A not-so-quiet battle is being waged among regulators, consumer advocates and industry players over who best represents the interests of the 12 million Americans who use payday loans for everything from emergency car repairs to everyday expenses.

As I wrote in a recent column, alternatives to payday loans have been introduced to offset what critics view as predatory products, with much of the opposition led by faith-based organizations frustrated with regulators' failure to stem the growth of the $38.5 billion industry.

Critics charge that these small dollar, short term loans, due in full on a borrower's next paycheck (hence the name payday loans), snare the working poor in a debt trap. A Pew Research Foundation study released in 2013 found that a borrower taking out a $375 loan ends up paying $520 in interest and fees, including taking out new loans to pay off previous loans over the average 10 month life in a typical borrowing cycle.

Payday loans have been regulated by a patchwork of state laws complicated by online lenders who try to circumvent any oversight. Recently Minnesota's attorney general imposed a $4.5 million fine on an internet Payday lender, CashCall, for operating a "rent-a-tribe" scheme falsely claiming its Western Sky subsidiary operated out of an Indian reservation in South Dakota and therefore was not subject to Minnesota regulations.

The U.S. Consumer Financial Protection Bureau (CFPB) recently issued preliminary rules that would require providers of payday loans, auto title loans and other short-term loans nationwide to ascertain a borrower's ability to pay, limit debt rollovers and notify borrowers before attempting to collect directly from their bank accounts. The public input period, which ended a week ago, generated nearly 90,000 comments bolstered by a letter-writing campaign from borrowers, organized by payday lenders, expressing opposition to the regulations.

But critics said the rules don't go far enough. Darryl Dahlheimer, program director at Lutheran Social Service financial counseling center in Minneapolis called the regulations "a very weak approach."

He said he would like to see a national standard similar to the Military Lending Act Congress passed in 2006, limiting the interest on any loan to a military veteran to 36 percent. He said he would also like to see a national registry for outstanding loans to monitor industry practices and prevent proceeds from a new loan being used to pay off a preexisting loan with another lender. He also points to a "loophole" in Minnesota regulations that put most payday lending outside limits imposed by the legislature.

According to the Minnesota Department of Commerce, 22 companies are licensed as "consumer small loan lenders" covered under laws regulating consumer loans. But five larger companies are organized under a depression-era regulation as "industrial loan and thrift companies" with the top two, Payday America and ACE Minnesota, accounting for two-thirds of the 333,000 legal payday loans and nearly three-fourths of the $128.6 million loaned out in Minnesota in 2015, said the state Department of Commerce.

These larger lenders "operate with few of the restrictions and consumer protections that apply to consumer small loan lenders," said Commerce spokesperson Ross Corson.

They can lend more than the $350 limit in consumer lending laws, can offer open-ended loans that bypass rollover restrictions and borrowers are not required to have a "cooling off period" between back-to-back loans with the same lender, Corson said.

An attempt in the state legislature to reform the regulations in 2014 died at the end of the session. A leader in that effort, DFL state Sen. Jeff Hayden said he wants to see the impact of the final CFPB rules before deciding what changes are needed at the state level.

But Gary Dachis, founder and president of Unbank, the third largest payday lender in the state with 16 storefront locations and more than 40 employees, said the industry is misunderstood by both regulators and the media, which focus on negative stories of "bad actors" and illegal online operations.

"There are people who live paycheck to paycheck. The only thing that helps them is the cash today and we will give them cash right now."

He also said his customers value fee transparency, unlike traditional banks with confusing terms and hidden fees.

Dachis opposes both the CFPB rules and changes to industrial loan and thrift regulations which he says have worked well for more than 80 years. While acknowledging that some of his customers rollover their loans, he said he discourages it and said that he will not make a payday loan for more than 25 percent of a borrower's paycheck.

"It's ludicrous to think we want to bury somebody … because you don't get your money back then. … That's not my business model."

He also said, unlike other payday lenders, he does not automatically pull delinquent payments from a borrower's bank account.

If reform attempts succeed, Dachis said the future direction of his business is uncertain. Payday loans make up less than 10 percent of his revenue, and he may exit the business or come up with another product such as longer term installment loans. "It may be the thing to do anyway," he said.

Brad Allen is a freelance journalist and former investor relations executive for companies including Imation Corp. and Cray Research. His e-mail is brad@bdallen.com.