By now, pretty much everyone knows that "payday loans" are a big scam. Or, if they don't know already, they should read more. A payday loan is an advance on your paycheck. It's used by people who live paycheck-to-paycheck to support themselves in between paychecks. The problem is that these same people can't secure real loans from normal banks. Banks' interest rates are capped by the federal government, but since payday loan companies aren't banks, they aren't regulated as such. This means they can engage in usury, the practice of charging illegally high interest rates (at least, the rates would be illegal if these payday loan companies were banks).

Most payday loan places are located in low-income areas, where people don't have the collateral or credit score to get real loans. It's a good sign that your city or town is on the outs if payday loan stores start popping up.

You'll recall that this is the same behavior that has caused the bulk of our current financial crisis, except instead of dealing with a thousand or two thousand dollars, we're dealing with hundreds of thousands of dollars per person.

Payday loan places charge as much as 400% APR. This means that, in order to get a thousand-dollar loan to tide you over between paychecks, it may cost you four thousand dollars. In this story from The Denver Post, it took four years and $8,000 for Linda Medlock to pay off a $500 payday loan.

Want to sue a payday loan company for usury? If the contract you signed with them contains an arbitration clause, you'd better think again. In 2006's Buckeye Check Cashing, Inc. v. Cartagena, the Supreme Court denied respondent Cartagena the right to sue Buckeye Check Cashing for usury, since the contract contained an arbitration clause. Since arbitration clauses are severable from contracts, the Court ruled, any issues about the enforceability of the contract go into arbitration, not a court. And we know how fair and balanced mandatory binding arbitration is.

Now, with a new wave of recession coming over the country -- a wave in which even middle-class people are being affected -- companies that you never thought would get into the check-cashing business have found new opportunities. Say's Law is right: supply does create its own demand. In this case, it's tax season and there's a supply of people who need fast money. H&R Block and others have created the "refund anticipation loan," a loan granted to you by H&R Block based on what you think your tax refund will be. Don't be fooled; H&R Block is selling you the same bologna as the variable-rate mortgage companies and the payday loan companies:

What you may not notice is the exorbitant annual percentage rate on that loan. But consumer groups have. They say these short-term, high-interest loans prey on the very people who can least afford them.

Critics of refund loans, as the loans are commonly known, point to the disparity between the tax advances and other credit offerings aimed at wealthier customers.

Tax preparers, both independent operations and major chains, charge interest rates that can run on an annualized basis well into triple figures, all for the privilege of getting money a few days earlier. The IRS further mitigates the risk to lenders with its Debt Indicator service, alerting them to any claims (child support, unpaid federal student loan) against refund-loan applicants' refunds.

What's worse is that many people who get a refund anticipation loan don't understand that it's a loan on their refund, and once they get the refund, they'll need to pay back the loan, plus an exorbitant interest rate. So, if you get that $600 refund from George W. Bush, don't put it into a refund anticipation loan. And for crying out loud, don't go buy a refrigerator like the president wants you to; use it to pay off your debt!