TRENTON, N.J. (11/13/14)--New Jersey Credit Union League-supported legislation that would permit New Jersey state-chartered credit unions and banks to offer prize-linked savings accounts has been introduced in the state Assembly.
The measure was introduced by Assemblymen Herb Conaway (D-Delran), Troy Singleton (D-Mount Laurel), Timothy Eustace (D-Bergenfield) and Craig Coughlin (D-Woodbridge). Coughlin chairs the Assembly Financial Institutions and Insurance Committee, which will consider the bill before it can be voted on by the Assembly as a whole. The measure mirrors a Senate bill introduced in mid-October by Sens. Richard Codey (D-Livingstone) and Ronald Rice (D-Newark) (News Now Oct. 24).
The legislation would authorize state-chartered credit unions, banks and savings banks to conduct savings promotions in which a minimum deposit qualifies for a chance at winning a designated prize. The idea has been put into practice in a number of states by nonprofits and credit unions. With each deposit in an amount predetermined by the institution, a participant qualifies for a raffle that can win financial prizes while at the same time they build up their savings.
The bill would require all participants to be at least 18 years of age, that everyone has an equal chance to win, that all the rules and conditions are spelled out, and that interest rates and fees are approximately the same as other accounts.
According to the Credit Union National Association, the National Credit Union Administration currently authorizes federally chartered credit unions to offer raffle-based activities such as prize-linked accounts. Federal credit unions should consult legal counsel before establishing such a program to determine if any other state or federal restrictions apply.
Ten states--Connecticut, Indiana, Maine, Maryland, Michigan, Nebraska, New York, North Carolina, Rhode Island and Washington--currently permit credit unions to offer prize-linked savings accounts.