Paul Kiel of ProPublica has written When Lenders Sue, Quick Cash Can Turn Into a Lifetime of Debt, which describes how a $1,000 payday loan at 400% interest can become a $40,000 debt. The investigative report not only looks at the plight of individual borrowers but provides a comprehensive review of payday loan court enforcement in two states. Kiel also spoke with former employees of loan companies who described how the companies operate:
In Mississippi, the poorest state in the country, the largest installment lender is Tower Loan. Mississippi laws prevent installment lenders from charging the triple-digit rates common in some other states, but Tower has ways of magnifying the cost of borrowing. The company, for instance, packages expensive but nearly useless insurance with the loans and encourages its customers to renew their loans over and over – both common industry practices. The company’s ideal customer is someone “who can’t ever get out of debt,” said Josh Lewis, who worked at a Tower store in rural Yazoo County in 2010. “It was sad watching low-income people get in that hole,” said John Barfield, who worked at a store last year. “It's very, very common at Tower Loan.”