We are opening a new branch and the marketing department sent me an ad to review for compliance for there promotion. The promotion would offer an additional interest of $50 when opening a new saving account or certificate of deposit with at least $1,000. Disclosures would include early withdrawal penalty; the term of the CD; dates of the promotion; the date the interest will be paid; that the account must remain open and a $1,000 balance must be maintain through xx/xx/xxxx; the cash premium may/must be reported as interest income to the IRS;customers are responsible for applicable taxes and of course Member FDIC. Should we include a disclosure for the savings account that states that fees could reduce earning on the account? Am I missing anything?

Also, when promoting a drawing for a TV, computer, etc. can we require them to open a new account to enter. I think that it has to be a random drawing offered to anyone whether an account is opened or not. Please advise.

The $50 looks like a bonus and that triggers disclosure of the APY and that triggers a complete advertising disclosure.

So, the only thing I am missing is disclosing the APY?

Is the $50 actually interest?

Here's an actual special promotion offer:

$50 bonus available only for new accounts using new funds, and will be paid only on one new account per household. Account must maintain an average daily balance of $5,000 or more for a minimum of 30 days prior to receiving $50 bonus. Bonus is credited to your account 6 weeks after you have met the 30 day promotional requirements. Bonus offer ends, and all account applications must be received by 11/30/02 and your account must be funded by 12/31/02.

A $100 minimum deposit is required to open a Money Market account. Annual Percentage Yield (APY) on the Money Market account is 2.67% as of 8/19/02. The APY is variable and may change before or after the account is opened. All new accounts are subject to XXXXX credit approval, account opening procedures, and standard account terms and disclosures for the account.

Fees could reduce earnings on the account. A service charge fee of $5 per month will be charged for months in which the average daily balance on a Money Market account is less than $250. There is a $3 fee on both the XXXXX and XXXX Checking Accounts if you choose to have your monthly statements mailed to you. See the Fee Schedule and Truth-in-Savings disclosure for more information.

This offer is subject to all applicable laws and regulations and XXXXXX Bank's Terms and Conditions.