Activists for and against Payday Loans already rallying lawmakers

Every year, more than 5% of all Americans take out a payday loan.

Payday lenders say they provide a valuable service. Others call the product rotten.

Alabama's legislature failed earlier this year to pass statewide regulations. However, many cities in our area have imposed their own local ordinances on payday loans.

The Alliance for Responsible Lending in Alabama , ARLA, believes lawmakers need to try again to toughen state laws against these businesses.

"It sounds good," said Cheri Amos. "It sounds like a road of hope. But what it does, is it's a road of destruction. So, I hope the lawmakers will really consider taking a deeper look."

Amos says she lost everything to her husband's secret addiction to payday loans.

"I came to realize that the situation had totally got out of control and basically taken over his life and his decisions on financial," explained Amos. "It totally wiped us out financially and we lost everything- savings, home and in the end our marriage."

Here's how it works: A payday lender will loan you $100 for a fee of $17.50.

Amos says her problems started with a loan for just $150.

"It wasn't a 14 day, 30 day period," added Amos. "He was able to go out, get a loan, then go and pay a little bit on a loan, then go to another loan, get a loan to pay that one, and it was like a just moving of buckets and moving of money. Never getting one paid off, because the other one had to be paid."

So every week when she got paid, the lenders automatically got paid.

"It was wiping out my bank account within ten minutes on a Thursday, every Thursday at 2:15. I was shocked to see how quickly the devastation and then how quickly it can compound and take it to other levels of devastation."

Stories like this make Joan Witherspoon-Norris work harder.

The Director of Social Justice For YWCA, says her organization is one of 15 groups that make up the Alliance for Responsible Lending in Alabama, or ARLA.

"Once the session starts, it's a whirlwind," said Witherspoon-Norris. "It goes really fast. So, we need to be ready for the day the legislature opens. We need to have our ducks in a row."

She says ARLA wants to cap the interest rate statewide for short term lenders.

"It's an incredibly lucrative industry," explained Norris. "The interest rate is 456 percent APR. Credit card loans are capped at 29.9 percent APR. SO, for an industry to legally charge 456 percent APR is incredible and terrible and very profitable."

Representative Patricia Todd of Birmingham plans to reintroduce her bill to limit the loans to 36 percent interest. Todd will again face opposition.

"I think if you have a rate cap of 36 percent on loans that that would not be conducive to be able to perform these transactions anymore," said Brent West, Vice President of Operations for AIES Management. "Nobody would loan money at that rate. It wouldn't work."

West has been in the payday loan business 15 years. He says there are already enough regulations on the industry.

"The demand for short term loans and small dollar loans is great," said West. "It has never decreased in popularity. It is highly popular. And consumers want this product."

"I would say that it's a rotten product and it damages people," countered Norris. "Just like when we find out that spinach has e-coli in it, we pull it off the shelves."

Some local governments aren't waiting for more statewide restrictions. They're making their own. At least ten municipalities have passed city ordinances offering some restriction on these lending businesses.

The restrictions set by cities range from moratoriums, to not allowing the businesses to locate within a certain distance of each other.

The Alabaster city council recently talked about adding restrictions but has no set plans in place.

Trusville's city council agenda for next week has a new moratorium on it.