And a local legislator wants to toughen regulations in Louisiana, where the cost of payday lending came to $311 million in 2005, according to the Center for Responsible Lending, a nonprofit based in North Carolina. Only two other states, California and Missouri, were higher.

A typical $325 payday loan will end up costing consumers, on average, $763.

Recently, voters in Arizona and Ohio approved measures capping interest rates on payday loans. Fourteen other states also have implemented interest rate caps of about 36 percent annually.

State Rep. Patrick Williams, D-Shreveport, drafted but never introduced legislation this year to further regulate the industry in this state.

"They take advantage of poor people. This is their only means of helping themselves, and sometimes they have to pay triple back."

Williams also takes issue with where many payday lenders set up shop. They are strategically placed in lower-income parts of town, he said.



Louisiana has a law regulating the industry. The Legislature passed the Louisiana Deferred Presentment and Small Loan Act in 2000.

In addition to requiring yearly licensing, it stipulates that the maximum payday loan amount is $350, with the loan term being 60 days or less.

The maximum finance rate for one of these loans is the greater of 16.75 percent or $45, plus a $5 documentation fee. After default, the interest rate during the first year is 36 percent, reducing to 18 percent after that.

Source: Google News