In 2003, Elliot Clark's wife fell and broke her ankle. She was unable to work and Clark's job as a security guard wasn't enough to pay the medical bills, so he took out $2,500 in short-term loans.
Those short-term loans took five years to pay off. In that time, Clark accumulated $50,000 in interest payments and ended up losing his home.
Clark, now 65, is a Vietnam veteran. He never graduated high school, having dropped out at 17 to join the Marines.
When medical bills of $22,000 became too much for him and his wife to pay once they were down to one income, Clark looked for a small loan to help them through the rough patch. With a 610 credit score, he wasn’t able to get a bank loan, so he turned to payday lenders.
“Oh, I’ve been called stupid, and they say I should have read the fine print,” Clark told The Kansas City Star. “But they’ve not walked in my shoes. What choice did I have? I needed money.”
Clark took out five loans of $500 each. When he wasn’t able to repay the loans at the high interest rates, he would often take out another similar loan to pay down the first one.
This cycle of building interest continued for five years. Eventually, Clark received disability benefits that allowed him to pay down the debt.
He is now able to rent a home with his wife, and says he hasn’t been to a payday loan business since.
Advocates against payday loans say stories like Clark’s are common. The National Consumer Law Center calls payday lenders “exorbitant” businesses that “encourage their customers to get on a debt treadmill” through the same refinancing cycle that Clark experienced.
This story comes less than two weeks after Google announced plans to stop showing ads from short-term or high-interest loans on its website, reports Time. In a May 11 statement on its Public Policy Blog, the company stated, “Our hope is that fewer people will be exposed to misleading or harmful products.”