There’s no doubt that less access to legitimate, regulated loans will drive consumers to unscrupulous offshore providers that are in effect, beyond the legal reach of U.S. authorities. A proliferation of online pharmacies portends the future of short-term loans if consumers lack state-based, regulated credit options.

A 60 Minutes’ nine-month investigation called “The difficult fight against counterfeit drugs,” which aired March 10, 2011, detailed how counterfeit prescription drugs manufactured outside of the United States were sold through “rogue internet sites, often posing as legitimate pharmacies.” According to the report, “Thirty-six million Americans are estimated to have bought their medicines from these sites, many searching for quality drugs at a better price. Some sites pretend to be from Canada because Canada is known for safe, inexpensive medicines.”

CFSA believes that appropriate state regulations provide strong protections for consumers, while ensuring continued access to choices for short-term credit needs. That same principle should apply in cyberspace. Customers who choose to get a payday advance online should not forfeit any of the protections they would receive from a regulated, store-front lender.

As far as alternatives go and the need for more clarity and transparency in disclosure agreements, the following was a key quote from a representative from Pew Charitable Trusts:

Susan Weinstock, Pew Charitable Trusts: “Unfortunately, the checking accounts in our study did not meet this standard. We found a median of 111 pages of disclosure documents…The banks often used different names for the same fee or service; put the information in different documents, different media, or different locations in a document…Many of these documents are not user-friendly, with much of the text densely printed, difficult to decipher, and highly technical and legalistic.”

We believe that CFSA’s Best Practices should be considered as a blueprint for responsible lending within the payday advance industry, and can be adopted for most short-term financial products. Provisions include: Full disclosure of fees, truthful advertising, right to rescind, appropriate collection practices, including no criminal action, and a requirement to be licensed in each state where the company does business.

“Different banks charge different fees. Different fees are applied under different terms and conditions. Different banks give different names to the very same fee,” Date said. “Ideally, consumers would have a simple way to evaluate checking account costs.”

The panel voted 12-to-10 to approve Cordray’s nomination.

“We are simply seeking common-sense changes,” Mr. Shelby, the committee’s ranking minority member, said in a statement after the vote. “Today’s vote by the Senate Banking Committee was premature. No nominee for the director of the Bureau of Consumer Financial Protection should receive consideration until the Democrats are ready to stop playing politics and work with us to make the bureau accountable. It’s their choice.”

In her post, Hillebrand said: “Payday lending operations—including those that operate online and those that target people residing on reservations—continue to be a concern for both communities.”

We wanted to remind our readers that CFSA Best Practices require that all our member companies that offer payday advances through the Internet must be licensed in the state in which the customer resides and that they comply with all applicable state laws. As a condition of membership, members must abide by all CFSA Best Practices and pledge their commitment to them annually.

In a statement on Native American partnerships with payday advance companies, our Board Chair D. Lynn DeVault said this: “CFSA believes that our strict set of Best Practices is a business model that ensures strong consumer protections while preserving access to short-term credit.”

The combination of the credit card act and the recession triggered card issuers to raise interest rates by about 2 percentage points, notes Nessa Feddis, VP and senior counsel at the American Bankers Association.

“If the bureau imposes further restrictions, the additional regulatory burden could [result in] higher interest rates and fees,” Feddis said. The agency does not have the power to cap either.

The CFPB put up a blogpost today that has a Raj Date recap from yesterday’s meeting in Philadelphia. Click below to review the vid.

“We also recognize that there are a variety of products which are targeted at consumers who have a short-term need for cash – including products offered outside of the traditional banking sector,” Date said. “The consumer agency has the capacity to address this range of products in an even-handed way. ”

Date said that the agency plans to examine the issue to ensure the market for short-term credit is “fair, transparent and competitive.”