Hilton, with the Coalition of Religious Communities, said, "The payday loan system inherently sets up clients to fail. They do no credit checks. They don't look at any ability of a person to repay. . . . We've seen people who have been loaned money (from several lenders at the same time) equal to three or four months' pay on a two-week loan cycle. That's failure from the word go."

The industry says it is set up to help, not trap, people. Pignanelli says most borrowers use them only briefly in their lifetimes. "Most use them for one or two years. They experience problems; they use the loans to work things out and then move on."

He says industry studies say a typical borrower in Utah is a woman in her early 30s with a household income of $50,000 to $70,000 and is "using payday loans because she doesn't want to pay overdraft or retail merchant fees." He says lenders "don't prey on the poor and the homeless because the poor and the homeless don't pay back loans."

Of note, a 2003 study by the Center for Responsible Lending said it found that 91 percent of all payday loans are made to borrowers who take out five or more such loans a year. It said only 1 percent of all payday loans are made to one-time emergency borrowers.

Illegal traps?

Utah has only a few minor rules that the payday loan industry must follow, such as posting signs clearly listing the annual percentage rate interest of loans, their dollar cost and the phone number of state regulators where borrowers may file complaints.

The Deseret Morning News found that violations of even those minor regulations were common — and could help mislead the unwary.

The Deseret Morning News visited 67 payday loan stores in Salt Lake, Davis and Utah counties. It found 18, or 27 percent, with at least one violation.

It also found that about one of every five stores visited failed to post, as required, their interest in terms of an annual percentage rate. And cashiers at some of them made misleading statements about that interest.

For example, an employee at a Dollar Loan Center in West Valley City, where no rates were seen posted, said verbally that it charges "7.5 percent interest." That is how much it charges in interest per week. The annual rate is 443 percent. Others similarly quoted weekly instead of annual interest rates.

Jaramillo says state law requires lenders when asked for cost of loans to quote interest as an annual percentage rate.

Some lenders also advertise "interest-free loans," even though they charge annual rates of approximately 500 percent. Some, such as Quick Loan, said the first two-week loan is free if the borrower pays it off in cash before it is due. Others called their charges "fees" instead of interest, although Jaramillo says all fees and interest by law must be calculated into the APR posted and included in contracts.