News stories, like the video below from CBS Nightly News, all too often do not distinguish between licensed payday advance providers who offer regulated loans and unlicensed, unregulated lenders, many offshore, who tender illegal loans.

Today, payday advance stores fill an important need for small dollar, short-term credit for banked, working Americans in communities throughout the country. Millions of customers across the country have used payday advances responsibly and appreciate having somewhere to turn when they need quick access to credit. Analysts estimate payday advances are used by 19 million American households.

We strongly encourage consumers who need access to credit to do business with CFSA members who are required to be licensed and regulated. A member that offers payday advances through the Internet must be licensed in the state where the payday advance customer resides.

As an example, in October, 2010, the Washington State Department of Financial Institutions (DFI) warned consumers of the danger of unlicensed payday lenders.

“When a consumer takes a loan from an unlicensed lender, there is very little we can do to protect them, and often little we can do to the company if they don’t adhere to our laws, especially if they are located outside of the United States.”

This CBS News story highlights the rising number of complaints against online lenders.    It’s harder to regulate online lenders so if you ban storefronts, the result is consumers going online for loans.  The smartest thing legislatures can do for consumers is to impose a reasonable regulatory scheme that keeps storefront lenders open.

This article by the Business and Media Institute, ‘CBS Evening News’ ignores borrower responsibility in hit piece on short-term lenders, critiques “Evening News” correspondent Armen Keteyian’s July 28th hit piece and points out that nearly 20 million American households utilize payday lending services to make an emergency car repair, cover a variety of other costs or avoid bounced check fees.

They say that calls requesting comment from Mary Bates (the customer interviewed for the CBS Evening News) on the apparent contradiction were not immediately returned. Bates had previously been quoted as saying, “Payday loans are really convenient and they help people get out of a bind…It’s less of a hassle. I really liked the people and they provided me a great service.”

The Business & Media Institute, a division of the Media Research Center, is nonprofit watchdog organization that strives to bring balance and responsibility to the media.