WASHINGTON • Richard Cordray will convene his first field hearing as the director of the new Consumer Financial Protection Bureau today in Birmingham, Ala. Cordray will hear testimony on the payday loan industry, which has acquired a reputation as one of the bad boys of the commercial credit world.

Assailed by some for enticing low-income customers into a cycle of repeat borrowing at high interest rates, payday lenders have drawn the ire of state regulators nationwide. Their penchant for setting up shop in poor minority neighborhoods has made their business model a target for civil rights activists as well.

Industry supporters say payday lenders provide much-needed short-term credit to consumers who are largely underserved by banks and who can't borrow cash from friends and family. When compared with alternatives such as bouncing checks or paying re-connection fees on utilities, they argue, short-term payday loans — which often demand repayment within weeks — are a good deal, despite interest rates that can run upward of $15 to $20 for every $100 borrowed.

Years of attacks by consumer advocates, unfavorable court decisions, tighter state regulations and the recession have taken a toll on the industry. After reaching a high of more than 24,000 in 2006, the number of payday loan stores fell to 19,600 in 2010, according to reports by industry analysts.

Seventeen states and the District of Columbia have outlawed high-interest payday loans, which allow cash-strapped workers to borrow against their next paychecks.

Industry representatives say such criticisms are unwarranted. In fact, most customers are satisfied with the product, said Jamie Fulmer, vice president of Spartanburg, S.C.-based Advance America, the nation's largest nonbank provider of cash advance services, with 2,600 stores in 29 states.

Among providers of short-term credit — such as car-title lenders and pawnshops — state-regulated payday lenders provide the most transparent, easy-to-understand terms and conditions, Fulmer said.

"I would challenge you to find a more fully disclosed product in the marketplace," he said.

Under terms of the 2010 Dodd-Frank financial legislation, the consumer bureau couldn't regulate the payday loan industry and other nonbank entities that provide financial products until its director was in place. As Republican senators were blocking Cordray's confirmation, President Barack Obama used a recess appointment to install him last month.

Cordray's first order of business was to launch the bureau's nonbank supervision program, from which today's hearing springs.

Consumer advocates hope the bureau will use its authority to scrutinize industry loan records and marketing materials and gauge their compliance with federal truth-in-lending laws. They also want the bureau to develop new rules for industry practices deemed unfair, deceptive and abusive, said Jean Ann Fox, the director of financial services for the Consumer Federation of America.