SoFi battles its first major PR crisis
- With accusations of sexism, harassment and cancellations of loan applications that had internal errors, SoFi is facing its biggest PR hurdle yet.
- Analysts say the company's initial response was effective, but could have also included references to internal polices, programs and actions to "rout out" inappropriate behavior.
SoFi, once called the “fintech darling” of Silicon Valley, has come up against its first major PR challenge.
In a wrongful dismissal suit filed last week, a former employee reportedly claimed he was let go after he told management he had seen female employees subjected to lewd and inappropriate comments and that managers canceled loan applications when internal errors were made — a tactic to secure quarterly bonuses of up to $15,000. There’s also talk of a second class-action lawsuit alleging broader mistreatment of employees at the company.
It’s a perfect storm for the brand, which has raised $1.9 billion in equity funding and is valued at over $4 billion.
It’s made worse in light of recent Silicon Valley scandals at Uber and Google relating to sexism and sexual harassment and Wells Fargo’s recent PR hurdles resulting from a phony account scandal and release of confidential data from at least 50,000 of its wealthiest clients. But experts said the extent of the damage to the SoFi brand will center on whether other employees come forward to corroborate the allegations.
“In terms of the discrimination and sexism issues in Silicon Valley, this is the first time we’re seeing it come forward with a wrongful termination; it blurs the allegation a bit because it’s specific to one person’s hiring or firing,” said Chris Allieri, founder and principal of public relations and public affairs consultancy Mulberry & Astor.
With its booze-flowing singles events, Social Finance, known as SoFi, has marketed itself as a different kind of finance company. It has an army of 200,000 customers, many of whom are brand evangelists. But if Silicon Valley scandals at Uber and Google are indications, the hint of a culture problem creates a reputational risk. “You never want to be associated with a scandal a lot bigger than yours,” said Kellan Terry, PR data manager at Brandwatch.
Jim Prosser, vp of communications and policy at SoFi, said the company carried out an internal investigation into the matter and challenged the notion that loan applications could be arbitrarily cancelled.
“They were investigated in-depth by the company and found to have no merit,” he said in a statement. “We will vigorously defend ourselves against any claims otherwise.” Prosser added that managers aren’t able to “un-assign” loan applications assigned to a reviewer, and the cancellation of an application can only be triggered by the applicant or time expiration.
Based on sentiment expressed on Twitter, the lawsuit hasn’t made a big dent in SoFi’s brand reputation. Since the news broke Friday, 119 tweets mentioned the SoFi Twitter handle, 53 percent of which were positive and 47 percent were negative, according to Brandwatch. Compared to the past month, the SoFi handle attracted 920 mentions, 75 percent of which were positive. Still, Terry maintains that it’s not a massive conversation, and the news may have gotten less play with the violence in Charlottesville, Virginia, capturing headlines.
By drawing attention to the internal investigation, SoFi has done what’s needed to attack the problem early, said Terry. But Dorothy Crenshaw, founder and CEO of crisis communications firm Crenshaw Communications, said the company could have taken it further by pointing to specific policies and procedures in place to deal with inappropriate behavior of employees.
“The response is a little troubling to me — it’s defensive in tone,” she said. “They could point to policies and workplace programs to show that this behavior would be routed out quickly.”
Others say another way to look at the situation is to turn a crisis into an opportunity by drawing attention to milestones.
“If this were out of context and a one-off in the startup world, then they may be able to get by, but because this is within the larger context of what’s going on [with Uber and Google], they have an opportunity to tell a story,” said Allieri. “If they have proof points or positive stories, this is the time to tell it — I would be getting that ready.”