"Rather than regulating high-cost payday lenders, the Dodd-Frank Act seeks to provide financial incentives to offer more competitively priced small-dollar loan products through loan loss reserve funds, technical assistance funding, and other programs and grants to promote financial access and education." Huffington Post, July 28.

Moreover- the APR allowed to banks, etc. receiving incentives is 36 percent.

In other words, payday lenders are not criminalized, they are getting competition. But in the bottom-dwelling milieu where they operate, the clueless will continue to deal with them and wouldn't know how to do otherwise.
Not much one can do with the clueless on the bottom except to try to keep them off the street.

Now what do payday lenders have to do with the middle class? The amounts they loan are too small to be of interest to the guy with middle class expenses.