League Files Prize-Linked Savings Comment Letter

Hightstown -- The NJ Department of Banking and Insurance last month published the long-awaited proposed implementation rules for NJCUL-requested legislation that authorizes New Jersey credit unions, banks and thrifts to offer savings promotions, also known as "prize-linked savings accounts." Signed into law in January 2016, the measure had an effective date of July 19, 2016 to allow for necessary rulemaking. 

The NJCUL filed its comment letter yesterday and has worked with CU Solutions Group and Commonwealth on additional comment letters.  CU Solutions Group offers credit unions the Save to Win program, a multi-state, turnkey, prize-linked savings program. Formerly Doorways to Dreams Fund (or D2D), Commonwealth’s mission is to “build solutions to financial challenges faced by financially vulnerable people.” The Save to Win product was developed in 2008 by the then Doorways to Dream Fund, the Filene Research Institute and the Michigan Credit Union League & Affiliates. 

The legislation (S2495/A3868, now P.L.2015, c.236) authorizes depositories in the state to conduct promotions, or “prize-linked savings accounts” in which a minimum deposit in an amount predetermined by the institution qualifies for a chance to win prizes.

The idea has been put into practice in a number of states by non-profits and credit unions, and has been successfully implemented internationally. 

Legislation to allow federally chartered financial institutions to offer prize-linked accounts was signed into law by President Obama in December 2014. 

The New Jersey law enables state chartered institutions to offer the accounts, and also clarifies that such savings promotion programs conducted by either state or federally chartered institution do not constitute unlawful gambling under state law, and are not subject to any laws concerning legalized games of chance presently in statute.

The deadline for interested parties to submit comments on the proposed rules is May 19, 2017.

 

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