I did a search and only found posts about customers referring friends for loan products.

We want to place a flier in customer’s statements that state:

Get $10 cash when your friend opens
>Any checking account
>Any CD
>A high balance money market account (we actually name the account)
>A high balance savings account

Get $5 cash when your friend opens
>A lower balance money market account
>A lower balance savings account

We don’t state any APY’s.

I don’t believe this is an advertisement as defined by Reg DD.

Section 230.2
(b) Advertisement
v. Messages that are provided along with information about the consumer's existing account and that promote another account at the institution

The flier is very general and it’s not to promote accounts to current customers.

Marketing wants to add a referral fee to the customer if they refer someone who opens an annuity. I know the interagency statement on insurance sales states we can offer employees only a one time nominal fee for a referral, but was wondering if there are any restrictions for offering a referral fee to a customer. I could find nothing on this.

Anyone have any comments, suggestions, opinions?

Quote:

---

Marketing wants to add a referral fee to the customer if they refer someone who opens an annuity. I know the interagency statement on insurance sales states we can offer employees only a one time nominal fee for a referral, but was wondering if there are any restrictions for offering a referral fee to a customer. I could find nothing on this.

---

Be careful under the SEC guidelines also. I am not versatel in this area, but a referral to the customer could be seen as improper. Someone tell me if I'm wrong or right, Please!

It seems to me that you would have privacy and security of customer information issues similar to the previous thread concerning discounts and bonuses for referring loan customers. You could learn not only what kind of account you friend opened but, within a range how much they opened the account for (since your fee would be based on the balance of the new account). Now with reference to the fee for NDIPs, does your bank offer its own products ? If not, how could the bank pay a fee for an annuity sales ? Shouldn't the entity selling the annuity pay the referral fee ?

We've thought about the privacy issue and what we hope will remedy this is we've trained our staff not to share information about a customer with another customer.

For instance, if a customer asked us if his/her friend opened an account, our staff won't say. Not to mention they can't discuss account numbers, balances etc.

For our customer to collect their referral, they would have to drop off or mail the flier we sent them with their name and their friend's name. If after a search of our database, their friend's name comes up showing a new account, we will mail them the money.

The referral isn't based on the balance in the account, it's based on the type of account (ie., if their friend opens a high required minimum balance money market product, they get $10, if they open a low required minimum balance money market product, they get $5).

We have two licensed insurance sales people employed by the bank. They sell a third party's product. We have an agreement with them for compensation to the bank for each sale. So there is a benefit to the bank for each sale, therefore senior management justifies us paying the referral.

I think that you a treading water with the sharks on the privacy issue, no matter how much training you provide. I have a new neighbor and I know your program, so on a whim I submit his name (never met actually him), I receive a check in the mail - bingo - I have non-public information about this neighbor from you.

You may want to check with an attorney in your state, because the payment of referral fees on annuity sales to non-licensed individuals is illegal in some jurisdictions.