Gotta love it when critics compare payday loans to the Big Mac. In their eyes, a Big Mac can make you morbidly obese, causing you health problems and eventually leading to heart disease. Sure, when eating them excessively this may be true—but let’s not forget that a consumer has the choice to eat as many Big Macs as they want. And most dieticians would tell you that moderation is key to living a healthy lifestyle.

While Edward Ashworth, the guest columnist who wrote the op-ed that ran on NOLA.com, talks of APR and the “sky-high” fees that consumers pay when using a payday advance, what he’s forgetting to acknowledge are the responsible lenders—like CFSA members—who encourage responsible use of payday advances and provide clear and transparent product information so that customers can make informed decisions.

Here is Best Practice #1 that CFSA Members must adhere to:

“A member will comply with the disclosure requirements of the state in which the payday advance office is located and with federal disclosure requirements including the Federal Truth in Lending Act. A contract between a member and the customer must fully outline the terms of the payday advance transaction. Members agree to disclose the cost of the service fee both as a dollar amount and as an annual percentage rate (“APR”). A member, in compliance with CFSA guidelines where they do not conflict with applicable federal, state or local requirements, will further ensure full disclosure by making rates clearly visible to customers before they enter into the transaction process.”

The reality is that making ends meet is often a struggle, but the idea that it can all be cured if payday loans were eliminated is far from the truth. The fact of the matter is consumers are looking for greater convenience and less cost. There are many financial service providers offering short-term credit products, competing for consumers’ business—from banks, credit unions, payday lenders, and the like. In fact, some of the options are more expensive than payday loans. According to a study conducted by Pew Health Group’s Safe Checking in the Electronic Age, if an overdraft was treated like a short-term loan, with a repayment period of seven days, the APR for a typical incidence would be over 5,000 percent. Another interesting fact: The median amount a customer can be charged per day in overdraft fees is $140. In addition, Americans are estimated to spend $38 billion on overdraft fees in 2011, an all-time high, according to Moebs Services. And that’s not even getting to disclosures. While payday loan agreements are typically one to two pages, Pew found the median number of pages for a checking account disclosure is 111 pages.

So what’s more important: Access or information? We say both.

Consumers need access to information and options to help them cope with their individual circumstances. In the end, it should be informed consumers who decide what works for them, whether it’s going to a bank or credit union,  utilizing a check cashing service, going the way of the prepaid card, or opting into a payday advance.

There’s no question that Americans are coming up short, struggling to make ends meet for several months at a time. It was just reported that 64 percent of Americans would utilize a source other than their savings account to satisfy a $1,000 unplanned expense. The survey also revealed that to resolve the problem, 17 percent of respondents indicated they would borrow the money from friends or family. That National Foundation for Credit Counseling’s release said that “asking those close to you for a loan can be awkward, and potentially negatively impact the relationship. Further, it can lead to “serial borrowing,” with the borrower always leaning on someone else to solve his or her financial problems.”

The bottom line is that if credit options were regulated out of existence or severely restricted, people would still come up short from time to time. If you eliminate access to one product, consumers will seek out another. And research shows it will likely be a more expensive and credit-damaging option.

KC Star editors apparently don’t understand that a 36 percent APR cap would eliminate short-term loans in Missouri. Still, some readers understand the provision would deny credit to those who need it most, and that the costs of payday loans are reasonable compared to short-term alternatives…

Back in May, the National Bureau of Economic Research (NBER) released a study which revealed that almost half of Americans would either probably or definitely be unable to come up with $2,000 in a month if the case of an emergency. This study really shed light on the fragile financial environment that we live in today. Now, the National Foundation for Credit Counseling (NFCC) has released the results of a similar survey, but with the amount of money needed in 30 days being $1,000.  While the survey offered different answers to choose from, the results were very similar to NBER’s findings.

…64 percent of Americans would utilize a source other than their savings account to satisfy a $1,000 unplanned expense.

In a story that came out in The Missourian today, we were glad to see some reporting that had a balanced perspective, offering opinions from the opposition and also what would happen if you placed restrictions on payday lending. Who would be affected the most, you ask? Consumers, and access to much-needed, and affordable credit options…of course!

Saku Aura, an associate (sic) professor of public economics at MU, said he believes the ballot initiative could prove beneficial in some ways, but might make it harder for people to get credit in the long run.

While Aura acknowledged claims that people are struggling with these loans and making irrational decisions, he added that “it’s also true that many people are using this loan as the last resource because they don’t have access to any other type of credit.”

He said the ballot initiative could lead to the disappearance of payday lenders or a dramatic change in the services they provide.

It appears obvious to the ABA that customers understand deposit advance programs, according to ABA’s letter to OCC. The actual deposit advance program is probably much easier to understand than the explanation below, but at least ABA is acknowledging that the terms of the agreement are simple and clear:

“Customers understand that deposit advance programs are the functional equivalent of receiving an advance on income or other regular deposit. Thus, when the recurring deposit actually occurs, the balance not previously advanced is credited to the account. In other words, the normal, recurring payment is bifurcated into an accelerated portion (the advance), and the remaining balance received on schedule less the fee for taking the advance. When a person goes to his or her employer for an advance on their salary or commission payout, the obliging employer naturally pays only the balance (regular periodic earnings less the advance) on the scheduled pay day. The bank that offers a deposit advance program is behaving similarly, but as a third party, the bank charges a fee for the accommodation.”

Some banks have been forced to defend their ability to offer” payday-style loans,” meanwhile, consumer advocates are fighting for tougher restrictions, according to Dow Jones Newswires.

Debate over the Direct-Deposit Advance products flared up after the Office of the Comptroller of the Currency, which regulates national banks, in June proposed guidelines for banks to follow when making such loans, finding that some practices associated with the cash advances “raise operational and credit risks and supervisory concerns.”

Only a handful of banks–including U.S. Bank and Wells Fargo & Co. (WFC)– currently offer the direct-deposit loans, but more banks have signaled interest in offering them. Regions Financial Corp. (RF) started offering its “Ready Advance” loan in May after it found that its customers often get payday loans.

U.S. Bank “has designed consumer protections to prevent long-term use,” said spokesman Tom Joyce.

The American Bankers Association weighed in on the debate, issuing a letter to the OCC saying:

“Although the Comptroller of the Currency has broad authority to define and eliminate unsafe and unsound conduct, it is well-established that conduct considered to be unsafe and unsound is “conduct deemed contrary to accepted standards of banking operations which might result in abnormal risk or loss to a banking institution or shareholder” (emphasis added).10 The OCC, however, has not demonstrated how the prevailing management of overdraft protection or deposit advance programs presents an “abnormal risk” to a bank, nor has it suggested that the discussion of safety and soundness considerations in 2005 Guidance inadequately addresses the credit and operational risks presented.

…

“…there is nothing in the record to suggest that the operation of deposit-related consumer credit programs presents operational, credit, or reputational risks that are not addressed adequately by existing regulation and guidance. ABA believes that the OCC’s assertion of safety and soundness concerns is a thinly disguised attempt to impose additional consumer protections on the existing regulatory framework. We urge the OCC to refrain from setting this precedent, as it will undermine a fundamental goal of financial regulatory reform, the uniform and consistent regulation of consumer financial products and services so that markets work in a fair, transparent, and efficient manner.”

A new study from the Consumer Federation of America says that overdraft protection fees remain high and some institutions actually have slapped on additional penalties. What’s surprising is that this comes a year after the Federal Reserve enacted new rules to rein in exorbitant ODP fees, according to AOL DailyFinance.

“The Fed’s rule cut the number of people who participated in these programs, but for the people who do opt in, there’s no limit on the size of fees or the number of overdraft fees (banks) can charge,” says Ed Mierzwinski, consumer program director with U.S. PIRG.

The median overdraft fee is $35, unchanged from last year, and customers can incur anywhere from three — at JPMorgan Chase (JPM) — to 10 — at Fifth Third Bank (FITB) — of these fees in a single day, according to the study. In the last year, BB&T (BBT) doubled the number of overdraft fees it charges per day to eight, while Regions Financial (RF) raised its daily limit from four to six per day, the survey found. Only TD Bank (TD) reduced the number of fees per day from six to five.

American Forces Press Service put a story out yesterday touting Military Line, an organization “protecting servicemembers and their families from financial pitfalls such as payday lenders,” the article says. The program’s mission, according to Brenda Linnington, director of the Better Business Bureau Military Line, is to increase military members’ financial literacy through information, education, and outreach — both online and on the ground.

“I’d like Military Line to serve as a bridge between the civilian and military communities,” said Linnington, an Army veteran and the wife of an active-duty Army officer. She took on the job in January after the former director, Holly Petraeus, left to head the Consumer Financial Protection Bureau’s Office of Servicemember Affairs.

Just as a reminder, in response to articles earlier in the year, CFSA put out the following statement: “We are surprised to learn that military financial counselors are reporting that some payday lenders may be making loans in violation of the terms and rates imposed by law. We are certain that no reputable payday lenders, especially among the 50 percent of the industry represented by this association, make illegal loans.”

CFSA member companies do not market or provide two-week payday advance loans to the military.

iWatch News has reported that the CFPB has recently launched a process to build a records system to manage all the information it gathers from its Twitter followers and Facebook friends. The CFPB Social Networks and Citizen Engagement System will store each consumer complaint or suggestion along with a consumer’s IP address, geographic location, birth date, business affiliation, and other demographic information. The records may be disclosed, the CFPB said, if needed by Ccongressional offices, agency contractors, law enforcement authorities, or as part of court litigation.

“The use of social media will enable the [bureau] to interact with the public in effective and meaningful ways, encourage the wide sharing of consumer financial information and the strengthening of an online community of consumers, and ensure that critical information about the agency and key consumer finance issues is distributed,” the CFPB said in the recent Federal Register notice.