WASHINGTON -- Last September, the D.C. Council had to decide whether payday loans preyed on the poor or were a godsend for consumers needing quick cash in an emergency. The Council decided. It capped payday loans at 24 percent, effectively putting them out of business. Now Virginia faces the same decision, and Liz Crenshaw has her latest installment on the issue.

Curtis Gipson, Consumer
I needed to just get an advance on a week's salary.

Crenshaw
SO CURTIS GIPSON USED A PAYDAY LOAN AS THE QUICK FIX TO HIS SHORT-TERM MONEY PROBLEM. HE BORROWED $720 DOLLARS. IN TWO WEEKS HE WOULD PAY BACK $820. ANNUAL INTEREST RATE, ALMOST 390 PERCENT.

Did you think you were going to pay it off in that first two weeks?

Gipson
Not really Liz, because it's easier to pay a hundred dollars than it is to pay $820, so I was willing to let it go for a couple of weeks before I paid it off.

Crenshaw
Did it only go a couple of weeks?

Gipson
No it didn't.

Related: Watch The Report

Crenshaw
AND THAT'S WHAT HAPPENS TO MOST PAYDAY BORROWERS WHO DON'T UNDERSTAND THAT A QUICK PAYDAY LOAN CAN PUT THEM IN A CRUSHING CYCLE OF DEBT. SO FAR, GIPSON'S PAID $500 IN INTEREST WITHOUT TOUCHING THE PRINCIPAL.

LAST SEPTEMBER, PAYDAY INSIDERS TOLD US THAT'S HOW THE PAYDAY INDUSTRY PREYS ON ITS CUSTOMERS.

Bill Harrod, Former Payday Manager
You'll see that customer in September, October, November. You'll see him for Christmas.

Crenshaw
How long did your customers typically stay with you?

Harold
I was there 9 months and none left and I saw them all the time. Not one customer paid off a loan.

Crenshaw
AND EXPERTS SAY THAT RESULTS IN 400-PERCENT OR HIGHER INTEREST RATES ON EVEN MODEST LOANS.

Leslie Parrish, Center for Responsible Lending
We estimate that within a year, the average borrower has paid $793-dollars for an initial $325 loan.

Crenshaw
DESPITE INTENSIVE LOBBYING, D.C. SHUT DOWN PAYDAY LENDING LAST YEAR BY CAPPING INTEREST RATES AT 24-PERCENT. SO WHAT HAPPENED TO PAYDAY LENDERS?

WELL THEY CAN'T MAKE D.C. PAYDAY LOANS ANYMORE BUT THEY DID SEND THEIR CUSTOMERS ACROSS THE RIVER TO, ARLINGTON OR BAILEY'S CROSSROADS.

THERE, IN A FEW MOMENTS, BORROWERS CAN FIND A PAYDAY STORE READY TO LEND UP TO $500 RIGHT NOW. UNLIKE D.C, VIRGINIA IS STILL PAYDAY FRIENDLY.

Right now, Virginia allows Payday lenders to charge around 400-percent APR, and that's done through a special exemption to their 36-percent interest rate cap that all other small lenders have to abide by.

But that could change. The Virginia General Assembly is currently battling over payday loans. The Virginia House has overwhelmingly passed a payday reform bill.

THAT BILL LIMITS THE NUMBER OF LOANS BORROWERS CAN GET EACH YEAR, EXTENDS THE TIME TO REPAY LOANS, AND CAPS THE INTEREST RATE AT 36-PERCENT.

BUT THE VIRGINIA SENATE IS STILL ARGUING SEVERAL BILLS WHICH COULD REFORM THE INDUSTRY, CAP THE INTEREST RATE, OR EVEN REPEAL THE 2002 LAW THAT OPENED VIRGINIA TO PAYDAY LENDERS.

THE PAYDAY INDUSTRY SAYS IT HAS ALREADY REFORMED ITSELF WITH A "BEST PRACTICES" POLICY THAT HELPS CONSUMERS BORROW RESPONSIBLY AND PAY BACK LOANS WITH NO-CHARGE EXTENDED PAYMENTS IF THEY RUN INTO TROUBLE.

BUT CURTIS GIPSON HOPES VIRGINIA LEGISLATORS WILL HEED HIS STORY AND PROTECT OTHERS FROM THE PRICE HE'S PAID.

It's fast?

Gipson
It's fast.

Crenshaw
It's easy?

Gipson
It's easy.

Crenshaw
It's expensive?

Gipson
And it gets expensive.

Crenshaw
Yeah.