BOSTON – A word to the wise from credit union legal experts: Credit unions considering offering zero percent auto loan financing as prizes to members should be thoroughly familiar with related IRS rules before launching a promotion.

Richard Schulman, Esq. an 11-year NCUA veteran who also served for three years as Associate General Counsel on the regulatory side of the office of General Supervision and who is currently a partner at Roach & Carpenter, Boston representing federal and state-chartered credit unions, told Credit Union Times he has received calls from several credit unions inquiring about the feasibility of offering zero percent financing "either as a raffle drawing or other type of prize" to members who apply for auto loans.

"For safety and soundness reasons, credit unions cannot offer zero percent financing for all members. Any person who gets a loan from a credit union has to qualify by their credit standards," said Schulman. "But promoting the zero percent financing as a prize would be one way for credit unions to compete with the car dealers who are promoting this."