Wells Fargo, staggered by a scandal tied to bogus consumer accounts and allegations of identity theft, is responding like most big companies with a sullied reputation: with an ad campaign promising to "make things right" for its alleged victims, without being too specific about how.
The campaign was scheduled to launch Monday night with commercials placed on the major network evening news shows and continuing onto the Sunday political panel shows. A sample ad shows the bank's signature stagecoach rolling across a Western landscape in slow motion as a voice-over narrator intones the bank's promise to "make things right," and offers a few vague particulars.
First, "all customers who've been impacted will be fully refunded," the narrator says. The bank will "proactively" send out confirmations for "any new checking, savings or credit card account you open." And it has eliminated product sales goals for its retail bankers. The ad ends with the legend, "We're renewing our commitment to you" and refers viewers to the "commitment" page of its website.
With its elegiac music, its slow-motion imagery and the soporific thrum of the female narrator's voice, the entire package has a sedative effect, like a sermon in a rural church. Viewers might not notice that it doesn't say much.
One can sympathize with the difficulty Wells Fargo faced in cramming everything about its "commitment" into a 30-second television commercial. But its website doesn't offer much more detail.
To recap, Wells Fargo last month paid $185 million to federal regulators and the Los Angeles city attorney to settle charges that its bankers met unrealistic sales goals by opening as many as 2 million bogus accounts for existing customers and noncustomers. Government investigators are still pondering civil or even criminal charges against the company.
The bank didn't admit or deny the charges, but its chairman and chief executive officer, John Stumpf, has lost his job. He's been replaced as CEO by Tim Sloan, a 29-year veteran of the company's management, some of them as Stumpf's right hand man, and as chairman by Steven W. Sanger, a former General Mills chairman who has been on the Wells board since 2003. During that period, he and his fellow directors didn't seem to notice anything amiss as the company's ethics were being eaten away from the top down and inside out. So neither appointment offers much hope for dramatic change in the company's culture.
Change is desperately needed, because the company's reputation has cratered in the wake of the scandal. A survey released Monday by the consulting group cg42, which tracks corporate reputations, was devastating. The consultants project that Wells Fargo will lose $99 billion in deposits and $4 billion in revenue over the next year or so "as a direct result of the scandal," of which about 85% of surveyed consumers were aware.
Although only 3% of Wells Fargo customers in the survey reported being directly affected by the wrongdoing, nearly one-third said they were actively looking for other banks and 14% already had decided to do so. The percentage of prospective customers who said they were likely to consider doing business with the bank shrank from 52% before the scandal broke to 19% afterward.
Shoring up the bank's reputation, therefore, must be Job One. But that requires concrete steps, not TV commercial persiflage.
Start with the bank's supposed commitment to "fully refunding" those impacted. What does this mean, exactly? Up to now, the bank has promised only to refund fees that were improperly charged to customers for accounts they didn't know were opened in their names, but indications exist that the consequences for some customers go way beyond that. Some may have seen their credit scores reduced, because they bounced checks on accounts that were drained behind their backs to fund bogus accounts. That could be reflected in their cost of borrowing for years, even decades.
Will those costs be "refunded"? How does the bank intend to determine this type of damage? Stumpf's inability to answer such questions during his appearances last month before House and Senate committees contributed to the recognition that he had to go. But the answers still aren't at hand.
The bank says it will "proactively" send out confirmation emails or letters on every account a customer opens. This is not especially impressive, as it reflects best practices already followed by other banks. In any event, it glosses over the fact that the problem accounts weren't opened by the impacted customers, but by strangers.
As for "eliminating product sales goals" for retail bankers, it's unclear how this promise can be believed. Every employee of every company must meet performance standards of one sort or another. Wells Fargo imposed a quota for new account openings that proved so hard to meet that many employees concluded the only way to do so was fakery. But there are myriad ways for a bank to keep the pressure on low-level workers without setting a numerical quota, and many of those will involve putting the customer's interest last. What Wells has to tell its customers is what the new performance standards will be, and how it expects them to be met.
Neither the commercial nor the website address another important issue for affected customers: Wells has insisted that disputes from existing customers about the fake accounts be referred to arbitration, where the bank typically has the upper hand. Judges typically have accepted the bank's position that even the fake accounts stem from legitimate accounts the victims opened, in which they agreed to submit any future disputes with the bank to an arbitrator. Stumpf was pressured during his Capitol Hill appearances to relinquish this strategy, but he refused.
The Wells Fargo stagecoach plainly has far to go before many potential customers will feel comfortable climbing aboard. A glossy TV campaign barely gets the horses out of the corral. The bank has told us what its goals are, but not how it intends to reach them.