TRI-CITIES -- Payday lending has grown into a billion dollar industry in Washington state. Lending is up 90 percent in recent years.

The idea behind a payday loan, use your paycheck and get an advance.

But an Action News investigation found you don't even need a paycheck to get cash.

There are more payday loan shops along Clearwater Avenue in Kennewick than there are fast food places.

And we went to all eight, with one question. "Can you get a payday loan with an unemployment check?"

We sent an Action News staffer inside to find out how far these shops will go to get you the cash.

Not everyone said yes, but the big names did: Moneytree, Check into Cash and Advance America.

One after another said, not only would they cash an unemployment check, but they also would base a short-term loan on that check.

You don't even need a payday to get a "payday" loan.
Is that legal? Yes.

"Social security, unemployment, child support ... nothing is what you would call sacred," said Yvonne Fengler of Consumer Credit Counseling.

Washington state is about to put tighter restrictions on payday lenders. Starting next year, loans are limited to $700 or 30 percent of your monthly income.

And you can't get as many loans as you used to, just eight a year. For some people it used to be as much as 25 times a year, that's enough for every bi-weekly paycheck.

The industry is creating a single database to prevent companies from giving more loans than allowed.

But the practice of payday loans for unemployment checks will still be legal.

Do Washington laws go far enough?

"No there's always ways around it but I do think that if nothing else they're going to put up hurdles to jump a little higher and try harder and maybe that will make the consumer wiser," said Fengler.

Fengler works for the non-profit Consumer Credit Counseling Service.

She meets with people deep in debt. Just this month, a couple walked in looking for help with all of their unpaid payday loans.

Fengler says they've been getting loans for four years, so she crunched the numbers. That's $55,0000 dollars they paid in fees alone.

But flip the coin. What about over-regulation? That's the argument in downtown Hermiston. You won't see very many payday shops, in fact there is only one in all of Umatilla and Morrow counties. The owner tells me it's because tougher laws in Oregon drove them out.

At its peak, Oregon had 360 payday loan shops four years ago. This year only 76 remain in the entire state.

It's because the state capped the interest rate at 36 percent and put in a mandatory loan time of 31 days.

It's one of the toughest payday loan laws in the country.

The owner of this Hermiston shop says his business brings a value to the community. The industry has a stigma of predatory lending, but says it's not always that way. Sometimes it's just helping people like Jimmy Primmer.

"Every once in a while you come up short at the end of the month," said Primmer.

Check cashing isn't the big concern for Fengler, it's the cycle of loan after loan.

"Come see us first. There are some resources you unaware of and we can help you find," said Fengler.

Action News called up the companies that give payday loans with unemployment checks.

The ones that called us back say they stand by the policy.

Advance America says they do it because the feds say they can't discriminate based on income.

The company spokesperson also says only a small percentage of clients are using unemployment checks for loans, most are middle income.

So what do you think about it? On keprtv.com, we've posted a poll question. Do you think payday lenders need tighter restrictions? Or do they provide a valuable service? Let us know what you think.