NEW YORK ( MainStreet) — Payday loans cost American families $3.4 billion in fees annually, according to the Center for Responsible Lending.

"These pay day loan predators are located in poor neighborhoods and close to military bases," said Terry Robinson, CEO for Sunovis Financial, a small business lender in San Francisco. "The correlation here is that payday loan companies tend to take advantage of the desperate and the poor."

As a result, many states are eliminating predatory payday lending or restricting the number of loans a borrower may withdraw in a year.

States that do not permit payday loans include Connecticut, Georgia, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Vermont and West Virginia.

"Consumers who choose short term credit should learn more about the lender they are borrowing from," said Amy Cantu, communications director with the Community Financial Services Association of America (CSFA). "Various lenders and lending models exist in the short term credit marketplace. There are good actors who offer a safe, reliable credit option, and then there are bad actors who seek to commit fraud and scam consumers."

An alternative to storefront payday lenders for some, FinFit loans are offered as part of an employee financial wellness program.

Before borrowing, workers complete a financial assessment, but FinFit loans are limited to employees whose employer is enrolled in the FinFit program because payments are payroll deducted over five months.

"When people use pay day loans, it's because they've experienced a challenge to their financial position," said FinFit.com founder David Kilby. "The only way to fix the problem is through education and development."

Accordingly, employees are not permitted to obtain a FinFit loan without examining their spending and saving habits.

"We not only educate the employee through an array of financial resources, but we also help them improve their credit by reporting back to the credit bureau when they make timely payments," Kilby told MainStreet.

Despite innovative alternatives, such as FinFit loans, there will always be a contingency that opt for payday storefront loans.

"There are some non-price benefits that payday storefronts can provide that banks, credit unions and others cannot. For example, extended business hours and location convenience," Cantu said.

Traditional alternatives to payday storefronts include banks and credit unions.

"We've found that credit unions and banks have very little financial incentive to offer this product because there's a high risk of default and a high cost associated with providing short term credit," Cantu said.

Members of CSFA that engage in best practices include pay day loan franchises such as Money Tree and Advance America.

"When obtaining credit from an illegal lender, there's very little if any protection under the law," Cantu told MainStreet. "It can be difficult for law enforcement agencies to identify lenders who operate offshore and online because there's no company address or door they can knock on." A full list of CFSA members is on the CSFA website .