We want to create a Refer A Friend Program for the bank. Basically providing a reward to the customer who refers the friend and something to the friend when they come into the bank (either an immediate gift or enrty into a drawing). Preferably we would want to reward the friend only after they open an account, but I believe that would throw us into the lottery bag.

So I was looking for any suggestions that we could implement to minimize the compliance risk but reward our customer's and their referrals. Thanks

No, that puts you in the Privacy bag. Using a drawing where there are limited winners is more the lottery bag.

Search the threads for "refer a friend" and "lottery" (separately) to get more info. Or go to the InfoVault and look up the topics. http://www.bankersonline.com/infovault/infovault.html

To piggy-back on this thread...

I agree with the interpretation that awarding the bonus to the customer who refers a friend only upon the opening of the friend's new account violates Privacy...

It sounds like there are two alternative to continue with a Refer-a-Friend program.

a) Pay all customers who are referred, regardless of opening a new account (sounds like an expensive program!)

b) Have new customer sign some sort of waiver/agreement that allows the Bank to deposit the referral bonus to the referring customer's account

Is anyone utilizing option B? If so, can you provide a sample of the form/language you are using?

THANKS!

I'm seeing good referrals coming from Bank Board members without any financial compensation. You just have to approach them in a different manner. Have you tried this?

I have mentioned Option B in the past. Some shot it down but I believe you could have the customer making the referral sign the card before it is given out. The person(s) being referred sign it before it is given to the bank. Those signatures acknowledge something to the effect of "By delivering this card to the XYZ Bank and opening a new, qualifying account, I authorize Bank to pay ____ $x for my account. I understand this makes ____ aware of my new account. Bank is authorized to pay the referral fee and make ____ aware of my new account on a one-time basis."

Certainly you can find better wording with fewer blanks. Counsel certainly could and probably should refer to the specific privacy cite. But I think it is doable. Still, counsel should do it.