Critics call the industry "legalized loan sharking," reports CBS News Correspondent Mark Strassmann.
Patricia Hobbs can document her deep dive into debt. She borrowed $500; her interest on the loan was $125.
When she missed her deadline to repay, in full, the loan kept rolling over, with interest. Another $125 every two weeks for almost a year: $3,250 to pay off a $500 loan.
"Outrageous. Stupid. I feel totally embarrassed about it, ashamed about it, stressed about it," says Hobbs.
Even some people in the industry admit that Patricia Hobbs' experience brings to life an embarrassing cliché – a small loan that explodes into a crushing debt. And for the lender, another payday loan becomes a payday jackpot.
"Payday lending is the poster child for predatory small loans that take advantage of consumers who have trouble making ends meet," says Jeann Ann Fox of the Consumer Federation of America.
Tennessee laws limit rollovers, cap the interest rate and demand lenders post their rates.
One payday lending chain's spokeswoman says her industry needs that oversight.
"I think what's important is that you have regulations that include consumer protections. That's very important and it's not heresy for me to say that," says Check-Into-Cash spokeswoman Merle Purvis-Smart.
Across America, 29 states allow the business, but regulate it; four states allow it without any regulation; and in 17 states, laws in effect ban payday lending.
Georgia, for one, hopes its payday lenders now live on borrowed time.
"We shut one operation down and another pops up. As one wise man once said, it's kind of like killing cockroaches. You shut one down and two more pop up," says Georgia Insurance Commissioner John Oxendine.
Patricia Hobbs needed a loan from her employee union to pay off her payday lender.
"I'm very angry," she says, "and I don't want anybody else to go through that" – the payback of her payday borrower's nightmare.