Topic: Lotteries and Promotions
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We would like to give away tickets to a major league baseball game to two customers who complete a customer satisfaction survey by a given deadline. The survey will be available in paper form at our branches and online. There is no cost to enter, but participants must be customers of our bank and have an email address. The winners will be chosen at random. Is this type of giveaway permissible? Also, can you confirm that if the total value of the tickets is less than $600, we will not need to file an IRS Form 1099 MISC for the prizewinners?
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Yes, we believe this type of giveaway is permissible under both Illinois and federal law since no consideration is required to participate. Further, your bank will not be required to file an IRS Form 1099-MISC for the prizewinners if the value of the tickets is less than $600. The Illinois Criminal Code defines an illegal…
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We are considering providing perks (such as gift cards or concert tickets) to our mortgage loan customers who are first-time homebuyers. Are there any fair lending concerns with this type of program? Would we have to provide perks to all borrowers, not just first-time homebuyers?
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Assuming that the underlying loan program is not otherwise discriminatory, we do not believe that offering gift cards or concert tickets to a subset of your mortgage loan customers would be found to violate fair lending laws, but we do recommend monitoring the promotion, documenting your business reasons for targeting first-time homebuyers and remaining sensitive…
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We would like to run a promotion for residential real estate loans where the bank would pay a credit towards the appraisal fee. Are there any potential issues with the promotion or RESPA concerns?
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Provided that this promotion is open to all customers, we do not see any issues under the Real Estate Settlement Procedures Act (RESPA) prohibition against kickbacks for referrals of settlement services. Providing incentives to borrowers to do business with your bank would not implicate any RESPA concerns. For resources related to our guidance, please see:…
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One of our branches would like to hold a bingo game event for account holders who are age 55 or older and maintain a required minimum balance, with a prize awarded at the conclusion of the event. What Illinois state laws would apply, and can the bank conduct a bingo game onsite?
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We believe your bank branch could hold a bingo game event for this subset of account holders, provided that no consideration is required to participate. In Illinois, the Bingo License and Tax Act regulates the licensure of entities authorized to conduct legal bingo games. However, if no consideration is required to obtain a bingo card,…
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Does Illinois have a law similar to the federal American Savings Promotion Act that authorizes banks to conduct savings promotion raffles?
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Yes, Illinois has enacted a law that essentially mirrors the American Savings Promotion Act, which created an exception for savings promotion raffles from the lottery prohibitions in federal banking and criminal laws. Effective January 1, 2016, Illinois law similarly authorizes state-chartered banks, savings banks and credit unions to conduct savings promotion raffles. For resources related…
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Our bank would like to advertise a competition where any individual can nominate their favorite small business to receive a cash prize. A business also can nominate itself. Our bank will narrow down the list of nominations, and the public will vote on the winning small business. Do we need to include the Illinois Prizes and Gifts Act disclosures in the advertisement? Are there any other laws that we should be aware of?
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No, we do not believe that you need to include the disclosures required by the Illinois Prizes and Gifts Act (PGA) in your advertisements. However, it would be prudent to include the material terms of the contest in the advertisements to comply with the Consumer Fraud and Deceptive Business Practices Act (CFDPBA). The PGA’s disclosure…
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Are there any potential problems with us conducting a promotional giveaway for an iPad if it is open to anyone who wants to register? We are sending a promotional mailing to randomly selected addresses within a mile radius of our newest branch.
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No, we do not believe that this arrangement violates Illinois or federal lottery prohibitions. The Federal Deposit Insurance Act defines a “lottery” as an arrangement in which participants “advance money or credit to another in exchange for the possibility or expectation that one or more” will win a prize. The Illinois Criminal Code defines a…
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We are holding a giveaway that is open to the public to give away a free tractor. No purchase is necessary, and participants do not need to be customers for a chance to win. Participants simply fill out a slip of paper providing their contact information, and we randomly select one winner. Are there any specific disclosures that we need to provide for this giveaway?
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Yes, the Illinois Prizes and Gifts Act requires nine specific disclosures to be made with any written promotional prize offer, and the Illinois 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. In addition, if…