COLUMBIA - The payday loan industry took $4.2 billion out of consumer pockets in 2005 because states have not done enough to restrict high-interest loans and practices that trap people in financial quicksand, the Center for Responsible Lending said Thursday.

States need to do more to limit interest rates and fees from repeatedly refinancing when people don't have the cash to repay small loans, said Michael D. Calhoun, the president of the group. Consumers can end up paying annual interest rates of up to 400 percent on small loans, he said.

The group's report estimates 90 percent of payday lender revenue comes from people who can't pay off loans when they're due and not from one-time users trying to meet a short-term financial emergency. The typical consumer borrows $325 but repays $793, the report said.

Consumers are paying the most in 10 states: California, Missouri, Louisiana, Texas, Alabama, Illinois, Ohio, South Carolina, Virginia and Florida. Eleven states, including Connecticut, Georgia, Maine, Maryland and Massachusetts, have banned or curbed the industry and saved consumers $1.4 billion, according to the report.

States should impose caps that limit interest rates to no more than 36 percent, similar to what's been imposed on loans to U.S. military personnel and their dependents, Mr. Calhoun said.

The report found that more than 60 percent of payday loans go to people taking out one or more loans a month.

"For the industry to continue in its present form, it has got to continue trapping borrowers in these short-term" loans, Mr. Calhoun said.

The $4.2 billion going to lenders is "hard-earned cash being siphoned out of the wallets of working people," said Julian Bond, the chairman of the National Association for the Advancement of Colored People. The money "should be helping people stay firmly put in the middle class rather than keeping them trapped in the quicksand of poverty."

The payday lending industry said the report was flawed with misleading and inaccurate information.

The report appears to be "an attempt to undermine consumers' ability to access funds for payday advances," said Jamie Fulmer, a spokesman for Advance America Cash Advance Centers Inc., the Spartanburg-based payday lending industry leader.

"Our products allow folks to find firm financial ground and firm footing to overcome their unexpected expenses," Mr. Fulmer said.

And getting a payday loan is often a bargain compared with what people would pay in late credit cards or returned check fees, Mr. Fulmer said.

The Community Financial Services Association of America, an industry group, says a $100 payday loan may cost $15. But it notes a returned check can cost $54 and a late payment on a $100 credit card bill can cost $37.

The group says payday loan customers aren't the only ones stung by fees. It says consumers pay $22 billion yearly in returned check charges, along with $4.2 billion in automated teller machine service charges.