MAYOR ADAMS, NYCEDC RELEASE FIRST-OF-ITS-KIND REPORT TO SECURE NEW YORK CITY AS GLOBAL LEADER IN APPLIED ARTIFICIAL INTELLIGENCE

 

NYCEDC Releases $3 Million Request for Proposal Seeking Operator to Establish “NYC AI Nexus” to Catalyze and Accelerate Applied AI Innovation and Adoption Across City’s Economy 

  

NYCEDC and OpenAI Announce New Partnership to Advance AI Innovation and Adoption Throughout Five Boroughs 

  

Announcement Comes as City Celebrates Breaking All-Time High Jobs Record for Eighth Time Since Start of Administration, Unemployment Down Across All Demographics  

New York City Mayor Eric Adams and New York City Economic Development Corporation (NYCEDC) President and CEO Andrew Kimball today released “New York City’s Artificial Intelligence Advantage: Driving Economic Growth and Technological Transformation,” a report that outlines a roadmap series of findings, recommendations, and actions to secure New York City’s position as the premier Applied Artificial Intelligence (AI) capital of the world. The report includes 18 commitments to unlock New York City’s AI potential to drive economic growth and continue to develop a diverse workforce to power the future of the city and the sector’s economy. A key commitment of the plan includes a $3 million investment from NYCEDC to establish a first-of-its-kind “NYC AI Nexus,” a transformative initiative designed to facilitate collaborations between New York City-based startups and founders with local businesses to identify, build, and ultimately adopt Applied AI solutions to ensure the continued competitiveness of the city’s diverse set of industries. Finally, NYCEDC announced a partnership with OpenAI, which recently established its first east coast office at the historic Puck Building in Manhattan with 450 employees. Through this partnership, OpenAI will support several programs, including NYCEDC’s Founder Fellowship and the NYC AI Nexus, and serve on the AI Advisory Council. 

  

Today’s announcement comes as the city celebrates recently breaking the all-time high jobs record for eighth time with unemployment down across all demographic groups since start of the Adams administration, continuing to advance Mayor Adams’ State of the City commitment to make New York City the best, more affordable place to raise a family.  

  

“The jobs of tomorrow are being created today in New York City, and artificial intelligence is key to making that happen,” said Mayor Adams. “As we hit another all-time record high for jobs in our city, our administration is looking to the future — and the future shows AI as the next emerging sector and source of job creation across our city, the country, and the globe. The five boroughs are leaping at the opportunity to be the global leader in AI, partnering with the leading AI company, releasing a first-of-its-kind report, and investing millions in the future. From tech and the green economy to life sciences and AI, the Big Apple, not Silicon Valley, is the city leading the way on the jobs that will make our city the best place to raise a family.” 

  

“New York City is the greatest city in the world. We have more jobs today than at any point in our 400-year history and are the global leader in Applied AI,” said First Deputy Mayor Maria Torres Springer. “As today's announcement makes clear, we have a vision and strategy to maintain that standing, and will work diligently in partnership to ensure that — building on the foundation of an unmatched tech ecosystem, nation’s largest academic network, robust talent pool, and abundant access to capital — New York City realizes the transformational potential of AI for the benefit and betterment of everyone in our city.” 

  

“New York City's premier talent pool, diverse economy, strong access to capital, and leading researchers are cementing the city as a global hub for Applied AI, and this report highlights ways that we can best leverage this burgeoning technology for dynamic economic growth,” said NYCEDC President and CEO Andrew Kimball. “New York City is already leading in AI innovations, and we are thrilled to partner with pioneering companies like OpenAI and continue to foster groundbreaking advancements in this transformative field, while ensuring that all New Yorkers have the opportunity to contribute to and benefit from the growth of AI.” 

  

The first-of-its-kind report identifies key recommendations that are essential to securing New York City’s leadership in AI to build an even stronger local economy while ensuring all New Yorkers can participate. Based on research and industry feedback, NYCEDC has identified three AI priorities: 1) Advance New York City’s position as the global leader in Applied AI, 2) Foster new business creation and partnerships to build a dynamic and prosperous AI ecosystem, and 3) Develop a diverse AI-ready workforce to power the future of the economy.   

  

In addition to the report’s identified priorities, the report includes 18 commitments NYCEDC is making to help unlock the city’s AI potential citywide and ensure New Yorkers from all five boroughs take advantage to ultimately drive economic growth. While some of these initiatives are currently underway, NYCEDC will be launching new initiatives, including:  

  

•   Developing programs to support the adoption of AI technological transformations across city industries. NYCEDC will release a $3 million requests for proposal seeking an operator to establish NYC AI Nexus. The NYC AI Nexus initiative is designed to drive AI adoption and work to make AI accessible across all sectors and types of businesses to ensure certain segments of the city’s economy do not fall behind. The NYC AI Nexus will foster innovation and adoption, address coordination challenges between startups and private industry, and accelerate the development and implementation of AI solutions that unlock new opportunities across the city’s economy. 

•   Promoting New York City as a leading hub for AI innovation. NYCEDC will partner with Tech:NYC to launch a campaign that establishes New York City as the global hub for Applied AI by highlighting its robust tech ecosystem, innovative startups, and groundbreaking AI applications. This new brand will be activated with high-profile events, conferences, strategic partnerships, and speaking engagements. The campaign will showcase New York City’s leadership in AI, attracting top talent, businesses, and investments.  

•   Create and launch an AI Advisory Council. Create an AI Advisory Council, in partnership with Tech:NYC, consisting of AI leaders and investors. These ambassadors for the city’s AI community will advise the Adams administration on initiatives to ensure AI in the city supports the growth of the city’s economy across all sectors and businesses, both large and small.     

•   Pilot AI literacy programs across public libraries. As an essential resource for youth and other residents across the five boroughs, NYCEDC seeks to pilot new AI literacy programs for librarians across the New York City public library system. Programs will be a mix of virtual and in-person training sessions on the fundamentals of AI, using AI tools safely and responsibly, and additional custom workshops to ensure library staff can support patrons in using AI embedded in library computer labs for homework assistance, career and professional development training, and other programs offered across local branches.   

•   Connect The City University of New York (CUNY) students with internship opportunities at AI-first startups. Launch the NYCEDC Startup Internship Program with a targeted focus of connecting CUNY students to dynamic roles at AI-first startups, with anticipated placements commencing in summer 2025.  

  

Additionally, the City of New York and OpenAI have formalized a partnership to continue to foster advancements in this transformative field, ensuring that all New Yorkers, and local businesses, have the opportunity to participate and benefit from the growth of AI. Through this partnership, OpenAI will:  

•   Provide a total of $500,000 Application Programming Interface credits to participants of a variety of NYCEDC programs, including the Founder Fellowship and the NYC AI Nexus.  

•   Provide 500 free ChatGPT Plus accounts to participants in AI literacy programs organized by the Fund for the City of New York, Decoded Futures, and NYCEDC literacy programs. 

•   Serve on the new AI Advisory Council. 

  

The report estimates that AI will have a game changing impact and benefit a variety of sectors in the city, especially life sciences and the green economy. In health care and life sciences, AI is driving breakthrough discoveries for patients at a faster pace and with greater accuracy. Additionally, AI will be an important tool in the fight against climate change with the creation of new climate technologies and solutions.  

  

Additional key takeaways from the report include:  

•   New York City has already emerged as a leader in Applied AI, distinguished by its thriving tech ecosystem, unparalleled industry diversity, the nation’s largest academic ecosystem, a robust talent pool, and abundant access to capital.    

•   New York City is the second-largest tech startup ecosystem in the world, employing over 360,000 tech ecosystem employees and is home to over 25,000 tech startups and over 1,200 active venture capital firms. Today, there are over 40,000 workers in the New York metro area with AI skills.  

•   This AI boom has already produced over 2,000 AI startups based in New York City and, in 2023 alone, approximately one-third of venture capital raised by city startups was directed to AI.  

•   New York City’s world-renowned universities, including Columbia University, Cornell Tech, CUNY, and New York University graduated over 87,000 AI-ready degree holders from 2018 to 2023.   

  

The Adams administration is actively investing in emerging industries through capital and programmatic investments to further position New York City as an economic and technology leader and to ensure that these sectors are at the forefront of innovation. The report highlights the numerous programs and initiatives already underway, including the NYC Catalyst Fund, the Greenlight Innovation Fund, supporting the opening of the Chan Zuckerberg Biohub New York, a $100 million backed request for expressed information to source a world-class anchor tenant that will establish and operate a cutting-edge life sciences center at the Science Park and Research Campus Kips Bay, supporting early-stage climate tech companies leveraging new technologies through programs, including NYCEDC’s Pilots at BAT, the Founder Fellowship, and the launch of the AI Policy Lab to support learning across New York City public schools.  

   

In October 2023, the Adams administration launched the nation's first comprehensive Artificial Intelligence Action Plan for the responsible use of AI in city government. The action plan lays out 37 actions over seven initiatives to create governance for the city’s use of AI, to better engage with New Yorkers and other partners on timely and topical AI matters, to hone AI skills for the city’s workforce, and to support agencies in implementing AI solutions.  

  

CHARTER REVISION COMMISSION ANNOUNCES ADDITIONAL PUBLIC HEARINGS, NEWLY APPOINTED COMMISSIONER

 

Mayor Adams Appoints Anthony Richardson to Charter Revision Commission 

  

Additional Meetings Bring Scheduled Hearings to All Five Boroughs 

New York City Charter Revision Commission (CRC) Chair Richard R. Buery, Jr. announced three additional public hearings in March and April in the Bronx, Staten Island, and Manhattan, adding to the two hearings earlier announced in Brooklyn and Queens, bringing opportunity for public input to each of the five boroughs. Details for the newly announced hearings are available below and on the CRC’s Public Meetings and Hearings webpage. These join two previously announced hearings: one on housing and land use in Brooklyn on February 11 and one on government reform in Queens on February 24.   

  

Additionally, New York City Mayor Eric Adams appointed Anthony Richardson, managing director for New York Syndications at CREA, LLC and longtime affordable housing leader, as a new member of the CRC. 

  

“We’re looking forward to hearing from New Yorkers across all five boroughs in the coming months as we examine the City Charter and consider how we can address the generational housing crisis impacting our city,” said CRC Chair Buery, Jr. “With the addition of Anthony Richardson and a robust, transparent public engagement process, we are well-positioned to continue the work of making New York City the world’s foremost center of opportunity for everyone. I’m excited to welcome Anthony to this effort.”   

  

The full list of public hearings across the five boroughs are: 

  

• Brooklyn Public Input Session on Housing and Land Use 

• Tuesday, February 11, 2025 

• 5:00 PM – 8:00 PM 

• Fire Department of the City of New York Headquarters, Robert O. Lowery Auditorium, 9 Metrotech Center (enter via courtyard off Flatbush Avenue), Brooklyn, NY 11201  

  

• Queens Public Input Session on Government Reform 

• Monday, February 24, 2025 

• 5:00 PM – 8:00 PM 

• New York City Department of Design and Construction Headquarters, First Floor Multi-Purpose Room, 30-30 Thomson Avenue (enter on 30th Place), Long Island City, NY 11101    

  

• Bronx Public Input Session on Housing and Land Use 

• Tuesday, March 4, 2025 

• 5:00 PM – 8:00 PM 

• Fordham University, McShane Campus Center, Great Hall, Third Floor, 441 East Fordham Road, Bronx, NY 10458 

  

• Staten Island Public Input Session on Government Reform 

• Wednesday, April 9, 2025 

• 5:00 PM – 8:00 PM 

• Staten Island University Hospital North (enter via the Dr. Regina McGinn Education Center), 475 Seaview Avenue, Staten Island, NY 10305  

  

• Manhattan Public Input Session on Housing and Land Use 

• Wednesday, April 23, 2025 

• 5:00 PM – 8:00 PM 

• New York Law School, 185 West Broadway, New York, NY 10013   

  

The public hearing schedule is also available on the CRC’s Public Meetings and Hearings webpage and will be updated as changes and additions are made. 

  

Additional details about all hearings — including Zoom registration links for virtual testimony, translation services, and accommodations — are available on the CRC’s website. Hearings will include testimony from experts on topics of interest to the Commission. At each hearing, the public will also be invited to testify about ideas for improving the City Charter, with testimony for up to three minutes each. Members of the public can also submit written testimony to CharterTestimony@citycharter.nyc.gov. Hearings will be live-streamed and archived online.  

  

Follow the CRC on Instagram, Threads, and X at @2025nyc_crc  

   

About Anthony Richardson 

  

Anthony Richardson is managing director for New York Syndications at CREA, LLC, a national tax credit syndicator specializing in low-income housing tax credits. In this role, Richardson leads the expansion of CREA’s New York footprint, serves as the primary contact with state and local government agencies, and facilitates multi-million-dollar investments in affordable housing in New York, as well as in other parts of the country. Prior to joining CREA, Richardson served over 13 years in various leadership roles in the City of New York, including as the executive vice president for development at the New York City Housing Development Corporation, and as the director of multifamily new construction programs at the New York City Department of Housing Preservation and Development. He currently serves on the boards of the New York Housing Conference, the Citizens Housing and Planning Council, and the New York City Housing Partnership. Richardson holds a Bachelor of Arts degree in Business Administration from Morehouse College, a Master of Public Administration (MPA) degree from Columbia University, and a MPA in Public and Economic Policy with merit from the London School of Economics and Political Science. 

New Jersey Man Sentenced To 18 Months In Prison For Causing The Death Of A Seven-Year-Old Boy And A 48-Year-Old Woman In Hudson River Boat Capsizing

 

Danielle R. Sassoon, the United States Attorney for the Southern District of New York, announced that RICHARD CRUZ, who caused the deaths of a seven-year-old boy and a 48-year-old woman after his motor vessel Stimulus Money capsized in the Hudson River in July 2022, was sentenced by U.S. District Judge Katherine Polk Failla to 18 months in prison.  In October 2024, CRUZ pled guilty to misconduct and neglect of a ship officer resulting in death. 

U.S. Attorney Danielle R. Sassoon said: “Richard Cruz has been held accountable for his misconduct and negligent actions that caused the tragic deaths of a young boy and a woman when Cruz’s vessel capsized in the Hudson River.  This prosecution should send a message to all captains and operators of commercial vessels that there will be consequences when they fail to follow the federal regulations and safety protocols that exist to keep passengers safe.” 

According to the allegations contained in the Complaint, Information, and statements made in court:

On July 12, 2022, at approximately 2:40 p.m., the motor vessel Stimulus Money capsized in the Hudson River resulting in the death of two passengers — a seven-year-old boy (“Victim-1”) and a 48-year-old woman (“Victim-2”).  At the time of the capsizing, CRUZ was the owner and captain of the vessel.  CRUZ had purchased the vessel approximately three months before the capsizing.  CRUZ conducted boat “tours” for paying customers onboard the vessel on multiple occasions in the months leading up to the capsizing, despite not having the required United States Coast Guard (“USCG”) credentials and certifications to do so.

CRUZ’s negligent actions and omissions caused the capsizing and the deaths of Victim-1 and Victim-2.  At the time of the capsizing, among other things: CRUZ operated Stimulus Money with 13 people on board, exceeding the vessel’s maximum allowable capacity; CRUZ operated Stimulus Money at a high rate of speed even though an advisory had been issued to alert small watercraft of hazardous conditions, including high winds and heavy seas; CRUZ had not obtained a required USCG certification to operate the vessel with paying customers on board; and CRUZ operated Stimulus Money without a valid USCG Certificate of Inspection, which is required for a vessel to operate with paying customers on board.

All 13 people on board Stimulus Money were thrown overboard when it capsized in the Hudson River.  Shortly after the capsizing, boats from the New York City Police Department’s (“NYPD”) Harbor Unit and the New York City Fire Department’s (“FDNY”) Dive Rescue Team, and ferries operating nearby, arrived at the scene of the capsizing to render emergency assistance.  All but two passengers were recovered conscious and in varying medical conditions. They were subsequently transferred to hospitals in Manhattan and survived the capsizing.  Approximately 25 minutes after the capsizing, members of the FDNY Dive Rescue Team recovered Victim-1 and Victim-2 from the Hudson River. They were trapped underneath the capsized vessel and found unconscious.  Emergency medical personnel subsequently pronounced Victim-1 and Victim-2 deceased.  The cause of death was drowning.

Please report any illegal passenger charters to the USCG at https://www.p3tips.com/878.

In addition to the sentence, CRUZ, 33, of Elizabeth, New Jersey, has been ordered to pay $50,000 in restitution for the funeral expenses of the victims. 

Ms. Sassoon praised the outstanding investigative work of the USCG Investigative Service and the Special Agents and NYPD Detectives assigned to the U.S. Attorney’s Office for the Southern District of New York.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Jeffrey W. Coyle is in charge of the prosecution.

Governor Hochul Announces Subway Fare Evasion Down 26 Percent in New York City

Highlights Ongoing Work To Continue Reducing Fare Evasion Throughout Transit System

Strategic Deployment, Stronger Enforcement and Smarter Turnstiles Are Turning the Tide Against Fare Evaders — Helping To Protect Transit Riders and Taxpayers, and Strengthen Transit System

Summonses Issued for Fare Evasion Increased 96 Percent in 2024 Compared to 2019

Reconfiguration of All Subway Turnstiles To Prevent Backcocking To Be Completed This Year and Additional Fare Evasion Measures To Be Installed

New Modern Fare Gates Being Installed at 20 Additional Stations This Year

Governor Kathy Hochul announced significant progress on multi-faceted efforts to combat fare evasion across the Metropolitan Transportation Authority (MTA). In the last six months, from June 2024 through December 2024, subway fare evasion is down 26 percent. Across buses, including both the local and express bus network, fare evasion is down by 9.1 percent over the same period of time. This progress follows a comprehensive strategic response implemented by Governor Hochul, MTA and NYPD — including strategic deployment of enforcement, modifications to fare gates at numerous transit stations, and other measures helping to reduce fare evasion. The Governor also highlighted ongoing efforts to further crack down on fare evasion, including new anti-fare evasion measures being installed at all subway turnstiles this year and new fare gates being installed at 20 high-traffic stations this year.

“We’re turning the tide against fare evasion to help protect transit riders and taxpayers and continue strengthening our transit system,” Governor Hochul said. “Our work is far from over – and we’ll continue to crack down on fare evasion this year through strong enforcement and new measures coming to subway turnstiles and fare gates throughout the system.”

According to the MTA’s Blue-Ribbon Panel report, the situation regarding fare evasion had reached crisis levels, with the MTA losing an estimated $690 million in unpaid fares and tolls in 2022.

To drive down fare evasion, Governor Hochul and the MTA have utilized recommendations from the report to advance a comprehensive strategy that has included strategic deployment of enforcement and ongoing modernization of turnstiles and fare gates, as well as other measures. This effort has also included strengthening coordination with NYPD to boost on-the-ground resources and increase the number of summonses for fare evasion.

The results have shown clear progress. From June 2024 through December 2024, subway fare evasion is down 26 percent – from 14 percent of subway riders evading the fare to 10 percent. Across buses, including both the local and express bus network, fare evasion is down by 9.1 percent – from 50 percent of riders evading the fare last summer down to 45 percent, marking a pivotal shift in combating fare evasion.

Strategic Deployment of Enforcement

NYPD Collaboration

NYPD issued 143,100 TAB summonses for subway fare evasion in 2024, a 96 percent increase from 2019. NYPD also created a new uniformed Bus Enforcement Unit that has been deployed alongside the MTA’s “EAGLE Team” to support fare compliance across all five boroughs.

Bus Fare Enforcement: MTA EAGLE Team

Following recommendations from the Blue-Ribbon Panel Report, the MTA took a data-driven approach to optimize deployment of the EAGLE Team, the MTA’s civilian bus fare inspection team, to the bus stops and times of day with the highest concentration of fare evaders. EAGLE Team inspectors are charged with inspecting fares on local and SBS bus routes, and with NYPD support, the officers both educate members of the community on fare payment options and issue summonses. The MTA has stepped up EAGLE Team deployment, enforcing bus fare payment on 148,000 buses at over 370 stops since September 2024. In 2025, the MTA will also implement sensors and screens on buses to further track and deter fare evasion.

Subway Fare Enforcement – Gate Guards

The MTA deployed unarmed gate guards across more than 208 subway stations, an expansion from 50 stations, taking a data-driven approach to optimize deployments based on station characteristics, ridership patterns, and more. Gate guards deter fare evasion.

Environment: Improving the Fare Control Environment

Expanding on several successful pilots from 2024, the MTA is rolling out data-backed modifications to more fare gates across the subway system and expects to see an even greater impact by combining multiple efforts together.

Turnstile Modifications

The MTA has made steps to tackle evasion tactics at the turnstiles to create stronger, more resilient barriers against fare evasion. This includes reconfiguration of turnstiles to prevent back-cocking at 75 percent of all turnstiles and installation of turnstile fins at 20 fare control areas, which have dissuaded and reduced the number of individuals jumping the turnstile.

In the coming months, the MTA will scale up this initiative and implement a newer generation of fins, pilot additional anti-jumping interventions, and complete anti back-cocking modifications at the remainder of the turnstiles systemwide.

Stopping the “Superhighway” of Fare Evasion

Delaying the opening of the emergency exit gate by 15 seconds has proven to be cost-effective in pilots, reducing gate evasion by nearly 40 percent. The MTA will build on this successful pilot and roll out this delay at exit gates in at least 150 stations in 2025, beginning at 34 St-Penn Station, Canal St, 161 St-Yankee Stadium, and Jay St-MetroTech.

Modern Fare Gates

The MTA replaced traditional emergency exit gates with new, accessible wide-aisle gates at Atlantic Av-Barclays Center, 34 St-Penn Station and Astoria Blvd, and introduced a new full array at Sutphin Blvd-Archer  Av, where fare payment increased by 20 percent compared to 2023.

In December 2023, the MTA released a Request for Information (RFI) to qualify the next generation of secure, accessible, and modern fare gates. After receiving and evaluating 12 responses from gate vendors, the MTA began in-lab testing of promising gate technology. The MTA will be conducting in-system testing and implementation of new fare gates at 20 stations by the end of 2025, and an additional 20 stations in 2026.

The MTA will prioritize stations with higher ridership traffic, accessibility features and those with high fare evasion. Initial installation is scheduled to begin at 42 St-Port Authority, Delancey St-Essex St, and Jackson Heights-Roosevelt Av.

The MTA’s proposed 2025-2029 Capital Plan will accelerate this implementation even further, including $1.1 billion to install modern fare gates in at least 150 stations systemwide.

Additional Strategies to Reduce Fare Evasion

In 2024, the MTA began adopting best practices in behavioral change to further reinforce the need for fare payment. Through campaigns that highlight the humanity of transit workers and create a sense of collective responsibility to digital signs on buses stating that fares are required, the MTA is resetting social norms around fare payment.

The MTA’s work with NYCPS to encourage student use of OMNY cards reinforces the importance of fare payment. Since the launch of student OMNY cards in September there has been a 51 percent increase in rides and 18 percent increase in weekly active rides among students. There has also been a 27 percent increase in taps-per-active-card during the previous semester compared to 2023. The new partnership with New York City Public Schools (NYCPS) has resulted in consistent fraud monitoring to ensure student cards are being used by the student to which they are assigned. The MTA has also created 15 Customer Service Centers that will be integrated with enrollment in Fair Fares, the City of New York’s program to provide eligible New Yorkers with half-fare MetroCards and OMNY accounts, as well as the MTA’s Reduced-Fare program.

Attorney General James Secures More than $1 Million from Netspend for Charging Illegal Fees and Misleading New Yorkers

 

Netspend Froze Customers’ Bank Accounts, Charged Illegal Fees, and Forced Customers to Pay Outrageous Interest Rates  

Netspend Will Pay More Than $735,000 to Tens of Thousands of Affected New Yorkers 

New York Attorney General Letitia James secured over $1 million and significant reforms from Ouro Global, Inc. (Ouro) which owns Netspend Corporation (Netspend), a provider of reloadable debit cards and payroll cards. An Office of the Attorney General (OAG) investigation found that Netspend violated numerous consumer protection laws and harmed tens of thousands of predominately low-income New Yorkers. For years, the company illegally froze its customers’ accounts and turned over their funds, which should have been protected, to debt collectors instead. Netspend also charged illegal fees on its debit and payroll cards that cost customers hundreds of thousands of dollars, and operated a paycheck advance program that charged customers illegally high interest rates. As part of the settlement, Netspend will pay more than $735,000 to tens of thousands of New Yorkers who were affected and change its policies to comply with New York’s consumer protection laws. Netspend will also pay over $350,000 in penalties to the state.

“Netspend took advantage of tens of thousands of consumers and even deprived vulnerable New Yorkers of their hard-earned benefits like Social Security,” said Attorney General James. “This settlement will return hundreds of thousands of dollars to New Yorkers and ensure that Netspend ends its illegal practices. I will not tolerate any company that tries to profit by defrauding New Yorkers, and we will continue to go after anyone who breaks our consumer protection laws.”

The OAG investigation found that Netspend violated state consumer protection laws, particularly those meant to protect low-income New Yorkers and those who receive benefits like Social Security and veterans benefits. Netspend operated a paycheck advance program, where workers could receive payments that supposedly represented advances on future wages. However, the fees Netspend charged consumers in this program amounted to interest rates with substantial annualized costs. While New York law limits annual interest rates to 16 percent for unlicensed lenders such as Netspend and 25 percent for licensed lenders, the OAG investigation uncovered more than 4,000 cases in which consumers were charged an effective annual interest rate of over 300 percent. The investigation also revealed that most of these enormous costs fell on New Yorkers who relied on repeated use of the paycheck advance program.

The OAG investigation also found that Netspend facilitated violations of New York’s Exempt Income Protection Act. Under this law, state or federal benefits such as Social Security benefits, veterans benefits, disability insurance, and unemployment insurance are protected from debt collectors up to a certain amount: $3,840 for New York City, Long Island, and Westchester County residents, and $3,600 for all other New York residents. Netspend failed to follow this law, freezing customers’ accounts and allowing debt collectors to seize its customers’ funds, even when they fell below the legal limit.

For example, in January 2019, Netspend froze a New York consumer’s bank account containing $1,008.52 – a balance substantially below the legal threshold. When the consumer contacted Netspend and informed them that the account restraint was illegal under New York law, Netspend incorrectly responded that the account had to remain blocked for a year “per the court order.” The customer had to pay over $600 from the account to the debt collector to free up the remaining funds from the illegal freeze.

Netspend also misled its customers and charged a wide range of illegal fees. Netspend’s marketing materials misled consumers about ATM fees that would be charged when using a Netspend card, leading its customers to believe they would be able to avoid all fees by using in-network ATMs. In reality, customers were charged fees on all ATM transactions, earning Netspend millions of dollars. Netspend also charged its payroll card customers a wide range of illegal fees after those fees were banned in New York, including fees for inquiring about an account balance at ATMs, fees for attempting transactions at ATMs that were declined, foreign exchange fees, and more.

As a result of the settlement, Netspend will pay back more than $735,000 to tens of thousands of New Yorkers who were charged illegal fees, had funds illegally turned over to debt collectors, or who paid fees for paycheck advance payments in violation of New York laws. Consumers who have active debit or payroll accounts with Netspend will have their accounts credited with restitution amounts, while those without active accounts will receive checks in the mail directly from the company. Today’s settlement also requires Netspend to pay a penalty of more than $350,000 to the state and change its policies to fully comply with New York laws.

Attorney General James encourages all consumers who have had their bank accounts illegally frozen or had funds illegally turned over to creditors to report their experiences to OAG.

Justice Department Sues to Block Hewlett Packard Enterprise’s Proposed $14 Billion Acquisition of Rival Wireless Networking Technology Provider Juniper Networks

 

Acquisition Would Eliminate Competition Between Two of the Three Top Wireless Networking Firms, Raise Prices, and Diminish Innovation for American Businesses

The Justice Department sued to block Hewlett Packard Enterprise Co.’s (HPE) proposed $14 billion acquisition of rival wireless local area network (WLAN) technology provider Juniper Networks Inc. (Juniper). HPE and Juniper are the second- and third- largest providers, respectively, of enterprise-grade WLAN solutions in the United States. The complaint, filed in the Northern District of California, alleges that the proposed transaction would eliminate fierce head-to-head competition between the companies, raise prices, reduce innovation, and diminish choice for scores of American businesses and institutions, in violation of Section 7 of the Clayton Act.  

“HPE and Juniper are successful companies. But rather than continue to compete as rivals in the WLAN marketplace, they seek to consolidate — increasing concentration in an already concentrated market,” said Acting Assistant Attorney General Omeed A. Assefi of the Justice Department's Antitrust Division. “The threat this merger poses is not theoretical. Vital industries in our country — including American hospitals and small businesses — rely on wireless networks to complete their missions. This proposed merger would significantly reduce competition and weaken innovation, resulting in large segments of the American economy paying more for less from wireless technology providers.”

WLAN technology — which includes hardware, software, and advanced artificial intelligence — is critical for the modern workplace. Millions of Americans today create and share company resources and access the internet from wireless-enabled devices. Retail employees wirelessly process payments and log inventory. Doctors access medical records on phones and tablets and track life-saving patient care on the go. University students take notes on their laptops and access course materials from their dorm rooms. Wireless networking is the primary means by which many employees connect to their employer’s computer network and the internet.

As alleged in the complaint, Juniper has been a disruptive force that has grown rapidly from a minor player to among the three largest enterprise-grade WLAN suppliers in the U.S. Juniper has also introduced innovative tools that have materially decreased the cost of operating a wireless network for many customers. This competitive pressure has forced HPE to discount its offerings and invest in its own innovation. HPE recognized and tracked Juniper’s growing significance and engaged in a campaign, including mandatory training for its engineers and salespeople, to “beat” Juniper when competing for contracts. Indeed, just a month before the proposed acquisition was announced, front-line HPE salespeople were concerned that “[t]he Juniper threat [was] dire” because in dozens of opportunities Juniper was “trying to unseat” HPE. Senior HPE executives shared this view; one former HPE executive reminded his team that “there are no rules in a street fight” with Juniper and encouraged them to “kill” Juniper when going head-to-head for sales opportunities.

Now, HPE seeks to acquire its smaller, innovative rival. The proposed transaction between HPE and Juniper, if allowed to proceed, would further consolidate an already highly concentrated market — and leave U. S. enterprises facing two companies commanding over 70% of the market: the post-merger HPE and market leader Cisco Systems Inc. This substantial lessening competition in a critically important technology market poses the precise threat that the Clayton Act was enacted to prevent.

Hewlett Packard Enterprise Company is headquartered in Spring, Texas. Its WLAN-focused business unit is located in Santa Clara, California.

Juniper Networks Inc. is headquartered in Sunnyvale, California.