Topic: Lotteries and Promotions
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We are planning a “lunch-and-learn” program at a local high school. Any interested student can attend, and we will give a free lunch to all students who attend a certain number of the sessions. Would this be considered a lottery? Are we required to offer a free lunch to those who do not attend the minimum number of sessions?
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No, we do not believe that this program would be considered a lottery, and your bank is not required to provide a free lunch to program participants who fail to attend the minimum number of sessions. The National Bank Act defines a “lottery” as an arrangement in which participants “advance money or credit to another…
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We would like to target customers of a nearby bank that is closing by offering them a free order of checks when they open a checking account at our bank. We would require proof that the customers are coming from the other bank. Could this be viewed as a discrimination issue? Also, can we mention the closing bank’s name in advertisements?
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It is possible that your contemplated promotion could create fair lending concerns, but a full analysis would require additional facts comparing your bank’s customer base with the closing bank’s customer base. Although a customer base is not a protected class, a promotion offered only to customers of a particular bank conceivably could have a disparate…
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We are holding daily drawings for a week as part of our bank’s anniversary celebration. The drawings will be open to the public and will not require any money or other consideration to enter for a chance to win. We want to post the winner’s name next to the submission box each day. Will that create any privacy issues?
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We do not believe that federal or Illinois financial privacy laws would prohibit the posting of winner names, since winners are not necessarily bank customers. Federal and Illinois privacy laws protect “financial records” and “personally identifiable financial information.” These terms are defined broadly, including even the fact that an individual is a customer of your…
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Do you have to receive a formal board approval before conducting a savings promotion raffle? Or is it sufficient to simply notify the board?
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Yes, the Illinois Banking Act requires board approval before a state chartered bank may conduct a savings promotion raffle. It is not sufficient to simply notify the board. For resources related to our guidance, please see: Illinois Banking Act, 205 ILCS 5/5g(b) (“If authorized by its board of directors, a State bank may conduct a…
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We have a bank anniversary coming up, and we are considering randomly selecting 100 of our existing customers to receive a $100.00 gift card. One of those customers then will be randomly chosen to receive a $5,000.00 prize. Is there anything we should be concerned with by offering a sweepstakes like this?
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In our view, your proposal is a sweepstakes that would violate Illinois and federal restrictions on lotteries if it is limited to your customers with deposit accounts. 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…
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We would like to hold a drawing for all of our customers who sign up for our new free e-statements service. The service is available on some free accounts and some fee-based accounts. Each person who signs up for the e-statements service will receive a chance to win an iPad. Will this violate the state and federal prohibitions on lotteries?
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Any drawing or raffle that is limited to bank customers, or to a certain group of bank customers, would likely violate both federal and Illinois restrictions on lotteries. The Federal Deposit Insurance Act defines “lottery” as an arrangement in which participants “advance money or credit to another in exchange for the possibility or expectation that…
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The Illinois Prizes and Gifts Act requires us to disclose the value of a promotional giveaway item. We are planning to hold a contest in which kids guess the value of a backpack full of back-to-school items. Do we have to disclose the exact value of the items?
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Yes, the Prizes and Gifts Act requires a written promotional prize offer to include “the retail value of each prize. . . .” Consequently, you will have to disclose the value of the backpack and school supplies in your giveaway disclosures. There may be alternative approaches that would capture the spirit of the game (teaching…
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Would the nine giveaway disclosures required under Illinois law apply to an advertisement in our lobby for anyone to guess the number of jelly beans in a bowl? The person with the closest guess would win an iTune gift card. In other words, is that advertisement considered a written promotion?
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Yes, the Illinois Prizes and Gift Act’s disclosure requirements apply to the advertisement you described. You correctly noted that the Act requires nine disclosures for every written promotional prize offer. We are unaware of any regulatory guidance or court cases that clarify whether the exact advertisement you describe would be considered a written promotional prize…