It is true that these companies extort money from the needy and get them trapped in a cycle of debt. The problem is that they also serve a need. Many people live paycheck-to-paycheck, just barely getting by, and any sudden emergency (car repair, medical bill, broken furnace) can throw their delicately balanced finances out of whack and they often feel they have nowhere else to turn to at short notice.
What surprises me is that the so-called free market has not provided a solution to this problem. Why hasn’t someone started a business that provides payday loans to meet this need and makes a modest profit by charging reasonable rates of interest and not enticing people to get deeper and deeper into debt? Surely it could drive the ruthless profiteers out of business? Or is such a business model not viable?
John Oliver’s show Last Week Tonight continues his series of investigative reports and takes on the phenomenon of payday loans.