"One little hiccup spells disaster, and that's what it was for me," said, Adam.
Adam is using his first name only to protect his family's privacy. He says about six years ago, he borrowed money from two payday loan companies. He didn't have anywhere to turn to pay an electric bill and medical expenses. Adam says he was denied a bank loan. He describes his experience.
"It's this spiral that's very hard to get out of. You go in, say you need $200, and they're like okay. Write me a check for $274.32," said Adam.
Adam says the $74.32, would be the interest for two weeks. He says it took a year and a half to pay off one loan. Adam would take back the check he used as collateral, and obtain a new loan over and over. He says he now has money saved. Whitney Barkley is with The Center for Responsible Lending in North Carolina. She says payday lenders charge interest rates of 500 percent. Barkley explains All American Check Cashing based in Madison, Mississippi is facing violations that could close its doors.
"They were rolling over borrowers' loans, meaning they were having them take out new loans in order to pay off money that they owed from old loans, then rolling those fees into the new loans," said Barkley.
The company is seeking a court order to block the Mississippi Department of Banking and Consumer Finance from revoking its operating license. Charles Lee is with the Mississippi Center for Justice.
"I was aware of the investigation. I've been aware of it for about a year and we had an idea that this is what was happening all along from our interaction with consumers," said Lee.
Mississippi regulators would not comment. The attorney general's office said in a statement "this office can neither confirm, deny, nor comment on the existence or nonexistence of any investigation."
