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We would like to hold a giveaway for an iPad Mini. It would be open to anyone who comes into the bank on the day of our anniversary celebration, but we will have a minimum age to enter. Is that permitted? And do we need to issue a Form 1099 to the winner? – IBA Compliance Connection

IBA Compliance Connection

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We would like to hold a giveaway for an iPad Mini. It would be open to anyone who comes into the bank on the day of our anniversary celebration, but we will have a minimum age to enter. Is that permitted? And do we need to issue a Form 1099 to the winner?

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Yes, we believe that you may impose a minimum age for entries into the giveaway, provided that you do not impose any other requirements for entries. And we do not believe you will need to issue an IRS Form 1099-MISC for the prize, since its value is below $600.

To comply with state and federal law, the giveaway should be open to customers and noncustomers, and participants should not be required to advance any money or credit in order to participate. In addition, the Illinois Prizes and Gifts Act requires nine specific disclosure to be made with any written promotional prize offer, and the Consumer Fraud and Deceptive Business Practices Act requires you to clearly and conspicuously disclose all material terms and conditions relating to the prize at the outset of the offer.

For citations related to our guidance, please see below:

  • Federal Deposit Insurance Act — 12 USC 1829a(c)(2) (lottery prohibition, defining “lottery” as an arrangement where participants advance money or credit in exchange for a chance to win)
  • Illinois Criminal Code
  • Illinois Prizes and Gifts Act — 815 ILCS 525/20 (disclosure requirements for written promotional prize offers)
  • Consumer Fraud and Deceptive Business Practices Act — 815 ILCS 505/2P (requires all material terms and conditions to be clearly and conspicuously disclosed)