U.S. payday lenders are lashing out at the Consumer Financial Protection Bureau in the wake of a report that concluded the industry traps consumers in a cycle of debt.

The Community Financial Services Association of America, a trade group that represents payday lenders, is taking issue with the methods the consumer bureau used to reach its conclusions, as well as the agency's characterizations of its findings.

"Not only are the data demonstrably incomplete and misleading, but the conclusions, and specific language within the report seem aligned with the type of rhetoric that more often comes from advocacy groups that are not always driven by facts," the industry group wrote in a letter to CFPB Director Richard Cordray.

The payday lenders argue in their letter that the agency's findings were based on examinations of a small segment of the industry. They also suggest that any crackdown on payday lending will cause customers to turn to unlicensed online lenders, exposing them to the risk of fraud or identify theft.

Many observers believe the CFPB poses a significant long-term threat to the viability of the payday lending business. Following the release of last week's report, a senior CFPB official suggested that the agency expects to take action aimed at protecting consumers from the payday lending industry.

The CFPB's report looked not only at payday loans, but also at high-cost, short-term loans offered by a small number of banks, and concluded that from a consumer's perspective there is not much difference between the two products.

In their letter to the consumer bureau, the payday lenders sought to defend their industry with a quote from one of the CFPB's key architects.

"It is a mistake to tell adults what to do with their own money," former Rep. Barney Frank, D-Mass., was quoted as saying. "Some adults will spend their money foolishly but it is not the purpose of the federal government to prevent them legally from doing it."

Frank's remarks came as part of a 2010 legislative debate over a bill that would have licensed Internet gambling, but the payday lenders left out that context.

A CFPB spokesperson did not respond to a request for comment on the payday lenders' letter.

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