A non-profit group research shows an alarming rise in the number of short-term lenders prying on low-income earners.

The Consumer Action Law Centre found a tenfold increase in the number of high cost, short-term lenders since 2002. The report revealed the loans have staggering interest rates from between 300 to 1,000 percent a year.

According to the report's author, Zac Gillam, “They're a particular type of product that people often in very tough financial circumstances use to attempt to get by day to day... The trap is that they're very expensive.”

Gillam now urges the Federal Government to strengthen lending regulations to protect consumers. He pointed at the interest rate caps in three states.

He said, “Currently in Australia we have an all inclusive interest rate cap in New South Wales, Queensland and the ACT... That is a cap that limits the legally chargeable cost of interest to 48 per cent. We're saying that cap should be national.”

Gillam claims the loans are made to meet basic living expenses.

The non-profit group is also warning consumers of unsolicited calls offering to refund bank fees incorrectly charged to their account. Scammers have been requesting personal details or upfront payment for the correction.