BOISE - Saddled with hospital bills and desperate for quick cash to cover rent and other monthly expenses, Joel Rios turned to payday lending.

Getting a loan was easy. On his first visit to a Pocatello store, Rios had $500 in cash within 20 minutes of filling out paperwork. After that, qualifying for more loans took even less time. In one year, Rios recalls taking out 15 loans, and he's lost track of how many he took out during a two-year span.

The loans - which in Idaho can carry interest rates upwards of 400 percent - ultimately pulled Rios deeper into economic turmoil.

Multiple loans and their high interest rates sapped his ability to pay monthly bills, forcing him back to high-interest lenders. Late payments to lenders were followed by daily calls from collectors. Then in 2009, a panic attack he attributes to economic stress and illegal threats of jail from creditors landed him back in the hospital.

He filed for bankruptcy shortly after, citing in federal court records mounting medical and payday loans as the bulk of his debt.

"It's a vicious, vicious cycle," Rios said. "I was cornered."

Payday lending has come under fire in all corners of the country in recent years for targeting low-income residents who often get trapped in debt like Rios did. Some states have taken steps to protect consumers, with lawmakers in neighboring states like Montana, Oregon and Washington approving caps on interest rates or other consumer protections.

But Idaho, where payday lenders extended $185 million in loans in 2010, is a state with some of the nation's least restrictive rules and regulations. Earlier this year, state lawmakers killed legislation intended to better protect consumers from the growing industry.

Legislation co-sponsored by Rep. Elaine Smith, D-Pocatello, called for a 36 percent annual limit on loan interest. Smith got behind the measure after concerned constituents complained to her about a growing number of residents struggling with debt from payday loans.

"These people are getting into debt traps and they can't get out," Smith said.

The bill never got a full hearing in the House Business Committee.

Payday loans function like an advance on a borrower's future paycheck. The average customer takes out a two-week loan for several hundred dollars at high interest rates providing they can show proof of owning a checking account and earn a paycheck.

Critics claim the practice preys on the weak and vulnerable. But the payday industry argues that it provides a desired product that helps customers in a pinch pay bills or other expenses.

But aside from a $1,000 cap on a single loan, approved by Idaho lawmakers in 2003 and still among the highest caps in the country, the state has few of the consumer protections adopted in other states.

For example, the federal government and many states have capped loan amounts and interest rates, restricted loan lengths or limited the number of loans a person can get each year. The District of Columbia and 17 states have enacted double-digit interest rate caps, a restriction the payday lending industry complains has crippled their ability to successfully operate in those markets.

Several years ago, Congress capped interest on payday loans for active military and family at 36 percent annually.

Yet despite the increasing restrictions, payday lending has grown dramatically in the past decade.

The number of stores licensed in Idaho increased from 165 in 2003 to about 215 in 2010, according to the Idaho Consumer Finance Bureau, which regulates lending, mortgage and credit industries in Idaho. In 2010, nearly 500,000 loans were issued statewide at an average of $371 per loan.

The bureau relies on payday lenders to self-report and isn't tasked with analyzing the industry's trends.

Uriah King, vice president of state policy for the Center for Responsible Lending, says 98 percent of payday loan volume nationally belongs to repeat customers. The average customer takes out nine loans in a year, with 44 percent of borrowers eventually defaulting, according to the center, a nonpartisan, nonprofit organization that fights predatory lending practices and has been researching the payday industry for more than a decade.

"The evidence is becoming overwhelming that the product just digs people deeper into the hole," King said. "They're utterly dependent on long-term use."

But Steven Schlein, a spokesman for the Community Financial Services Association, a trade group representing roughly half of payday loan stores in the U.S., says the default rate for all loans issued is about 5 percent and complaints are infrequent.

"The critics aren't users of payday loans. The consumers have a high satisfaction with payday loans," Schlein said.

Moreover, he argues that imposing a double-digit rate cap like the one that failed in Idaho would drive payday lenders out of business, pushing more customers to online payday lenders that are more difficult for states to hold accountable.

In neighboring Montana, the Attorney General's office said it has received an increase in complaints about unlicensed Internet payday lenders since its 36 percent rate cap took effect in January 2011. The state's approximately 100 storefront payday lenders disappeared after the legislation took effect.

Mike Larsen, chief of the Idaho Consumer Finance Bureau, says the office only gets a couple dozen complaints about payday lenders each year, and that disciplinary action from the bureau is rare.

But he sees a different challenge in holding accountable the emergence of unlicensed online lenders, which he says are more inclined to threaten or harass borrowers who get behind on payments.

"That's illegal, that's abusive and that's heavy handed," Larsen said of the harassment Joel Rios faced. "If there are licensees doing that in Idaho we would want to know."

Critics like King say the Internet is merely a different vehicle for perpetuating a cycle of dependence on vulnerable customers.

"It's a generally defective product and needs to be reformed," King said.