DEPARTMENT OF CONSUMER AFFAIRS DECLARES DECEPTIVE OVERDRAFT ENROLLMENT TOP FRAUD OF THE YEAR
Commissioner Mintz Encourages New Yorkers to Pay Careful Attention to So-Called “Courtesy Overdraft” Marketing
Bloomberg Administration Provides New NYC SafeStart Bank Account with No Overdraft Fees
Consumer Affairs Secures Nearly $9.9Million in Restitution for New Yorkers in 2009—A Department Record
Department of Consumer Affairs (DCA) Commissioner Jonathan Mintz today
declared deceptive enrollment in so-called “courtesy overdraft” protection a top
fraud of the year. Banks who continue to automatically enroll customers
into such costly services without their permission after July 1, 2010 will be
violating federal law. Fees for these services, which average $27 per $20
purchase, cost Americans more than $38 billion in fees in 2009 alone and were
assessed without most customers’ knowledge or permission. DCA cautions
consumers about the deceptive marketing tactics that banks may use in upcoming
months to re-enroll them in these nontransparent practices and calls upon banks
to offer real-time overdraft choices instead. In an effort to provide New
Yorkers with a safe banking option and no overdraft fees, particularly the
825,000 without mainstream bank accounts, DCA has also created NYC SafeStart
Bank Account, the City’s first banking product available to all New
“We know that there are some 825,000 “unbanked” New Yorkers, and that the
main reason they are not fully participating in the mainstream financial
marketplace is well-founded fears of unpredictable and costly fees like
overdraft,” said Commissioner Jonathan Mintz. “Banks that automatically
enroll customers in costly and unrequested services like overdraft are violating
the most basic principles of a fair transaction – and soon will also be
violating federal law. Rather than wait for overdraft protection reform,
we have created a safe, affordable banking product with no overdraft or other
fees to help New Yorkers protect their money.”
The Center for Responsible Lending found that over 50 million Americans
overdrew their checking at least once in a 12-month period and the burden of
these exorbitant fees is often concentrated on those least able to pay
them. DCA’s Office of Financial Empowerment’s (OFE) Neighborhood Financial
Services Study by found these fees were the number one reason why more than
825,000 New Yorkers do not have bank accounts.
In response, DCA created the NYC SafeStart Account, which is the first of its
kind in the nation and is an ATM-based starter account designed to help New
Yorkers protect their money by avoiding costly fees, like overdraft fees or
monthly fees. The account, which can never be overdrawn, is available to
all New Yorkers and features no overdraft fees, no monthly fees provided minimum
balances are met, minimum balance requirements of $25 or less, and an ATM
While enrolling New Yorkers in a bank
account is the first step in protecting their money, DCA remains committed to
protecting consumers in the marketplace. Last year, DCA secured nearly
$9.9 million in restitution—a Department record—through mediation and
enforcement efforts for New Yorkers who filed valid consumer complaints.
In FY ’09, the Department received and investigated nearly 5,500 consumer
complaints against businesses consumers believe have unfairly taken advantage of
them or have misled them.
To file a complaint with the Department of Consumer Affairs, check
the license status of a business, or learn more about opening a NYC SafeStart
account call 311 or (212 NEW-YORK), or visit to nyc.gov/consumers.
DCA enforces the Consumer Protection Law and other related business laws
throughout New York City. Ensuring a fair and vibrant marketplace for consumers
and businesses, DCA licenses more than 71,000 businesses in 57 different
industries. Through targeted outreach, partnerships with community and trade
organizations, and informational materials, DCA educates consumers and
businesses alike about their rights and responsibilities. DCA’s Office of
Financial Empowerment (OFE) is the first municipal office of its kind in the
nation with a mission to educate, empower and protect New Yorkers with low
incomes. DCA’s OFE administers a citywide network of Financial Empowerment
Centers and other products and services that help these New Yorkers make the
best use of their financial resources to move forward economically. For more
information, call 311 or visit DCA online at nyc.gov/consumers.
ADDITIONAL COMPLAINTS RECEIVED BY DCA IN 2009:
DEBT COLLECTION AGENCIES DCA received more than 830
complaints against debt collectors last year, making it the Department’s number
one complaint for the second year in a row.
Always make sure the debt collector is licensed by the New York City
Department of Consumer Affairs.
If you do not recognize the debt, or question whether the debt is
legitimate, write a letter to the debt collection company asking for
verification of the debt within 30 days of receipt of the letter from the debt
Confirm all agreements to resolve a debt in writing.
Do not ignore a debt collector. Even a small debt could hurt your
Need more help? The City’s Financial Education Network Directory
provides a list of free and low-cost classes, workshops, and counseling
services to make managing your money easier than ever. Call 311 or
HOME IMPROVEMENT CONTRACTORS DCA received approximately
700 complaints against home improvement contractors in Fiscal Year 2009. There
are more than 12,000 home improvement contractors licensed to operate in New
York City. Many more are unlicensed and uninsured. DCA’s Home Improvement
Contractor Trust Fund provides additional protection for homeowners who use a
licensed contractor with payments up to $15,000 if the contractor goes out of
business or leaves town. Consumers can help protect themselves by
following these tips:
Always use a licensed contractor to ensure that DCA can intervene if there
is a problem.
Call 311 or use DCA’s instant license check at nyc.gov/consumers to ensure that
a home improvement contractor is licensed. Consumers can also request the
contractor’s complaint and violation history.
Avoid paying the contract in full before work is completed.
Establish a progress payments schedule on your contract so that payments are
tied to specific work progress with final payment due when all the work is
completed to your satisfaction.
Make sure your contract contains a cancellation clause.
Do not pay more than 25 percent of the total cost, up to a maximum
$15,000, up front and NEVER PAY CASH.
FURNITURE STORES Although DCA does not license furniture
stores, they must comply with the New York City Consumer Protection Law.
In Fiscal Year 2009, DCA received nearly 570 complaints about furniture sales.
Most consumers complain about defective or damaged goods or items that were
never delivered. Some complaints include billing disputes.
Before purchasing merchandise, call 311 to check the business’ complaint
Get a detailed receipt that lists an exact delivery date or a guaranteed
date by which the furniture will be delivered.
Examine your receipt closely and if not posted, ask for the store’s refund
policy before making the purchase. If there is no policy posted, the retailer
must give the consumer 20 days to get a refund in the manner in which the
purchase was paid.
Know the refund or exchange policy. Merchants can establish their own
refund or exchange policy, so long as it is prominently displayed. If there is
no policy posted, the retailer must give the consumer 20 days to get a refund
in the manner in which the purchase was paid.
Always get a receipt and save it. All receipts must include the total
amount paid, date, business name and address, the make and model of the items
you bought, and, if applicable, the business’s DCA license number.
ELECTRONICS STORES DCA received nearly 500 complaints
last year about electronic sales. Most complaints focused on improper
pricing, purchasing damaged or defective goods, and unwanted “add-on”
items. Consumers also can be lured into stores with “bait and switch”
schemes that advertise great deals that are not really available. Shoppers
looking for good deals can end up paying significantly more for unwanted
“add-ons” that were described as necessary. These are often items that
already come with the product.
Electronic stores operating in New York City must be licensed by the
DCA. Always shop at licensed electronic stores – they are required to
post their DCA license conspicuously.
Request an itemized receipt and examine it closely for hidden charges.
Look for the store’s refund policy, which must be posted.
Shop around and do some research on pricing before making a purchase. If
you know how much an item generally sells for, you will know if something
looks expensive or is a good deal.
Avoid buying extra warranties that may not give you anything that isn’t
already covered by the manufacturer’s and retailer’s warranties.
Be sure to ask the retailer if any written warranties already come with
the product and review the terms before agreeing to pay for additional
warranties being offered through a service contract. If there is no
written warranty from the manufacturer, you may be dealing with a “grey
market” item, which means it was not intended for sale in this country and is
not covered by a manufacturer’s warranty.