New York Attorney General Letitia James today delivered more than $230,000 to the New York City Department of Consumer and Worker Protection (DCWP) to support free financial literacy programs 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 offer New Yorkers 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 critical programs that help protect consumers from fraud and empower everyday New Yorkers to make responsible financial decisions. I am proud that the money my office has secured will be reinvested into our communities.”
This funding comes from a previous FTC and OAG settlement with direct marketer Allstar Marketing Group, LLC (Allstar) for deceptive practices that hid charges from consumers ordering products primarily advertised through television infomercials. Thousands of customers were hit with unexpected fees added through 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. After consumers were reimbursed, leftover funds were approved to be used by OAG for consumer education.
The $230,926 delivered to DCWP today is the remaining amount from the settlement with Allstar and will support DCWP’s Financial Empowerment Center’s public awareness campaign. The campaign will educate consumers on credit use, banking, savings, debt, safe and affordable financial services, and student loans.
“Whether you’re dealing with job loss or the cost of inflation, struggling with credit card or student loan debt, or having a hard time budgeting your paycheck — the city’s Financial Empowerment Centers 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 help and directing these funds to us to further raise awareness of this invaluable service.”
Financial literacy is a crucial part of financial well-being and large numbers of Americans are not well versed in financial literacy. A 2022 annual report by the TIAA Institute and George Washington University shows that more adults in the United States have a very low level of financial literacy than any survey year since the survey began in 2017. For example, adults correctly answered only one half of the 28-question survey designed to test financial literacy. Twenty-three percent could not correctly answer more than 7 of the 28 questions. Only one third of questions were answered correctly involving understanding financial risk. Black, Latino, and younger people had lower levels of financial literacy overall. As shown by the report, 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 debt constrained;
- Three times more likely to be unable to cope with a $2,000 financial shock; and,
- Four times more likely to spend more than 10 hours a week on issues related to personal finances.
The 2018 FINRA National Financial Capability Study shows that 69 percent of New Yorkers could not answer more than 3 of 5 questions covering everyday economics and finances.
The OAG vigorously takes action to protect consumers from fraud and hold unscrupulous companies accountable. The funding for this program will help strengthen consumer protections and help consumers avoid fraud.
The NYC Financial Empowerment Centers have helped clients collectively save more than $10 million since inception and have served more than 66,000 clients, helping them reduce their debt by more than $85 million. Anyone 18 and older who lives or works in New York City can book a free and confidential appointment with a professional financial counselor by visiting nyc.gov/TalkMoney or calling 311 and saying “Financial Counseling.” Services are available in person or by phone and in multiple languages.