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Savings Promotion Contest

Ala. Code tit. 5, ch. 27
in effect

Ala. Code § 5-27-1 Legislative Findings.

5-27-1. Legislative Findings. The Legislature finds and declares the following: (1) Federal law allows both depository financial institutions and credit unions to hold savings promotion contests, subject to certain conditions and authorization under state law. (2) Savings promotion contests in other states and countries have led to an increase in the number and amount of funds in personal savings accounts. (3) Savings promotion contests encourage people to save money by adding a feature to personal savings accounts that includes a chance to win prizes. (4) Savings promotion contests are not lotteries because they do not require individuals to pay consideration for a chance to win a prize, and the individual maintains ownership of the money that is deposited into a savings account or other qualifying account. (5) The prizes are funded through the interest that accrues across the pool of savings accounts participating in the promotion contest. (6) It is in the best interest of the citizens of Alabama to encourage increases in personal savings accounts. (Act 2017-406, §1.)

Ala. Code § 5-27-2 Definitions.

5-27-2. Definitions. When used in this chapter, the following words and phrases shall have the following meanings: (1) APPROPRIATE STATE OR FEDERAL REGULATORY AGENCY. The state or federal agency that is statutorily responsible for the supervision of all or part of the operations of a participating financial institution. (2) DEPOSITOR. An individual member or customer of a financial institution who meets all of the following requirements: a. Maintains a qualifying account at a financial institution participating in a savings promotion contest. b. Is in good standing at a financial institution authorized to do business in Alabama. c. Is 18 years of age or older. (3) ENTRY. A chance or chances obtained by a depositor to win a designated prize or prizes in a savings promotion contest by complying with the terms and conditions of a savings promotion contest. (4) FINANCIAL INSTITUTION. A bank, savings institution, or credit union authorized to do business in Alabama under federal or state law. (5) PARTICIPATING FINANCIAL INSTITUTION. A financial institution, as defined above, that is sponsoring a savings promotion contest. (6) QUALIFYING ACCOUNT. A savings account or other savings product that is offered by a participating financial institution and that meets all of the following requirements: a. Allows deposits to be made by a depositor. b. Is evidenced by periodic statements that are delivered to the depositor or are available to the depositor through electronic access. c. Has an interest rate that is similar to, and not less than, the interest rates of other comparable nonqualifying accounts. (7) SAVINGS PROMOTION ACCOUNT. A contest or promotion sponsored by a financial institution or a group of financial institutions in which a chance of winning designated prizes is obtained by a depositor when the depositor either: a. Deposits a specified amount of money or makes a specified number of deposits into the depositor’s qualifying account. b. Participates in one or more savings products or programs. (Act 2017-406, §2.)

Ala. Code § 5-27-3 Savings Promotion Contest Authorized; Conditions.

5-27-3. Savings Promotion Contest Authorized; Conditions. (a) Subject to supervision by the appropriate federal or state regulatory agency, a financial institution may conduct a savings promotion contest in accordance with this chapter for the purposes of encouraging depositors to maintain savings accounts and increase personal savings. The financial institution may join with other financial institutions to participate in a savings promotion or contest. (b) A savings promotion contest shall be subject to all of the following conditions: (1) Subject to any limits the financial institution may place on the number of entries that may be placed by the depositor, it is structured such that a depositor may place an entry to win a prize or prizes by doing either of the following: a. Depositing a minimum specified amount of money or making a specified number of deposits into a qualifying account in accordance with the terms and conditions of the specific savings promotion contest. b. Participating in one or more savings products or programs according to the terms and conditions of the savings promotion contest. (2) The participating financial institution complies with all applicable consumer protection laws. (3) No consideration is required as payment for a chance at winning the prize or prizes. For purposes of this subdivision, a depositor does not pay consideration if, as a requirement of participating in the savings promotion contest, the financial institution requires the depositor to deposit a specified amount of money or make a specified number of deposits into his or her account or participate in one or more savings programs or products involving his or her accounts. (4) Each entry has an equal chance of being chosen as the winning entry. (5) Participating depositors are not required to be present at a drawing in order to win a prize. (6) The participating financial institution maintains books and records necessary to facilitate an audit of the savings promotion contest and, upon written request, provides those records to the appropriate federal or state regulatory authority. (7) The savings promotion contest is conducted in a manner that protects the safety and soundness of the financial institution and does not mislead depositors. (8) The financial institution posts online the terms and conditions of the savings promotion contest and lists each location where entries may be submitted. (9) No fees or charges may be applied to a qualifying account that would not be applied to a substantially similar nonqualifying account. (Act 2017-406, §3.)

Ala. Code § 5-27-4 Oversight.

5-27-4. Oversight. Each savings promotion contest is subject to oversight by the federal or state agency responsible for regulating the financial institution, and the regulatory agency may issue cease and desist orders relating to a savings promotion contest offered by a financial institution which it regulates if the regulatory agency concludes, based on substantial evidence, that the financial institution is engaging in unsafe or unsound practices or that the financial institution has violated any law or rule, condition, or agreement of the regulatory agency. (Act 2017-406, §4.)

Ala. Code § 5-27-5 Construction; Limitation on Prizes or Awards.

5-27-5. Construction; Limitation on Prizes or Awards. A savings promotion contest offered pursuant to this chapter does not constitute gambling or the promotion of gambling or a lottery or raffle pursuant to Section 65 of the Constitution of Alabama of 1901. No prize or award shall exceed twelve thousand five hundred dollars ($12,500). (Act 2017-406, §5.)
Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026

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