Previous Settlement Funding Will Boost Free Consumer Literacy Programs for New Yorkers
NEW YORK – New York Attorney General Letitia James today donated more than $230,000 to the New York City Department of Consumer and Worker Protection (DCWP) to support free education programs finance for New Yorkers. The funding, which comes from a previous consumer fraud settlement secured by the Federal Trade Commission (FTC) and the Office of the Attorney General (OAG), will help provide New Yorkers with free, confidential one-on-one financial counseling at DCWP’s NYC Financial Empowerment Centers. Today’s action is part of Attorney General James’ ongoing efforts to protect consumers.
“Financial literacy is a key pathway to economic justice and equity, especially for vulnerable communities,” said Attorney General James. “This funding will support essential programs that help protect consumers from fraud and empower New Yorkers to make responsible financial decisions. I am proud that the money my office has obtained will be reinvested in our communities.
This funding stems from an earlier FTC and OAG settlement with direct marketer Allstar Marketing Group, LLC (Allstar) for deceptive practices that concealed fees from consumers ordering products primarily advertised through television infomercials . Thousands of customers have been hit with unexpected fees added by misleading online and phone ordering processes.
Allstar paid $7.5 million for restitution to customers as part of the FTC settlement, and $500,000 went directly to OAG for penalties, costs and fees. Once consumers were reimbursed, the remaining funds were approved for use by the OAG for consumer education.
The $230,926 donated to DCWP today represents the remaining amount of the settlement with Allstar and will support DCWP’s Financial Empowerment Center’s public awareness campaign. The campaign will educate consumers about using credit, banking, saving, debt, safe and affordable financial services, and student loans.
“Whether you’re grappling with a job loss or the cost of inflation, struggling with a credit card or student loan, or struggling to budget your paycheck – Financial Empowerment Centers of the city can help New Yorkers become more financially stable,” said DCWP Commissioner Vilda Vera Mayuga. “I thank the Attorney General for recognizing the importance of this assistance and for sending us these funds to raise awareness of this invaluable service.”
Financial literacy is a crucial part of financial well-being, and many Americans are unfamiliar with financial literacy. A 2022 annual report from the TIAA Institute and George Washington University shows that more adults in the United States have very low levels of financial literacy than any survey year since the survey began in 2017. For example, adults answered only half of the 28-question survey designed to test financial literacy correctly. Twenty-three percent could not answer more than 7 of the 28 questions correctly. Only a third of the questions were answered correctly regarding the understanding of financial risk. Blacks, Latinos, and youth had lower levels of financial literacy overall. As the report shows, people with a very low level of financial literacy (compared to those with a very high level) are:
- Six times more likely to have difficulty making ends meet;
- Three times more likely to be forced into debt;
- Three times more likely to be unable to cope with a financial shock of $2,000; and,
- Four times more likely to spend more than 10 hours a week on personal finance issues.
FINRA’s 2018 National Financial Capability Study shows that 69% of New Yorkers couldn’t answer more than 3 out of 5 questions covering day-to-day economics and finance.
The OAG is taking strong action to protect consumers from fraud and hold unscrupulous companies accountable. Funding from this program will help strengthen consumer protection and help them avoid fraud.
The NYC Financial Empowerment Centers have helped clients collectively save over $10 million since their inception and have served over 66,000 clients, helping them reduce debt by over $85 million. Anyone 18 and older who lives or works in New York can book a free, confidential appointment with a professional financial advisor by visiting nyc.gov/TalkMoney or by calling 311 and saying “Financial advice”. Services are available in person or by telephone and in multiple languages.