Can a branch have a contest whereby any customer who opts for a referral to an investment representative or mortgage consultant has their name submitted for a drawing for a prize? Can we limit it to customers, and even more specific, can we limit it to new customers?

No bank can offer or promote a lottery. What you describe is a lottery as you say it's for "customers" who then can receive something. To avoid the lottery rules, you must open it to all - not just customers.

Refer to Section 20(a) of the Federal Deposit Insurance Act - Codified to 12 USC 1829a(a).

Thanks David!

I've always interpreted lotteries as any game of chance, but in reading the section noted by David, it seems that there needs to be an exchange of money or credit to be termed a lottery. If the entrees are made available to anyone and there is no exchange of money or credit, does the Federal Law still prohibit the contest?

See below-excerpt from the citation:
c) Definitions
As used in this section—

(1)The term “deal in” includes making, taking, buying, selling, redeeming, or collecting.
(2)The term “lottery” includes any arrangement whereby three or more persons (the “participants”) advance money or credit to another in exchange for the possibility or expectation that one or more but not all of the participants (the “winners”) will receive by reason of their advances more than the amounts they have advanced, the identity of the winners being determined by any means which includes—

any customer who opts for a referral to an investment representative or mortgage consultant has their name submitted for a drawing for a prize?

If these mortgage loans are subject to RESPA you also have Sec. 8 issues to deal with.

PNW - having to be a customer of the bank to enter the drawing would be, IMO, the credit (consideration) given by the individual for entering the drawing (lottery/raffle). IOWs, unless I'm willing to give you my business I can't enter your drawing.

Also you want to check state Law. If you are in IN look at IC 4-32-1-2 and IC 4-32-6-20. Banks don't fall within the definitions.

PNW: I agree with Dan. The FDIC has stood on the opinion that having to open an account is "advancing money" [(c)(2)].

The "spirit" of Section 20 is that banks not be involved, in any way, with any games, lotteries, etc. Banks are to be seen as solid institutions that don't play around. This idea is to build trust in the banking system - which sadly was shattered by the Dodd-Frank Act and White House videos promoting the DFA - claiming that bankers are gamblers and needed to be reigned in by the government - but that's another story!
(Stepping down off my soapbox)

Thank you both for weighing in. I get asked these questions and like to have good information in response.

I checked state law(I'm new here) and with an agent at the Gambling Commission and found that banks can participate in "Promotional Contests of Chance" and further clarified that opening account, according to this state is permissable.

However, I was still concerned about Federal implications so I wanted to check it out.