I don't want to be a leech, but I have yet another question. However, remembering the saying "Give a man a fish and he can eat for a day, but teach a man to fish and he can eat for a lifetime", I need some general guidance. I remember reading on this forum before about "lotteries" and other promotions that banks run. I assume that some of this will be state law, but are there any general resources available on-line or in paper form that I can refer to that will let me know which type of promotions are permissible and which type are "verboten"? I'm newly minted as the compliance officer at my bank and while I feel I know the garden variety stuff fairly well (loans, deposits, etc.), I never would have questioned the validity of a promotion before I visited this forum. Sorry to ramble, but can anyone point me towards a source for finding information about which "drawings" and which types of drawings are legal for us to do? Thank you very much.

You'll basically have to know what your promotion will do and how that relates to the definitions, such as to a lottery. In my case I am looking at OCC regs. Your regulator should be similar, but not necessarily exactly the same in these areas.

State laws can vary, but the principal of compliance is the same.

12 U.S.C. Sec. 25a Participation by national banks in lotteries and related activities --
Prohibited activities
(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--

(A) a random selection;

(B) a game, race, or contest; or

(C) any record or tabulation of the result of one or more events in which any participant has no interest except for its bearing upon the possibility that he may become a winner.

Thank you Andy. We're a state-chartered non-member, so I think I'll go to the FDIC's web site and comb through. We're basically doing a promotion where debit and credit card customers (both new and existing are eligible to enter)are being put into a drawing for $250.

Thank you very much.

The purpose of the lottery ban is to avoid situations where the customer would have a choice of depositing hard-earned dollars into an FDIC-insured account OR gambling them away in some form of lottery.

Some state's take a much broader view of what a lottery is. In my experience with Federal and Texas laws, you would have a lottery if those customers are paying fees to have those access devices or the accounts associated with them, with you. Even if minimum deposit requirements are met and there are no fees, the fact that the deposits are with you, may be enough. For this reason these "contests" are opened to noncustomers who are not paying fees to you and that makes it OK. But that may not be applicable to your state. Try counsel or the KY forum below and see what your peers believe.

Thank you for the extra information. I finally found Section 20 of the FDIC act on the web and I think I understand. We have no fee for obtaining the debit card, so I think that we can have a drawing for debit card customers without violating any laws. I don't think "our" credit card (which actually just has our name, but is administered by another bank)has an annual fee. But, if the CC has an annual fee would that qualify as an "entry fee" and thus make the credit card part of the promotion a lottery?

We are very conservative. Counsel had chained things together to arrive at our opinion. The debit card has no fee, but the associated account does, or at least requires a deposit. And that alone may be sufficient to qualify.

Review this thread for more info. Zaibatsus post is enlightening if you have similar requirements. Especially the The OCC has interpreted the required consideration to include the requirement of having a customer relationship with the bank. part.

You may also find an article I wrote "Feeling Lucky? helpful.