As many in the industry have argued, applying an APR to a fee for a two-week, non-collateralized loan does not accurately represent the cost of the product. For consumers, a payday advance costs on average $15 per $100 borrowed. It’s that simple. It’s a straight-up, one-time fee. Considering APR only for that transaction can create a distorted measurement standard. For example, a $20 overdraft fee on a $100 bounced check paid back in two weeks equates to an APR of 520%, yet no one thinks of overdraft fees in that way. Why? Because from the consumer’s perspective it is not the most relevant factor.

Rather than look solely at APR, why not look at the number of consumer complaints these products generate in the different states? The answer probably is because there are very, very few complaints relative to the number of loans taken out. So-called consumer activist groups would much rather focus on an issue they can use to promote their own agenda rather than look at the product objectively.

These groups and their supporters in legislatures need to stop distorting issues such as APR and instead focus on real ones, like ensuring that there are adequate consumer protections in place.

Eliminating access to a source of credit, especially when the alternatives are even more expensive, is not in the public’s best interest. Ensuring that people are not abused when using the products is a proper focus for government action.