When Oregon capped payday loan APRs at 36% in 2007, Advance America closed all their stores in the state.

Why? Because the legislature made it impossible for them to collect interest at rates that sometimes ran as high as 700%. So they took their business elsewhere.

Payday lenders sometimes try to get around usury laws by denying that they're making loans at all. In an attempt to characterize loans as something else, they may call them “sale-leaseback” transactions, “deferred presentments,” “cash advances,” “deferred deposits,” “check loans” and the like.

In a paper called “Usury Law, Payday Loans, and Statutory Sleight of Hand: An Empirical Analysis of American Credit Pricing Limits,” Christopher L. Peterson, a law professor at the University of Florida, writes that “The best available nationwide estimate suggests that the average payday loan borrower repays $793.00 for a $325.00 loan.”

The Pentagon published a study that found the average military family was repaying $834 for a $339 loan.

Not altogether unsurprisingly, the industry insists its charges don't qualify as usurious. But Policy Matters Ohio, a nonpartisan research organization, says that “the cost of payday loans is harmful to low- and middle-income working families.”

The Eugene Register-Guard says payday loans trap “the poor, naive and desperate in death spirals of debt.”

Fair game or moral outrage? Hoofy & Boo take a look at payday loans.