The consumer watchdog has accused payday loan companies of "irresponsible lending", "pressure tactics" and other bad practices.
The OFT has given them them 12 weeks to prove they provide an important service, or else they could face closure.
However, there will be no cap on interest rates.
Consumer Editor Chris Choi reports:
More top news
Dippy the Diplodocus now has his own Twitter account as fans fight to keep him in the main hall of the National History Museum.
The BBC has announced that it has kept the Premier League highlights for a further three years through to the end of the 2018/19 season
Campaigners have hailed new tough guidance for prosecutors and police when tackling rape allegations as a "significant step forward".