I had read on this site previously about a bank that seeded their ATM machine with "bonus dollars" to reward customers and drive traffic. I think this is a great idea and I'd like to try it out at a few of our branches, my concern is the legality of the promotion.

The program would run like this (as "borrowed" from this site): Place a $20 or $50 bill in the $10 slot of our ATM. Customer requests $10 from the machine and gets the lucky $20 or $50...their account is debited the $10 and the additional money is theirs as a bonus.

Is this a lottery? Do we have to offer "free" entries?? Technically I guess they would be subject to fees we charge for the ATM transaction so does this toss us in to the category of "paying to enter the contest?"

Any advice is appreciated. I had thought this was a slam-dunk but over the last few days I've started backtracking on my initial enthusiasm.

Thanks.

I'll give you my 2 cents worth.

I don't think this is a lottery. No one advanced money for a chance. Also, anyone can use your ATM, so you are not making it available only to a select group.

I think is fine to do.

How in the world do you audit this? It sounds like a lot of fun - I just think our auditors would stroke.

As an auditor, I would suggest that in lieu of sticking a larger bill in the machine, you use a redeemable card or certificate (I'm not an ATM technician, so I have no idea how to do it). The customer would bring in the card or certificate to receive their cash. That would provide an audit trail to ensure that the bonuses actually go to customers, not the ATM teller.

Also, if I were a customer of the institution, I would withdraw the maximum for the day in order to increase my odds of winning, then pull through the drive through and re-deposit what I didn't need. Have fun re-supplying that ATM every day. Not to mention forcing your teller to sell to the vault. Do enough customers not get the same idea for this to cause a problem?

We gave away $500 in one week for our "Birthday Giveaway". Customer transactions were up 22% and non-customers trans. were up 19%. The goal was to get non-customers in the habit of using our ATM to increase our surcharge income.

To discourage opportunists, we did 2 things. In the newspaper ad, we put "one entry per day and one winner per household". This of course is not enforceable but you hope people will comply. The second thing is we reloaded the cash drawer each day so that the extra cash was spread through the week. We have 1 teller fill and 1 teller verify the cash drawer. We put $100s in the $20 drawer and $50s in the $10 drawer.

I would also encourage you to use receipt paper that is printed with a coupon or ad. We had receipts that said "open a new account and get a free box of checks" to market to the non-customers during the promo.

I've heard of another bank that instead of stocking extra cash in the ATM, they stamped a few receipts as winners so people would have to come inside. This only works if your receipts are not a roll however.

Luckily we did not have anyone take advantage of the promo and everyone really enjoyed it. We are planning to do a birthday and a holiday giveaway next year. Good luck!

We were thinking of doing this same promotion, but were told by a third party compliance group that this was considered a lottery and they advised us NOT to persue.

You may want to go further with your regulator or counsel. If people can use the ATM at no cost, your customers as well as non-customers, there is no consideration on their part. That is an integral part of the definition of a lottery. Your state laws may have some variance so factor that in as well.