IBA Compliance Connection

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We are planning on running a contest to benefit small businesses. We are providing a t-shirt for contestants. If they take a selfie with the t-shirt and post it on social media with specific hash tags, they can come to our bank during a one-week timeframe and receive a low-dollar gift card for a local business, while supplies last. Everyone can participate in this contest, and we are planning on advertising it with a flyer and on social media. Would this contest fall under any special Illinois rules? Additionally, do we need to disclose anything, such as that no purchase is necessary, that the contest is void where prohibited, any eligibility requirements and restrictions, and the sponsor’s name and address?

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Yes, we believe you should comply with the disclosure requirements in the Illinois Consumer Fraud and Deceptive Business Practices Act for this contest.

The Illinois Consumer Fraud and Deceptive Business Practices Act states that advertisements offering free prizes to consumers must clearly and conspicuously disclose all material terms and conditions at the outset of the offer, leaving no reasonable probability that the offering might be misunderstood.

Consequently, we believe you should disclose that there is no purchase necessary to enter the contest and clearly and conspicuously disclose all other rules of the contest, including eligibility requirements and how contestants can receive the t-shirt and gift cards from you for free. We do not believe that the sponsor’s name or address is a “material term or condition” requiring disclosure.

Note that while lotteries are generally prohibited by the Illinois Criminal Code, we do not believe the contest you described would be considered a lottery, as the gift cards are not being “distributed by chance among persons who have paid or promised consideration for a chance to win.” Similarly, we do not believe that the Illinois Prizes and Gifts Act and its requirements related to written promotional prize offers would apply. That law applies only to gifts “offered or awarded to a participant in a real or purported contest, competition, sweepstakes, scheme, plan, or other selection process that involves an element of chance.” As there does not seem to be an element of chance associated with your contest, we do not believe the Prizes and Gifts Act would apply.

For resources related to our guidance, please see:

  • Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2P (“It is an unlawful practice for any person to promote or advertise any business . . . by means of offering free prizes, gifts, or gratuities to any consumer, unless all material terms and conditions relating to the offer are clearly and conspicuously disclosed at the outset of the offer so as to leave no reasonable probability that the offering might be misunderstood.”)
  • Illinois Criminal Code, 720 ILCS 5/28-2(b) (“A ‘lottery’ is any scheme or procedure whereby one or more prizes are distributed by chance among persons who have paid or promised consideration for a chance to win such prizes, whether such scheme or procedure is called a lottery, raffle, gift, sale, or some other name, excluding savings promotion raffles . . .”)
  • Illinois Criminal Code, 720 ILCS 5/28-1(b)(13) (“Participants in any of the following activities shall not be convicted of gambling: . . . (13) Games of skill or chance where money or other things of value can be won but no payment or purchase is required to participate.”)
  • Prizes and Gifts Act, 815 ILCS 525/10 (“‘Prize’ means a gift, award, or other item or service of value that is offered or awarded to a participant in a real or purported contest, competition, sweepstakes, scheme, plan, or other selection process that involves an element of chance.”)
  • Prizes and Gifts Act, 815 ILCS 525/25 (“A written promotional prize offer must contain each of the following in a clear and conspicuous statement at the onset of the offer: . . .”)