Topic: Lotteries and Promotions
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We use a third party service provider for our rewards checking. They informed us that they will be running a promotion with a cash prize for the winner of a sports bracket tournament. Should we be concerned?
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We would strongly recommend consulting with legal counsel before going ahead with this promotion. Although we cannot offer any legal advice, we would have concerns with this kind of promotion under the federal lottery prohibition and the Illinois Criminal Code’s prohibitions on gambling. As to federal law, the Federal Deposit Insurance Act states that a…
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Can we hold prize giveaways that are open only to bank customers?
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We do not see any problem with a bank holding a promotional drawing and requiring participants to fill out a form to make an entry, but it should be open to any participants — not just to bank customers. If all entries are free, and no other requirements are imposed on entries, we do not…
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Can we hold a drawing to give away a television if the drawing is open to anyone who comes into the bank during a street fair?
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If all entries for the promotional drawing are free, and no other requirements are imposed on entries, we do not believe that the bank would violate either federal or state prohibitions on lotteries by holding a promotional drawing. The National Bank Act prohibits banks from dealing in any lottery, defined as an arrangement in which…
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Can we hold a raffle to raise money for charity if it is open only to employees?
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We believe that the raffle would technically be considered a lottery, which is prohibited under federal banking law and under Illinois criminal law. There is no exception under the lottery rules for games that are held for employees only. The National Bank Act prohibits national banks from dealing in any lottery, defined as an arrangement…
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Would a silent auction fundraiser violate the lottery prohibition?
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We believe it is possible to structure a silent auction so that it does not violate the lottery restrictions. The Federal Reserve Act prohibits banks from dealing in any lottery, defined as an arrangement in which participants “advance money or credit to another in exchange for the possibility or expectation that one or more but…
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If anyone can get a free entry to our sweepstakes, but it is possible to purchase additional entries, would that violate the prohibition on lotteries?
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If you allow everyone to enter the lottery for free, including customers and non-customers alike, we do not believe that the sweepstakes would fall into either the state or federal definition of a “lottery.” The Federal Deposit Insurance Act prohibits banks from dealing in any lottery, defined as an arrangement in which participants “advance money…
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Can we hold a giveaway that requires participants to come to a bank branch in order to enter for a chance to win? And can we give prizes to participants who win games at the bank, such as a guessing the amount of candy in a jar?
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Under Illinois law, the issue is whether the participants in your promotion — coming into a branch, filling out a survey, or playing a game — are making a “payment or purchase” in exchange for a chance to win the prizes. The Illinois Criminal Code makes it a crime to advertise or distribute tickets for…
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If a bank offers a promotion where it provides customers with the initial deposit for account opening and the customer never conducts any transactions on the account, then who retains the initial deposit if the bank closes the account?
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Any amount in the bank account at account closing is owned by the customer. There are at least four reasons that the bank retaining the amount of the initial deposit could cause the bank significant legal problems. It arguable would break the bank’s actual or implicit agreement with the customer. The bank induced the customer…
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Are we prohibited from offering a certificate of deposit (C.D.) from our bank as the grand prize for a marketing promotion?
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We do not know of any prohibition against a bank offering a certificate of deposit as the prize in a drawing open to the public. The Illinois Prizes and Gifts Act governs the promotion of prizes that are used to induce people to conduct business or contact a business in Illinois. It provides that the…
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We are thinking of offering a $100 for customers opening a checking account. I know we can’t pay interest on a checking account, so how can other banks offer this?
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A bank is permitted to offer a $100 to customers opening a new checking account if the $100 premium is not related to the balance in the demand deposit account or the duration of the account balance. As a general rule, a bank is prohibited from paying interest on a demand deposit account under the…