Bill to Allow Banks to Conduct Savings Promotions for Consumers

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Legislation sponsored by Assembly Democrats Herb Conaway, Troy Singleton, Tim Eustace and Craig Coughlin to inform through promotion the benefits of having a savings account cleared a legislative hurdle with passage by an Assembly panel on Thursday.

The bill (A-3868) would authorize state-chartered banks, savings banks, savings and loans and credit unions to conduct savings promotions. In the bill, “savings promotion” is defined as a raffle in which the sole consideration required for a chance of winning designated prizes is the deposit of a minimum specified amount of money in a savings account or other savings program.

The sponsors note the intent of their bill is to encourage depositors to save by allowing these financial institutions to reward their customers for depositing money into savings accounts with a chance to win prizes.

“When many hard-working New Jersey residents struggle to meet their immediate needs, it understandably can be difficult to consider depositing money into a savings account, but not doing so often has devastating consequences,” said Conaway (D-Burlington). “This legislation will help incentivize saving so that people can avoid turning to credit cards, high-interest loans or other resources that typically cost more in the long run. ”

“Too often, unanticipated expenses are the beginning of a cycle of indebtedness that’s difficult for many to escape,” said Singleton (D-Burlington). “This bill will help encourage many who would not otherwise put money aside to open an account that can serve as a lifesaver in the future.”

“Whether they’re looking to fund a home, a car or simply a rainy day account, all New Jersey residents can benefit from saving,” said Eustace (D-Bergen/Passaic). “By facilitating these promotions, this legislation will help emphasize the importance of savings accounts.”

“Having access to funds at any time can prove to be crucial during an emergency situation,” said Coughlin (D-Middlesex). “With debt crippling many American households, this legislation hopefully will lead more people to take advantage of a savings account to help manage their finances.”

The legislation also includes certain consumer protections by requiring the participating financial institutions to:
(1) conduct the promotion in a manner so as to ensure that each entry has an equal chance of winning the designed prize;
(2) fully disclose the terms and conditions of the promotion to each of its account holders;
(3) maintain records sufficient to facilitate an audit of the promotion;
(4) ensure that only account holders 18 years of age and older are permitted to participate in the promotion;
(5) not require any consideration, other than the requirement that the participant deposit money into a savings account or other savings program to obtain entries in the promotion, to participate in the promotion; and
(6) offer an interest rate and charge fees on any qualifying account that are approximately the same as those on a comparable non-qualifying account.

The bill also clarifies that a savings promotion conducted as a result of the bill’s provisions does not constitute unlawful gambling under the laws of the state and is not subject to any laws concerning legalized games of chance presently in statute.

The measure was advanced by the Assembly Financial Institutions and Insurance Committee, of which Coughlin is chair.