March 2017 is up, another survey would need to take
place with the same respondents in order to track if the efforts have turned negative opinions to
positive ones. All levels of employees at Wells Fargo should be tested on questions of ethics to
maintain a strong company morale across all branches to constantly evaluate Objective 3.
Besides the constraint of the scandal still being under investigation, another constraint for
Wells Fargo was the company’s numerous different statements that sounded similar, but adjusted
over time. Obviously leaders should adjust their statement as new information is announced but
between the switch from Stumpf to Sloan as CEO, the overall apology statement was different
across all publications. The researcher feels that a more straightforward and concise statement
would have been more beneficial to the company’s reputation. However, since Stumpf has
resigned, the sales report has already shown signs of recovery. Perhaps Sloan’s new strategy of
being transparent also plays a part in rebuilding the bank’s trust. The best thing a brand can do is
keep consumers in the loop by being transparent especially by Sloan and other high level leaders.
Going forward, Wells Fargo is encouraged to practice transparency and continue working
towards internal ethical training. The bank’s reputation will eventually improve over time as long
as consumer needs are put before the company’s needs.

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References
Egan, M., & Isidore, C. (2016, September 22). Wells Fargo CEO denies orchestrated fraud in
accounts scandal [Online article]. Retrieved November 14, 2016, from
http://money.cnn.com/2016/09/20/news/companies/wells-fargo-ceo-apology/
Glazer, E. (2016, October 11). Wells Fargo Lays Out Strategy to Move Past Scandal. Wall Street
Journal. Retrieved November 14, 2016, from http://www.wsj.com/articles/wells-fargo-
lays-out-strategy-to-move-past-scandal-1476191166
Gonzales, R. (2016, October 12). Wells Fargo CEO John Stumpf Resigns Amid Scandal [Online
article]. Retrieved November 14, 2016, from http://www.npr.org/sections/thetwo-
way/2016/10/12/497729371/wells-fargo-ceo-john-stumpf-resigns-amid-scandal
Shen, L. (2016, October 26). Wells Fargo CEO Tim Sloan Just Apologized to His Employees.
Fortune. Retrieved November 14, 2016, from http://fortune.com/2016/10/26/time-sloan-
fargo-apology/
Sloan, T. The BancAnalysts Association of Boston Conference [PDF document]. Retrieved from
Wells Fargo Online Website:
https://www08.wellsfargomedia.com/assets/pdf/about/investor-
relations/presentations/2016/BAAB-conference.pdf

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Sullivan, B. (2016, September 29). The Wells Fargo Fallout: How Does the Scandal Affect You?
Grow from Acorns. Retrieved November 14, 2016, from
https://grow.acorns.com/2016/09/how-does-the-wells-fargo-scandal-affect-you/