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 Yorkers. 

“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 Card
     
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.

TIPS:

• 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 collection agency. 
• Confirm all agreements to resolve a debt in writing. 
• Do not ignore a debt collector.  Even a small debt could hurt your credit rating.
• For more information, visit nyc.gov/consumers and download DCA’s Debt Collection Guide.
• 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 visit nyc.gov/ofe.

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:

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.

TIPS:

• Before purchasing merchandise, call 311 to check the business’ complaint history
• 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.

TIPS:

• 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.