Bright red police leaflets warning Times Square tourists that photos with costumed characters are free, and tipping is optional, are taking a bite out of the bottom line for the many Elmos, Mickey Mouses, SpongeBobs and Statues of Liberty who dress up to help make ends meet.

"Photos with costumed characters are free. Tipping is optional," read the warnings in English, Spanish, Chinese, German and French. And visitors are told to find police or call the emergency dispatcher if they are being pressured for cash.

The blitz kicked off over the weekend, with officers handing out flyers in five languages. City officials say they had to take action following physical attacks on some visitors, including children. The unruliness peaked last month when a Spider-Man was accused of punching a police officer for telling a woman the character could not force her to pay up.

Hours after the flyers started circulating on Saturday, four fake superheroes were arrested for blocking pedestrians and grabbing one for a picture.

But some of the mostly Spanish-speaking immigrants who wear the giant costumes say they have been left with less money to feed their families.

Standing more than 2 metres (7ft) tall and swathed in light green robes with a US flag pouring down her right arm, Lady Liberty – as played by Hugo Gomez, a 34-year-old Dominican immigrant with three children – has a prime spot in the middle of Times Square.

Gomez leaned down to whisper to a reporter that before the police-enforced measure, he drew about $150 (£89) in tips each day. In recent days, he made about $40 (£23).

Gomez said he never begs. People still come to him, but the cash has shrunk. And standing on prosthetic devices for five hours at a time is taking its toll, he said – without much payoff. "My skin swells every day," he says, his eyes gleaming behind his mask.

One Elmo is angry at police. "All they say is, 'Go, go, go away, move, move, move!'" says Alberto Ramirez, a Peruvian native from New Jersey, who stands by the TKTS theatre discount booth where people queueing behind barricades are an easy target.

He says he pulled in $20 (£11) in eight hours, half of the $40 (£23) he made before, with five kids to feed.

City officials say the warnings were needed to curtail abuse. "They're doing it for people's safety," says Barati Narasim, a New York mother and software expert who offered a few dollars to a Spider-Man posing with her son and his friend.

The city council is working on a bill to require licensing, something Tim Tompkins, president of the Times Square Alliance, says would help legitimate operators by putting "bad players" out of business.

Even Gomez, aka Lady Liberty, favours licensing. "We all know legalising our work with a licence would make things normal, smoother."