The state of Mississippi is gearing up for a legislative battle as the expiration of a law approaches in 2012. If the law sunsets as scheduled, payday lenders will no longer be exempt from a 36 percent cap on annual interest rates. Payday loans carry rates of up to 572 percent and cost families $270 million in fees every year.

In recent years, a growing number of states have enacted interest rate caps and other protections to eliminate abusive payday lending practices that trap consumers in long term debt. Payday lenders repeatedly evade these rules, finding new ways to maintain business as usual and continue to offer short-term loans with triple-digit interest rates. The latest form of subterfuge is one in which the payday lenders position themselves as brokers, seeking licensure under state-level laws designed to regulate credit repair organizations. Under this scheme, payday lenders charge the maximum interest rate allowed on the underlying loan plus an additional "broker" fee, typically ranging from $20 to $25 per $100, resulting in loans with an effective annual percent interest (APR) in excess of 500%.

Testimony of Uriah King, Center for Responsible Lending before the Ohio Senate Finance and Financial Institutions Committee

Executive summary of Springing the Debt Trap - outlines what reforms states have tried, documents that none have worked except for the 36% rate cap.

A working paper by a staffer at the Fed Bank of NY is fundamentally flawed, offers no valid information, and is being used to justify policy that keeps low-wealth borrowers trapped in income-draining payday loans. The paper is not a Federal Reserve Bank report as a payday industry press release implies. Our critique exposes the fatal errors in the paper's methodology.

Facing increasing scrutiny of the problems caused by payday lending, the industry trade group recently announced a new public relations campaign that claims to address the problem of loan flipping by requiring its lenders to offer borrowers an extended payment plan. However, this plan will not give borrowers a viable option for escaping the debt trap, and a description of the guidelines suggests lenders will offer the plan to borrowers in trouble only once per year despite the fact that the typical borrower has nine loans per year.

CRL critiques faulty research report by Don Morgan, which attempts to compare states with and without payday lending but misidentifies many of those states.

Brief analysis of Georgia's law preventing payday lenders from circumventing their consumer credit interest rate cap and other protections.

Payday lenders offer defective product, claiming if fills need for access to credit