Introduction
The use of corporate ethics significantly helps maintain trust and integrity within organizations. Unfortunately, unethical behavior may harm businesses and the parties engaged in those businesses (Galloway et al., 2023).
The Situation and the Parties Involved
The main point of discussion here is a recent news report exposing Bank of America’s transgression of corporate ethics, namely, with unjustified charging of fees to customers, withholding reward bonuses, and creating fictitious accounts without consumers’ consent. Staff members were encouraged to create fake accounts to meet sales targets and receive rewards. The bank also unlawfully charged customers overdraft fees, late payment penalties, and exorbitant interest rates (Jones, 2023). The controversy involved several parties, including the bank, customers, the Consumer Financial Protection Bureau (CFPB), and the Office of the Comptroller of the Currency (OCC). The bank’s immoral conduct attracted the attention of regulators, and it faced harsh criticism and legal ramifications.
Numerous individuals who suffered damages as a result of the bank’s actions initiated lawsuits against it. The bank was also subject to fines and penalties following examinations by governmental agencies and regulatory organizations (Shichor & Heeren, 2021). The CFPB investigated the allegations over a period of seven years and established that hundreds of thousands of customers suffered due to illegal actions. This resulted in a charge on the bank to pay over $100 million to clients, and an additional $90 million was imposed as penalties (Jones, 2023). The OCC also imposed a $60 million fine due to various legal violations related to overdraft charges (Jones, 2023). The scandal also caused the bank to lose the trust and credibility of its customers. As a result, more stringent banking regulations and legislation were introduced to prevent such abuses.
Ethical Standard Violated in the Situation
The relevant ethical standard in this case is the violation of integrity. Integrity is characterized by transparency, moral rectitude, and honesty. The Bible, Proverbs 11:3, indicates that “the integrity of the upright guides them, but their duplicity destroys the unfaithful” (Oxford, 2023). The word imposes upon people the obligation to act with honesty and transparency for long-term business success. However, the bank’s employees acted contrary to this, and the institution suffered as a result of their immoral acts.
Moral integrity is vital in business, and when a firm behaves unethically, as seen with Bank of America, customers, shareholders, and employees lose faith in it. Integrity implies engaging in all business interactions, not only those mandated by law, in an open, honest, and fair way. The Bible in Proverbs 11:1 says, “Jehovah detests dishonest scales, but accurate weights find favor with him” (Oxford, 2023). The statement emphasizes the value of honesty in business.
Customers rely on financial institutions to act morally and legally in their best interests. Customers can lose faith in businesses, leading to a fall in the value of shareholders’ investments as the market reacts to the ethical breach. Employees’ motivation and loyalty decrease if they are concerned about the company’s ethics and values (Galloway et al., 2023). The situation required adequate safeguards to prevent an ethical breach from occurring.
Potential Prevention and Response to the Situation
The primary action the Bank of America could have enacted was to strengthen its internal controls. Shichor and Heeren (2021) state that strong internal controls may involve conducting regular audits through which unethical practices can be detected. The audit can be conducted through a rigorous inspection of service charges, sales targets, and employee behavior. The bank could enforce ethical leadership by developing an intense ethical culture from the top management.
The bank’s leadership could have promoted a culture that values accountability, honesty, and integrity and acted as an example for the rest of the workforce to follow. The Bank of America could have also implemented employee training programs to educate employees on the importance of ethics in business. It would have also developed a whistleblower protection program to allow reporting unethical behavior without concern about retaliation. Fostering a culture of openness and providing whistleblowers with legal protection may inspire individuals frustrated by wrong actions to report such practices to relevant authorities.
The unethical actions perpetrated by the bank would attract various reactions. The bank suffered from losing customers at the core of its business operations. The first step would have been to apologize and seek restitution, as the affected customers deserved a public apology. The bank should also have paid customers for the erroneous fees. This could include reimbursing customers for financial losses and correcting erroneous charges.
The bank could also have implemented enhanced compliance measures to prevent such unethical actions from occurring again (Shichor & Heeren, 2021). This process includes reevaluating sales goals, personnel incentives, and risk management procedures. The company should have enhanced transparency and communication by publicly outlining the steps to address the ethical infraction. This would help to repair the company’s image and trust among customers and stakeholders.
Conclusion
In summary, the unethical actions of the Bank of America represented a severe transgression of business ethics. Such risks can be minimized by implementing preventive measures, such as enhancing internal controls, promoting moral leadership, ensuring staff members receive sufficient training, and offering whistleblower protection. To regain the trust of its clients, the bank should issue an apology, provide restitution, tighten compliance, and encourage open channels of communication and transparency. Businesses must consistently conduct themselves in an honest and decent manner to maintain the trust of their customers and other stakeholders. The actions of Bank of America should serve as a lesson in the importance of upholding moral principles and adopting proactive measures to prevent future ethical lapses.
References
Galloway, T. L., Miller, D. R., & Liu, K. (2021). Guilty by association: Spillover of regulative violations and repair efforts to alliance partners. Journal of Business Ethics. Web.
Jones, D. (2023). Bank of America to pay $250 million for illegal fees, fake accounts. NPR. Web.
Oxford. (2023). The Holy Bible 2023 Coronation Edition. Oxford University Press, USA.
Shichor, D., & Heeren, J. W. (2020). Reflecting on corporate crime and control: The Wells Fargo banking saga. Journal of White Collar and Corporate Crime, 2(2). Web.