It has not been a good year for Wells Fargo. But it has been an even worse year for many of Wells Fargo’s customers. The bank opened as many as 3.5 million fraudulent savings and checking accounts on behalf of customers without their consent. Last year, regulators fined Wells Fargo $185 million. See Matt Levine, Wells Fargo Opened a Couple Million Fake Accounts, Bloomberg (Sept. 9, 2016). This news was followed by revelations of an overbilling scheme:
Wells Fargo has already admitted to charging people for overdrawing bank accounts that they didn’t have and for car insurance that they didn’t need. Now, its being accused of ripping off vulnerable mom-and-pop businesses.
For several years, Wells Fargo’s merchant services division overcharged small businesses for processing credit card transactions, a lawsuit alleges. Business owners who tried to leave Wells Fargo were charged “massive early termination fees,” according to the lawsuit filed in US District Court.
Matt Egan, Wells Fargo Accused of Ripping off Mom-and-pop Shops, CNN Money (Aug. 11, 2017).
Wells Fargo CEO Tim Sloan claimed that the bank “must get back America’s trust” and described these latest allegations as “a reminder of the disappointment we caused.” The situation has customers, legislators and the general public crying out for justice. Although Wells Fargo settled class-action lawsuits against it for $142 million, there is no reason to believe that the settlement figure will be enough to win back public trust, let alone investors’ confidence.
Wells Fargo many not be done for – yet
Calling Wells Fargo’s issues a “P.R. disaster” diminishes the seriousness of the bank’s actions: it defrauded customers and harmed investors. Period. Yet, with careful management of its public relations going forward, Wells Fargo will rebound from this crisis as most corporations do whenever they face similar public backlash. For example, do you remember when:
- United Airlines removed a passenger to give his seat to an employee, injuring the passenger in the process?
- Samsung’s batteries caught on fire while they charged?
- Bud Lite and Bloomingdales featured ads which seemed to imply that date rape was acceptable?
- BP caused the Deepwater Horizon oil spill and then botched the cleanup afterward?
- Volkswagen designed vehicles that knew how to cheat on emissions tests?
- Bank of America wanted to charge a monthly fee for debit cards?
You probably do. And while each of these companies took a financial hit—and a lot of public heat—every single one of them is still operating. Wells Fargo will probably bounce back from this crisis, too.
Handling a public relations crisis
What can you do if something goes awry at your own company, and you find yourself on trial in the court of public opinion? After years of working with local businesses and global corporations, including banks and institutions within the financial services industry, we’ve learned a thing or two about what steps to take when the optics are terrible:
- Be proactive. Whatever you do, do not wait. Admit that you don’t have all the details yet, and tell your customers that you are still investigating and will issue a statement once you have more information.
- Be honest. Do not say nothing is wrong when it appears that something is. Again, repeat that you do not have all the details yet, and that you will release information as it comes to you. If you deny that a problem exists, it could be held against you later if it ultimately turns out that a problem does
- Apologize. When something goes wrong on your watch—own up to it. Bear in mind that there is a difference between “I’m sorry this happened” and “I’m sorry you feel this way.” Avoid that second statement like the plague. Issue a formal written statement, reassure people that you are listening to them, and vow to fix the problem.
- Follow through. Now, fix the problem. It may seem “unfair,” but remember that something about the way you do business has been perceived badly. Address these perceptions clearly and calmly, and then take steps to ensure that such perceptions are eliminated.
- Stand your ground. If you are accused of an action that is categorically untrue, defend yourself. Do not point fingers or try to make yourself a martyr; repeat the truth, offer your customers a chance to review the facts for themselves, and consider a counter-suit, if necessary.
Launching a positive PR campaign
Your new PR campaign does not need to be an obvious rebranding. For example, pretend you sell luxury liquid soap. The soap is bottled in strong, brightly colored glass bottles—bottles that, to some, may be even more coveted than the soaps themselves. You outsource the bottling to a factory that you do not own. For one reason or another, something goes wrong at the bottling factory and barely perceptible shards of glass are mixed into the soap. Your customers (as well as people who do not even use your product) are up in arms about the dangers of your product.
You issue a statement, apologize, and investigate. You release the results of the investigation, and assert clearly and calmly that the problem occurred outside of your realm of control. You know there is nothing wrong with your soap, and the public knows that the bottling plant is at fault—but all of that does not seem to make much of a difference. In the public’s mind, your product and those bottles are inextricably linked. To combat this perception, you could:
- Install a safety operator at the plant
- Offer safety courses to the workers that your company pays for
- Hire additional machinery inspectors
- Schedule regular meetings with the bottling plant’s owners or operators to analyze potential safety risks, and make the notes or transcripts of those meetings available to the public
Steps like these help quell public concerns that you are not following through on your promises to do better. Full refunds and coupons are nice, but they can look more like signs of desperation if you do not address the problem itself in any and every way that you can. Your customers need to see that you put forth honest efforts to fix problems and that you take proactive steps to reduce the risks of similar or other problems occurring in the future.
Max Julian is a partner at Gertsburg Licata in the litigation practice group. He may be reached at (216) 573-6000 or at [email protected].
Gertsburg Licata is a full-service, strategic growth advisory firm focusing on business transactions and litigation, M&A and executive talent solutions for start-up and middle-market enterprises. It is also the home of CoverMySix®, a unique, anti-litigation audit developed specifically for growing and middle-market companies.
This article is for informational purposes only. It is merely intended to provide a very general overview of a certain area of the law. Nothing in this article is intended to create an attorney-client relationship or provide legal advice. You should not rely on anything in this article without first consulting with an attorney licensed to practice in your jurisdiction. If you have specific questions about your matter, please contact an attorney licensed to practice in your jurisdiction.
