Experts Call Wells Fargo’s PR Crisis Response Lacking

Wells Fargo faces a difficult recovery following what some experts call one of the worst types of PR crises. 

Wells Fargo employees created fake customer accounts, PIN numbers and emails in order to meet sales targets and earn bonuses going back to 2011. They opened about 1.5 million bank accounts and about 565,000 credit card accounts that may not have been authorized by consumers, according to the Consumer Financial Protection Bureau. Wells Fargo reached an agreement with regulators to pay $185 million in refunds and penalties.

In a news release, Wells Fargo said it will:

• Take disciplinary actions including terminations of managers and other employees.
• Invest in employee training and monitoring and controls.
• Strengthen its performance measures that are tied to customer satisfaction, loyalty and ethics.
• Send customers confirmation emails after they’ve opened deposit accounts and send customers an application acknowledgement and decision status letter after they have applied for a credit card.

Expression of Regret

“Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” it stated.

Although the statement contains elements of the standard PR crisis playbook, PR crisis experts call its response incomplete or worse. Even if top managers did not know about or authorize the illegal behavior, they overemphasized short-term profit pressure without attention to ethics training or developing a proper company culture. Those management mistakes prompted the crisis.

While the company expressed regret, its statement is dry and sterile and fails to address emotions of customers or remaining employees, says Cheryl Snapp Conner, founder and CEO of SnappConner PR. “It was clearly executed under the direction of lawyers and intended primarily for the eyes of regulators and investors,” she writes in Inc.

The incident, she says, offers these lessons in PR crisis management.

Consider your audience. Most businesses are not publically held and can think of their customers and employees before — or at least as the same time as — their investors.

Admit mistakes. Admitting mistakes and taking ownership of the crisis is preferable to a sterile corporate response.

Strive for recovery. Transparency is essential for a PR recovery. Co-opt your employees and other influencers into the process as you move forward. Track the results.

‘Not Crisis Ready’

“What was Wells Fargo thinking? Wells Fargo has proven beyond a shadow of a doubt to not be crisis-ready,” says PR crisis management strategist Melissa Agnes. The company faces one of the most difficult crises to manage: a crisis of corporate culture. That crisis of corporate culture prompted a loss of customer trust and crisis of confidence.

The company cannot simply blame lower-level sales staff. The scandal shows a break down in internal procedures and controls that could have been prevented.

While Wells Fargo has attempted a strategic crisis communication response, it still has not answered the most important questions: How did this ever happen in the first place? And what are you doing to make sure it does not happen again?

“If Wells Fargo doesn’t address the bigger questions and fix the bigger issues within their culture – which will certainly not be an easy feat – then this crisis risks having much more impact on the bank’s reputation and, ultimately, it’s bottom line than it might otherwise,” Agnes writes in Forbes.

Commentators Condemn the Bank

Media commentators lambasted the bank. Given that more than 5,300 employees were involved in granting unauthorized accounts, the company cannot blame a few bad actors. ““This is systemic, pervasive behavior — including behavior that rises to the level of criminal fraud, real-property theft (by taking money from a legitimate account without permission) and identity theft, though the government oddly glosses over these crimes,” states Nicole Gelinas, contributing editor to the Manhattan Institute’s City Journal, writes in a special column for the New York Post.

Speaking on Jim Cramer’s Mad Money show, Wells Fargo CEO John Stumpf said the number of accounts affected was relatively small. “We have at any one time 100,000 team members in our branch and retail bank network,” he told Cramer. “And we hire people and people turn over, of those 100,000 the vast majority do the right thing, they come to work.”

Stumpf also said that he took ultimate responsibility for the scandal. In the interview, Stumpf seems to be trying to minimize the problem and evade responsibility. His taking responsibility quote seems to lack sincerity and authenticity. Not what a CEO needs to achieve.

Bottom Line: While Wells Fargo ostensibly followed recommended PR crisis actions, crisis communications experts say its response to accusations involving unauthorized bank and credit card accounts could have been better. The bank still has important questions to answer to regain customer trust. Parsing the company’s actions can provide important PR crisis management lessons.