Contest or lottery — the rules have changed
AML AND COMPLIANCE NEWS |
The American Savings Promotion Act was signed into law by President Obama on Dec. 18, 2014. It amended the Federal Reserve Act, Federal Deposit Insurance Act and the Home Owner's Loan Act to amend the definition of lottery in each law to allow a savings promotion raffle. A savings promotion raffle is defined as "a contest in which the sole consideration required for a chance of winning designated prizes is obtained by the deposit of a specified amount of money in a savings account or other savings program, where each ticket or entry has an equal chance of being drawn, such contest being subject to regulations that may from time to time be promulgated by the appropriate prudential regulator…."
Now when structuring a contest, financial institutions can focus on the true goal of increasing deposit accounts rather than trying to be sure they do not inadvertently create a lottery. It will no longer be necessary for anyone to ask to participate in the contest as long as the contest involves a savings account or other savings program. Exactly what an "other savings program" includes is one of the questions about the act that will go unanswered until promulgating regulations are issued.
Why the sudden change in heart, you might ask? It's simple; Americans are not saving enough. Congress no doubt hopes that the result of the passage of this law will be to get more people to save.