IBA Compliance Connection

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We would like to encourage customers to interact with our social media pages. Can we hold a drawing for customers and non-customers who have “liked” our pages? What disclosure requirements apply?

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The social media promotion you describe likely is permissible under Illinois and federal law, provided that it is open to both customers and noncustomers, individuals are not required to pay to participate, and your bank follows the disclosure requirements noted below.

Federal law generally prohibits banks from conducting lotteries or other games that require participants to pay or advance credit for a chance to win. Illinois law generally prohibits lotteries, with an exception for promotions in which no payment or purchase is required to enter. In this case, both customers and noncustomers would qualify for the drawing by “liking” your bank’s social media page — not by making payments or purchases. Therefore, we do not believe that the promotion would violate the Illinois or federal lottery prohibitions.

Your institution should disclose the giveaway’s terms and conditions in compliance with Illinois law. The Illinois Prizes and Gifts Act outlines nine disclosures that must be made in a written promotional prize offer. A link to these disclosures is included with our resources below. In addition, the Consumer Fraud and Deceptive Business Practices Act requires all material terms and conditions related to a promotional drawing or giveaway to be clearly and conspicuously disclosed at the outset of the offer.

Also, if your bank awards a prize valued at $600 or more, you should report it on an IRS Form 1099-MISC.

For resources related to our guidance, please see:

  • National Bank Act, 12 USC 25a (prohibiting a “lottery,” defined as an arrangement where participants “advance money or credit” in exchange for a chance to win)
  • Illinois Criminal Code, 720 ILCS 5/28-2(b) (prohibits gambling, including lotteries, and defines “lottery”)
  • Illinois Criminal Code, 720 ILCS 5/28-1(b)(13) (exemption for drawings where money or things of value can be won but no payment or purchase is required to enter)
  • Illinois Prizes and Gifts Act, 815 ILCS 525/25 (nine 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)