In 2010, Montana voters overwhelmingly approved a 36 percent rate cap on payday loans. The industry -- the folks who run the storefronts where borrowers are charged high interest rates on small loans -- predicted a doomsday of shuttered stores and lost jobs. A little over a year later, the 100 or so payday stores in towns scattered across the state were indeed gone, as were the jobs. But the story doesn’t end there.

The immediate fallout from the cap on payday loans had a disheartening twist. While brick-and-mortar payday lenders, most of whom had been charging interest upward of 300 percent on their loans, were rendered obsolete, online payday lenders, some of whom were charging rates in excess of 600 percent, saw a big uptick in business. Eventually, complaints began to flood the Attorney General’s office. Where there was one complaint against payday lenders the year before Montana put its cap in place in 2011, by 2013 there were 101. All of these new complaints were against online lenders and many of them could be attributed to borrowers who had taken out multiple loans.

That is precisely what the payday loan industry had warned Montana officials about. The interest rates they charge are high, the lenders say, because small-dollar, short-term loans -- loans of $100 or $200 -- aren’t profitable otherwise. When these loans are capped or other limits are imposed, store-based lenders shut down and unscrupulous online lenders swoop in.