June 27, 2018

Is it too Late to Say Sorry? These 2 Companies are Trying to Win Back Your Trust

Forgive and forget. Facebook and Wells Fargo are asking you to do both.

In an attempt to win back customers after a string of public scandals, these two companies produced and aired apology videos intended to tug on the emotions of past, present, and future.

Facebook's video reminds customers why they started using the social networking site in the first place, while Wells Fargo highlights their deep roots in banking. Both companies then go on to admit--in some respect--that they messed up. These admissions end with a promise to do better in the future. But is it too little, too late?

Before we jump into that possibility, let's take a look at what went wrong to find out if it's possible for these companies to make things right.

The Facebook and Cambridge Analytica scandal

Anthem, Target, and Equifax were thrown into chaos when hackers breached their systems and made off with customer data. While these scandals rocked headlines and damaged trust, they happened on a very different playing field when compared to the Facebook incident.

In fact, there are (at least) three types of data privacy breaches:

  1. You give away too much information online and it's used against you.Example: You post throwback photos of college party nights and a job recruiter spots them while performing your background check.
  2. The information you've given to a company gets hacked.Example: You add credit card information to your account and hackers break into their system to retrieve it.
  3. The information you've given to a company is sold off or given away.Example: The Facebook and Cambridge Analytica scandal.

Example #1 is like leaving your front door unlocked, making it easy for a burglar to come in and take what they want. Example #2 is entrusting your home to a security company, but the security company is ill-equipped to keep your home safe. But the one that really stands out from the rest is example #3. In this example, you entrust your home to a security company, and that company then goes and invites burglars to your house to take whatever they want.

This is why Facebook is now scrambling and begging for forgiveness. What happened with Cambridge Analytica was a complete misuse of Facebook user information and it's unclear if that trust will ever be restored. Yet, they're relying pretty heavily on an apology video to try to accomplish this feat.

The Wells Fargo fake accounts disaster

For the past two years, Wells Fargo has been in some serious hot water--not just with customers, but the Federal Reserve as well. Whistleblowers and outspoken employees exposed that the company was creating fake bank and credit card accounts using real customer information.

Early this year, the Federal Reserve even put limits on Wells Fargo's growth until the company could prove it was complying with bank regulations.

Now they're trying to, "fix what went wrong and making things right" with an apology video and other key changes to internal policy and procedures.

Does an apology even matter?

I was fortunate enough to attend this year's Berkshire Hathaway's annual shareholder meeting. Of course, Warren Buffett was there and inevitably, someone asked how he could continue to invest in a company like Wells Fargo after the events of the past year.

Buffet responded: "All the big banks have had troubles of one sort or another and I see no reason why Wells Fargo as a company, from both an investment standpoint and a moral standpoint going forward, is in any way inferior to the other big banks with which it competes."

But the real takeaway was when he pointed out that what happened at Wells Fargo could have happened anywhere.

"We know people are doing something wrong as we sit here at Berkshire. You can't have 370,000 employees and expect that everyone is behaving like Ben Franklin."

While not excusing the behavior, it's true that you can't control every element of what goes on in a very large company. Bad apples turn up from time to time. And these bad apples can spread and put the entire company at risk. But, if you're able to identify the problem and weed it out, then you do have a chance of saving the whole company.

Even without the apology video, Wells Fargo could simply focus on weeding out the problem and still be in good shape to carry on business as usual.

Final word

An apology video alone isn't going to restore trust in Facebook or Wells Fargo. The true test will be if these companies actually deliver on their promises to fix the problems and do better in the future. If they can deliver on those promises, then the negative impact on their business and their brand will have been mitigated successfully.

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