May 26, 2009 -- Laura White, from Mullins, S.C., is 66 years young, and lives on a $575 a month Social Security check.
A few years ago, her old car needed repairs which she couldn't afford and, since she uses the car to take her epileptic daughter to the doctor, White became desperate.
"Things was tough. I needed money so, that's what I had to do," she said. "I wasn't getting enough."
White's solution was one that over a million Americans have turned to: Advance America, the largest payday loan company in the United States.
It seems simple enough: Demonstrate that you have a job or a steady income, and Advance America will loan you money, for a fee of $15 per $100 borrowed.
White borrowed $300 from the company, which made $676 million in revenue in 2008 and has 2,800 U.S. locations. She agreed to pay that loan back -- plus the $45 fee -- as soon as her next Social Security check arrived. The fee was equal to a 163 percent annual interest rate on the loan.
But when White got paid next, she had a problem. As often happens, she once again found it impossible to pay her bills and pay off the loan, so she had to borrow an additional $300 against her next check. And she says she was "hooked."
"We need the money so we go get it," she said. "This little town is hooked in cash advances."
It's a vicious cycle that's continued for over two years. She has not caught up, and in fact, White says she has paid over $1,000 in fees by borrowing and re-paying $300 over and over again.
Jean Ann Fox, from the Consumer Federation of America, says that the industry counts on repeat business like White's.
"Folks just get on a treadmill," she said. "And they keep renewing the loans or paying off one and taking another."
Research from two state finance regulators shows that most people who take out a payday loan are just like White -- they take out another one immediately after or within the next two years.
In Recession, Many Turn to Short-Term Loans
Lorelie Hawkins, from Ruckersville, Va., also lives on Social Security, and she takes care of her sick husband. When she was desperate for fast cash for a down payment on an apartment, Advance America offered her another product -- a straight loan or "line of credit" for $750, no questions asked, as long as she agreed to a 365 percent interest rate.
Six months later she has already paid back more than $700, and still owes $900 on that original $750 loan.
"I agreed to it," she said. "[The agent] was really a nice lady and I trusted her."
That information doesn't surprise the CFA's Fox, who pointed out that 35 states in this country have legislation authorizing payday lenders to charge interest rates ranging from 300 percent to 800 percent.
"It is tragic that consumers who struggle to make ends meet are paying some of the highest interest rates in the market," said Fox, "and that that's enriching the payday loan industry at the expense of communities that need every penny consumers make."
Despite the current economic climate and the number of Americans living paycheck to paycheck, Fulmer says Advance America is not engaging in price gouging or taking advantage of desperation.
"This is a time, an unprecedented time of economic concern for millions of Americans," he said. "We think that, you know, calls for more access to short-term financial credit options, not fewer. And, you know, again I point to the fact that in the competitive marketplace, we're reasonably priced. "
Fulmer attributes that competitive marketplace — made up of other emergency, short-term lenders -- to the fact that "the small and the larger financial credit institutions, you know, really don't offer consumers a small short-term loan anymore.
"Anytime you offer a product, you want to make sure the consumer uses it responsibly and is satisfied with the service we provide," he said.
'GMA' Gets Answers
Fulmer says Advance America offers an option for over a million of American consumers facing financial difficulty.
"Overwhelmingly, the consumers who use our product use it responsibly," he said.
Hawkins says she tried to negotiate with Advance America, as did White, to no avail.
But when "Good Morning America" asked Fulmer if the company would help, he said, "absolutely."
"We work with any consumer who comes to us and demonstrates a willingness to repay us and, you know, can't."
A few days after our interview, Hawkins got a call from Advance America. Her interest rate was reduced from 365 percent to zero, and the company says she can hold off on paying until things get easier.
Advance America told White she can now pay $20 a month until her loan is paid off, with no more fees.
That's good news for White and Hawkins, but today 19 million Americans are still intertwined with payday loans and no end in sight.