YOUR MONEY

Wells Fargo and Chrysler manipulations

This week a major U.S. bank and Fiat Chrysler have been ‘reprimanded’ for encouraging local branches and staff to cook the books and inflate new orders.

Fiat Chrysler, which suddenly became Canada’s top car company based on sales, was caught inflating its sales numbers by offering bonuses to dealerships who increased sales year or year or month to month.  To achieve this, the company stopped using as its sales criteria the moment when a customer takes ownership of a vehicle; instead allowing the figure for dealer ‘orders’ and similar dubious ‘sales’ to be used.

Dealerships could reap significant bonuses with higher car numbers, while company prestige as the top car manufacturer in Canada was a goal, and one that would increase the stock’s share price.

And so the game began across the land at Fiat Chrysler locations.

As for Wells Fargo, its CEO, in the rush to increase customer accounts (both bank account and credit card accounts), instituted a quota system and heaven help the branch manager or lowly teller who did not get extra business for the firm.  Under such constant pressure and threat of being fired, local branch managers and tellers fraudently, i.e., without the prior knowledge or consent of clients, created ‘ghost’ bank accounts and added new credit cards to their existing services – all with, of course, additional monthly fees.

According to Time magazine, this program between 2011 and 2015 – some 4 years until whistle blowers came forth – created over 2,000,000 ‘ghost’ accounts and credit cards and earned the bank $2.6 million in additional, fraudulent fees (Time, Oct,. 3, 2016 p. 14).

Under pressure from government authorities, both Fiat Chrysler and Wells Fargo CEOs have proclaimed their ‘mea culpa’ and are taking ‘remedial action’ under government threat.

So what do we learn from these 2 events in radically different economic sectors?

Simply, that to get ahead of the competition CEOs are willing to use carrots or sticks as motivators for their employees, and, in the end, those on the battlefront will be tempted -- and often fall prey-- to these pressures and break the law.