The Times Square Alliance met with elected officials Wednesday morning to talk about growing concerns and solutions to regulate the so-called street performers.
"Our feeling is that there's honest folks out there trying to make a living, but there's also folks there trying to take advantage of people," said Times Square Alliance President Tim Tompkins.
Councilman Dan Garodnick is now in the process of drafting a bill that would weed out troublesome characters by making them get licenses from the city. He also said there are copyright issues to hammer out.
"We're going to try to deal with the line of protecting First Amendment rights and commercial speech and also protect against what has become garden variety harassment out there," Garodnick said.
"We've had some conversations with the city administration, but we've got to speed it up," said Tompkins. "People are getting ripped off and worse."
Last month, police arrested a 22-year-old man wearing a Spider-Man costume, accused of grabbing a woman's breasts and backside after putting his arms around her.
Another man who dressed as Spider-Man was convicted last month of harassing a woman in a Times Square spat. The 36-year-old man had been charged with punching a mother of two in the face after she refused to tip him for posing for a photo with her children in February 2013.
The attorney for the character argued that the woman started the fight by throwing a block of ice at his head after he called her names. Another Times Square character, Batman, had to intervene in the scuffle.
In January, a man dressed like Woody from "Toy Story" was charged with forcible touching, and in another case a man dressed as Super Mario is accused of groping a woman.
"The situation is out of control and a licensing and regulatory scheme must be put in place," Tompkins said last month.
Past incidents include a person dressed as Super Mario accused of groping a woman and an Elmo figure pleaded guilty to disorderly conduct after unleashing an anti-Semitic tirade.
But those inside the outfits say they're just trying to get by, averaging $50 a day.
"It's going to affect people getting near us," said one person dressed as Tigger who did not want to be identified.
"We're not bad," said another person dressed as Minnie Mouse.
Others like David Franco, who has been dressing up as Batman in Times Square for five years, says he's not against having to get a license.
"The problem now is there's too much characters," he said. "On one corner, you see the six same costumes."
Dave Chapdelaine and his wife were in town taking pictures with the characters on Wednesday.
"It's part of the culture down here. It's part of New York City. Regulation is fine, but over regulation? Nah," he told CBS 2′s Don Champion.
Tompkins has stressed that despite all the issues, he's not pressing for an outright ban.
Council members behind character licensing say they're working with lawyers on the legality of a potential bill. There's no clear timeline of when a bill will be introduced.
In 2013, Councilman Peter Vallone Jr. proposed legislation that would ban or create tight regulations for costumed characters in the city.
The Times Square Alliance conducted a recent survey and found 50 percent of people who live and work in Times Square reported having a negative encounter with a character.
The Associated Press contributed to this report.