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Referral Programs & Lotteries

Answered by: 
Andy Zavoina

Question: 
We currently have a referral program whereby if an existing customer refers a friend to open a new account, the existing customer receives $5 gift certificate for groceries for their referral. We want to expand the program to include a monthly drawing where the existing customer who referred their friend has a chance to win a $250 grocery gift certificate in addition to the $5 gift certificate. Is it legal? What regulations apply?
Answer: 

What you are describing is loosely a lottery and the bank may not participate in this activity.

Review 12 USC 25a. You may consider consulting counsel as some opinions would define the referral of the account as consideration to you, while others may not.

First published on BankersOnline.com 3/3/03

First published on 03/03/2003

Filed under: 
Operations
Filed under operations as: 
IT
Referral

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