COLUMBIA, S.C. — 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, according to a report by the the Center for Responsible Lending.

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 because consumers can end up paying annual interest rates of up to 400 percent on small loans, said Michael D. Calhoun, president of the group.

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

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, Calhoun said.

The report found 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, 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, 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."

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

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

Getting a payday loan is often a bargain compared with what people would pay in late credit card or returned check fees, Fulmer said.