Officials eye online payday loans

A study by the Pew Charitable Trust has found that approximately 3 percent of adults have taken out an internet payday loan within the past five years.

However, many people find themselves worse off after getting these types of short-term loans due to their sky-high interest rates.

Payday loans allow workers to borrow in advance against their paycheck for a fee that often turns out to be the equivalent of an interest rate of several hundred percent annually.

Consumers' banks may provide Automated Clearing House access to online payday lenders that then automatically withdraw loan payments from customers' accounts.

Even though the banks do not offer the loans directly, providing access to customers' bank accounts could violate consumer protection laws. And officials are trying to put pressure on banks to make them stop working with online lenders who prey on those in need of immediate cash.

Consumer advocates say more payday loan companies are setting up shop online because it's a lot easier to hide from the law on the internet than it is to hide in a storefront.

Because internet payday loans are illegal in 15 states and are restricted in many others, customers could have grounds to seek legal action against unscrupulous lenders.