When cross-selling turns corrosive

At what point is the line crossed between ‘incentive’ and ‘pressure’? Steve C Morang discusses how unrealistic targets, a climate of anxiety, and an internal control gap, led to a grass-roots fraudulent movement at Wells Fargo.

Reprinted with permission from the November/December 2016 issue of Fraud Magazine, a publication of the Association of Certified Fraud Examiners, Austin, Texas, copyright 2016. Steve C Morang, CFE, CIA, CRMA, is senior manager – leader advisory, fraud & forensics – for Frank, Rimerman + Co LLP and president of the ACFE’s San Francisco Chapter. His email address is: smorang@frankrimerman.com.

I first read about the Wells Fargo settlement on the morning of 9 September 2016, during a Bay Area Rapid Transit ride into San Francisco. As reported in the media, the banking giant negotiated a deal to settle a lawsuit filed by the United States Consumer Financial Protection Bureau, the Office of Comptroller of Currency, and the City and County of Los Angeles. As part of the $185 million settlement Wells Fargo didn’t admit to any wrongdoing. However, it did confirm to the regulators and media that employees had opened more than two million checking, savings and credit card accounts without customer approval. Apparently this was done to meet ‘cross-selling’ quotas for five years beginning in 2011.