Topic: Lotteries and Promotions
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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…
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Our marketing team would like to hold four types of online contests that would be open to the public. The contests would: (1) enter individuals who comment on a video post into a random drawing to win a book, (2) enter individuals who answer a question into a random drawing to win a gift card, (3) award a gift card to the individual who comes the closest to guessing the number of pennies in a pictured piggybank, and (4) solicit nominations of not-for-profits to be entered into a drawing in which an organization chosen at random would win lunch. The value of each of the prizes would be under $600, and our bank has branches in Illinois and Indiana. Can you provide us with any guidance on holding these types of contests?
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We believe each of these promotions would be permissible and would not be considered illegal lotteries under federal or Illinois law since no fees are required to enter. However, we believe that any online posts advertising these promotions would be considered written promotional prize offers subject to the requirements of the Illinois Prizes and Gifts…
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Our bank would like to hold a coloring contest. Are there specific rules we must follow for these types of contests?
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No, we are not aware of any rules you must follow when holding a coloring contest, provided there is no cost to enter, you do not award prizes based on chance, and the prizes are not valued at $600 or more. The Illinois Criminal Code prohibits lotteries, which the Illinois Supreme Court has held consists…
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We are sponsoring a contest where students will create a product or service that will be judged. The top three finishers will receive cash prizes in different amounts. Because the event is not a networking event, would the Illinois Prizes and Gifts Act apply?
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No, we do not believe that the Prizes and Gifts Act would apply to the prizes you have described, assuming that the awarding of the prizes would not involve an element of chance. The Prizes and Gifts Act defines “prize” as “a gift, award, or other item or service of value that is offered or…
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We are hosting a free youth banking workshop with a community organization at an elementary school focused on educating kids from low-income areas about banking. As part of the workshop, participation prizes will be awarded. Would the Illinois Prizes and Gifts Act apply to these prizes?
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We do not believe that the Prizes and Gifts Act would apply to the participation prizes you have described, unless receiving any of the prizes involves an element of chance. If winning the prizes does involve an element of chance, then the Act would require any written promotional prize offers to contain nine specific disclosures.…
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We are an Illinois savings bank considering offering minor savings accounts. We would like to provide a gift at account opening, with the exact gift (cash or swag, for example) determined by spinning a wheel that lands on a certain prize. Can minors open savings accounts in their name if they are old enough to sign the signature card? Also, is there a dollar limit on account opening gifts, and would we need to describe the gift in our account disclosures and report it to the IRS for tax purposes?
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Yes, minors are permitted to open savings accounts. While we are not aware of a dollar limit on account opening gifts, Regulation DD’s disclosure requirements apply if the gift is worth more than $10, and IRS reporting requirements apply to gifts valued at $10 or more and $600 or more. Both the Illinois Savings Bank…
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Would holding a drawing for customers who enroll in e-statements constitute a lottery? The winner would receive a $50 gift card.
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No, we do not believe the drawing you described would constitute an illegal lottery under Illinois or federal law. Under federal law, banks are generally prohibited from dealing in lottery-related activities where participants advance money or credit in exchange for the possibility of winning more than the amounts advanced. The Illinois Criminal Code also prohibits…
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Every year, a local civic organization makes a quilt and sells raffle tickets for the quilt to raise money for the organization. As a bank, we understand that we cannot sell raffle tickets on our premises, but may we display the quilt with a sign indicating who to contact to purchase raffle tickets?
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No, we believe such a display would violate federal law. The Federal Deposit Insurance Act prohibits the use of any part of banking offices to “announce, advertise, or publicize the existence of any lottery.” This raffle appears to qualify as a “lottery” in which participants advance money in exchange for a possibility to be randomly…
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We are a state nonmember bank. Can we hold a raffle for a local school in which our bank would donate the prize and sell raffle chances, and all proceeds would go to the school?
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No, we believe such a raffle would violate both federal and state law, regardless of whether the proceeds are donated to a school or other charitable cause. The Federal Deposit Insurance Act prohibits state nonmember banks from holding “lotteries” in which participants advance money in exchange for a possibility to be randomly selected to receive…
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As a promotion at a new facility, we would like to fill the $20 canister in the ATM with a random number of $50 bills. The promotion would be open to anyone with an electronic device card who accesses the ATM, and we would publish rules disclosing the ATM fees (including a withdrawal fee charged only to noncustomers). Would this promotion be considered an illegal lottery?
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No, we do not believe that this promotion would be considered an illegal bank lottery. Under federal law, banks are generally prohibited from dealing in lottery-related activities (other than savings promotion raffles) where participants advance money or credit in exchange for the possibility of winning more than the amounts advanced. We do not believe that…