Installment Lenders Put Borrowers in a World of Hurt: The 182 Percent Loan

Payday loans are well-known for their risks. However, “installment loans” contain exorbitant interest rates and function by enticing borrowers — who are primarily impoverished — to renew their loans again and over. We take you inside World Finance, a multibillion-dollar installment lender.

Katrina Sutton swiped her debit card at a petrol station outside of Atlanta late last year. She’d waited until her $270 salary from Walmart cleared her bank account. Isn’t it true that the money wasn’t there? She couldn’t go to work without petrol.

She tried not to be concerned, but she couldn’t help herself after calling her credit card company. World Finance had stopped her cash, she was informed.

Sutton resides in Georgia, where payday loans are illegal. However, World Finance, a multibillion-dollar corporation, sells installment loans, a product that often traps debtors in a similar debt trap.

The world is one of the country’s significant suppliers of installment loans, a sector that flourishes in at least 19 states, mainly in the South and Midwest; it has more than 10 million clients, and it has withstood recent legislative measures to limit lending with outrageous interest rates and costs. Installment lenders were exempt from a 2006 federal legislation prohibiting the sale of certain types of loans with annual percentage rates over 36 percent to service members; thus, they often set up businesses near military bases, providing loans with annual rates that may reach triple digits.

Installment loans have existed for many years. Installment loans, unlike payday loans, are paid back in installments over a period ranging from a few months to a few years. Both forms of loans are targeted at the same low-income demographic, and both have the potential to trap borrowers in a cycle of costly, recurrent debts.

Installment loans have the potential to be deceivingly pricey. Customers are pushed to renew their loans again and over again by World and its rivals, changing what the business portrays as a secure, responsible means to pay off debt into a kind of credit card with exorbitant annual rates, often exceeding 200 percent.

When state regulations require lenders to offer lower rates, they often market borrowers needless insurance products that seldom benefit the customer but effectively double the loan’s annual percentage rate. Former World workers claim they were told not to inform consumers that the insurance is optional.

Calls to the customer’s home and office and friends and family are standard when borrowers fall behind on payments. Then there are the house visits. The world’s threats to sue its consumers are frequently genuine, as Sutton and others have learned.

The Consumer Financial Protection Bureau, the new federal agency in charge of supervising consumer-finance goods and services, has the authority to sue nonbank lenders if they break federal rules. It may also subject more prominent installment lenders to frequent inspections, although it hasn’t done so yet. Installment lenders have backed Republican moves to undermine the agency, expressing worries shared by the entire lending sector.

The Consumer Financial Protection Bureau (CFPB) has refused to comment on future rulemaking or enforcement action.

Despite having a client base classified as sub-prime, the World could easily weather the financial crisis. In the previous three years, the price of its stock, which trades on the Nasdaq under the company’s corporate name, World Acceptance Corp., has almost quadrupled. The organization serves more than 800,000 clients, having over 1,000 locations throughout 13 states. It also has a presence in Mexico, with over 120,000 customers.

World claimed in a letter in response to inquiries for this article that the firm offers an essential service to consumers who would not otherwise be eligible for credit. According to PaydayNow, the loans are rigorously screened to be reasonable for borrowers, and since they have predetermined monthly payments, they have “built-in financial discipline.”

The firm denied deceiving clients, claiming that its personnel is trained to notify borrowers that insurance products are optional and tells customers in writing. It claims it only approaches delinquent borrowers at their workplaces after failing to reach them at their residences and that it uses state regulations to reclaim late payments.

“World cherishes its customers,” the corporation claimed, “and its customers indicate their respect for World’s service and goods by their recurring business.”

Installment lending is marketed as a more consumer-friendly alternative to payday loans. According to Bill Himpler, executive vice president of the American Financial Services Association, which World and other large installment lenders are members of, installment loans are “the safest type of consumer credit out there.”

According to the corporation, around 40,000 of the World’s clients, or about 5%, are military personnel or their families. According to the Defense Department, active-duty military troops and their families make up around 1% of the US population.

The Beginner’s Loan

Sutton’s 1997 Crown Victoria required repairs in August 2009, and she was “between paychecks,” as she phrased it. More than half of her earnings were spent on student loans throughout her time at the University of Phoenix, where she was pursuing an associate’s degree. Her mother and grandparents helped her save money on rent, but her part-time work as a Walmart clerk didn’t provide her much flexibility. That month, she was on a tight budget and needed her automobile to travel to work.

She stated she happened to go by a World Finance business in a McDonough strip mall. “LOANS” was promoted on a neon sign, and mirrored windows provided seclusion. She entered the building.

Sutton recalls that a credit check revealed “my FICO score was 500-something,” placing her in the worst 25% of borrowers. “However, they had no trouble providing me the loan.”

She left with a $207 cheque in her hand. She promised to pay it back in seven $50 monthly installments for a total of $350. According to the loan documents, the annual percentage rate, including interest and fees, was 90 percent.

Sutton had been given a “starting loan” by World workers. Paige Buys discovered this when she was 18 to work at a World Finance office in Chandler, Oklahoma. She simply had a hazy idea of what World did at the time.

She was made branch manager at 19 (the youngest in business history, she was informed), and she had learned a lot by then. And the more she knew, the more perplexed she became.

“I despised the industry,” she said. “I despised the things we were doing to people. But I couldn’t just give up.”

The shop, located on Route 66, the town’s main thoroughfare, looks quite similar to where Sutton obtained her loan. A pair of desks and an artificial tree are hidden behind darkened windows. The walls are almost devoid of decoration. It looks more like an accountant’s office than a payday lending company, typical of World storefronts.

According to Buys, every potential borrower would almost certainly be approved for a loan of at least $200. She and other former workers claimed that although low credit ratings are typical, World encourages its staff to focus on something else: if additional loans aren’t already swallowing the borrower’s monthly income. If a client has money left after paying bills and some minor living expenditures, World will take them on.

According to its written answer, the goal of World’s underwriting processes is to verify that the borrower has adequate income to repay the needed payments.

The world asks its consumers to pledge personal belongings as collateral, which the firm might confiscate if they do not pay. Former staff claim that the customer’s riskier the more they were asked to list.

Sutton donated two TVs, a DVD player, a PlayStation, and a computer from her family. According to her contract, they were worth a total of $1,600. The world also highlighted her vehicle.

World and other lenders are limited in requiring borrowers to commit. The Federal Trade Commission adopted rules in 1984 prohibiting the use of “home commodities” like appliances, furniture, and clothes, and no borrower may be requested actually to provide the shirt from his back. Among other things, a television and a radio are safeguarded. However, since the regulations are so ancient, they don’t cover computers.

Items like video gaming consoles, jewels, chainsaws, and guns are all mentioned on World’s standard collateral form. In some instances, the contracts state that World has the right to confiscate the borrower’s property if the loan fails.

A World client from Brunswick, Georgia, claimed, “They began threatening me.” “They threatened to back up a truck and steal my furniture and lawnmower if I didn’t make two payments.” (Furniture is one of the items covered by the FTC rule.) The prospect of the company taking her piano was particularly upsetting to the woman, who asked to remain anonymous because she was afraid of the company’s employees. Last year, she sought bankruptcy protection.

Former World employees claimed that the company only repossessed personal items on rare occasions.

“Then you’ve got a broken-down Xbox, and what are you going to do with it?” remarked Kristin, who worked at a World store in Texas in 2012 and requested that her last name not be used out of fear of punishment.

Unless it were a vehicle, world supervisors “would assure us, ‘You know, we’re never going to reclaim this stuff,'” Buys recalled.

In its statement, World recognized that such repossessions are uncommon, claiming that collateral played an essential role in encouraging borrowers. “World feels that a borrower’s stake in the transaction’s success is a crucial part of consumer protection,” the business noted. When “borrowers have little or no stake in the success of the credit transaction,” it’s often more straightforward for them to quit it than to keep their promises.

True Gibberish.

Sutton’s loan deal stated a 90 percent annual percentage rate or APR. It wasn’t the case. Her effective rate was 182 percent, more than twice the national average.

Because of loopholes in federal law that enable lenders to bundle almost worthless insurance products with their loans and remove their cost when computing the yearly rate, the world may legally understate the actual cost of borrowing.

Sutton obtained credit life insurance, credit disability insurance, motor insurance, and non-recording insurance as part of her loan. She, like the other borrowers ProPublica spoke with, has no idea what they’re for: “When you receive that loan, they babble. They skip right over it, talking in gibberish.”

The insurance policies are designed to safeguard World rather than the borrower. The insurance would have owed World the outstanding amount of Sutton’s debt if she had died, gotten incapacitated, or damaged her automobile. The premiums on her $200 loan add up to $76, more significant than the loan’s other financial costs.

The world may use insurance products to get past rate limitations in certain areas and charge more incredible rates. For example, Sutton’s claimed annual percentage of 90% is nearly the utmost that Georgia may lawfully trust.

The world slapped on the insurance goods in jurisdictions with more severe limitations. Although the reported yearly rate was lower, the loans were sometimes more costly when insurance premiums were considered than those in high-rate states.

“We always hit and maxed with the insurance with every new individual that came in,” said Matthew Thacker, who worked as an assistant manager at a World branch in Tifton, Ga., from 2006 to 2007. “That was money that was returned to the corporation.”

The world makes money from insurance in two ways: it gets a commission from the insurer and charges interest on the premium, often funded as part of the loan.

“The customer gets screwed six ways to Sunday,” said Birny Birnbaum, executive director of the nonprofit Center for Economic Justice and former assistant commissioner of the Texas Department of Insurance.

Data from the industry reveals how lucrative this sector of the world’s economy is. World sells Life of the South Insurance, part of Fortegra Financial Corp’s publicly held. In 2011, the insurer in Georgia earned $26 million in premiums for the kind of vehicle insurance Sutton bought with her loan. Eighteen million dollars, or 69 percent of the total, was returned to lenders such as World. Overall, only around 5% of the money was spent on legitimate insurance claims.

When it comes to Life of the South’s other products, the data supplied to ProPublica by the National Association of Insurance Commissioners paints a similar picture. In Georgia, the company’s credit accident and health plans generated $20 million in premiums in 2011. Only 14% went to claimants, while 56% went back to lenders. The same trend holds in other states where World sells its goods.

Fortegra did not respond to a request for comment.

Gretchen Simmons, the manager of a World branch in Pine Mountain, Ga., lauded the organization for providing clients with loans they otherwise would not have been able to get. Because many of her customers were workers who were “more prone to have their finger hacked off,” she claimed she enjoyed selling accidental death and disability insurance with loans.

According to ProPublica’s assessment of various contracts, losing one finger isn’t enough to file a claim. The coverage pays a lump payment (for example, $5,000) if the borrower fails a hand. “Loss of a hand” entails “the loss of four complete fingers from one hand,” according to the regulation.

World claimed in its written answer that Simmons was sacked from the firm due to “dishonesty and suspected theft of money,” but it declined to elaborate. Simmons, who worked for World from 2005 to 2008, claimed a strained relationship with the corporation.

Credit insurance payments cannot be financed as part of a mortgage, although they may be funded for installment and other loans. Installment lenders may also lawfully remove premiums from the loan’s annual percentage rate if the borrower can choose the insurer or the optional insurance products – loopholes in the Truth in Lending Act, which governs how consumer-finance products are marketed.

All legally required disclosures are made in World’s contracts. While certain insurance products are optional, World mandates certain forms of insurance to acquire a loan. Sutton’s contract stipulates that the borrower “may pick the person or firm through whose insurance is to be purchased” for mandated insurance. Even if it were feasible, she, like most customers, would have no idea where to start.

“Except for the lender, no one will offer you loan protection insurance,” Birnbaum stated. “You can’t obtain credit insurance from your State Farm representative down the block.”

Borrowers must sign a paper acknowledging that insurance products are optional, meaning they may decline coverage and still acquire the loan. “We were warned not to bring it up,” said Thacker, a former assistant manager in Tifton, Ga.

The world refused to provide figures on what proportion of its loans include the insurance products in its answer to ProPublica. Still, it said that personnel is taught to notify borrowers that they are optional. The world noted that the corporation sells insurance products in certain jurisdictions but not others because of state legislation and if it “makes commercial sense.”

Buys, a former branch manager in Chandler, Okla., said she thought adding insurance items was incredibly deceptive. The world can charge high-interest rates and costs on loans under $1,000 in Oklahoma; therefore, it doesn’t usually provide insurance. However, it often bundles the goods with bigger loans, raising the yearly rate.

“You were meant to notify the client that you couldn’t complete the loan until they bought all of the insurance products,” says the supervisor. Purchases have been recalled. “You said that they are ‘included with the loan’ and emphasized how great they are.”

Buys said she started to doubt if the things were essential not long after starting her job. She remembers asking a family friend who was an attorney whether the law required it, and he told her no.

According to Buys, World taught its staff to think of themselves as “financial advisers” to their customers. She resolved to take things to their logical conclusion.

“I began telling them, ‘Hey, you can have this insurance you’re never going to use, or you can have the money to spend,” she recounted after a client took out a new loan. When a client asked for the disability insurance to be added, she left it in. People, on the other hand, chose to accept the money.

She recalled sitting across from a couple who had gone to the office to renew their loan one day. They talked about paying for burial, and since Chandler is a tiny town, she knew it was their son’s. The different insurance costs from the initial loan were shown on her screen. She recalls the screen “blinking as though I could modify it.”

She understood that she might encourage consumers to renew their loans to cancel their prior loan insurance. They would earn several hundred dollars extra if they did so. She noted that the couple enthusiastically agreed and that other customers believed it was sound advice and returned the purchases.

Buys said that her regional supervisor threatened to reprimand her. However, it was difficult to hold her accountable for informing buyers that the items were optional when they were not. Buys said, “All they could do was give me the stink eye.”

But, according to Buys, World quickly made it more difficult to cancel the insurance charges. She couldn’t delete them herself, so she had to send a form to World’s central office, along with a letter from the client. She said that to secure loans, that office would occasionally demand applicants to acquire insurance.

In response to ProPublica’s inquiry, World said that Buys’ claims about how it handled insurance were “wrong” but refused to elaborate.

Buys’ relationship with management eventually deteriorated to the point that she felt she had no option but to resign. She had been at World for three years before she quit in 2011.

‘It’s All About Keeping Them,’ says the author.

Sutton’s initial loan deal required her to make seven $50 installments before her debt was completely paid off.

However, if World can convince a client to renew a loan early in its term, the firm keeps most of the loan’s expenses while putting the borrower on the hook for the majority of what they owe in the first place. This is why World and other installment lenders benefit from debt renewals.

“That was the purpose every time they had money available,” Kristin, a former World employee from Texas, explains, “to get them to renew because as soon as they do, you’ve got another month where they’re simply paying interest.”

Sutton decided to extend the loan less than four months after taking out the first one.

The borrower agrees to start the loan all over again in a simple renewal (the corporation calls it either a “new loan” or a “refinance”). That meant another seven months of $50 payments for Sutton. The borrower gets the price in return. The amount is determined by the amount by which the borrower’s payments have decreased the loan’s principal to date.

That wasn’t enough for Sutton. She seems to have made three payments totaling $150 on her loan. (Sutton has no record of her prices.) However, when she renewed the loan, she got $44.

Sutton’s payments went toward interest, insurance premiums, and other expenses rather than the principle. It was the same when she renewed her loan for the second time.

The impact is analogous to the amortization of a mortgage: The interest component of each payment is most extensive in the first month and reduces with each subsequent payment. Each month, less interest is payable as the principle is lowered. The costs nearly totally go toward paying down the direction towards the conclusion of the loan.

The world sends out mailings regularly, and its workers make frequent phone calls to ensure that borrowers are aware that money is accessible. A client “receives a receipt showing, among other information, the outstanding amount on the borrower’s loan and, when applicable, the current new credit available for that borrower” every time they make a payment, according to the business. Former workers claim that staff is forced to make the pitch in person when a borrower visits a branch to make a payment.

“You must say, ‘Let me see what I can do today to bring you money,'” says the author. Purchases have been recalled. According to her and other former workers, it had to be provided if the borrower had money on the account.

“Oh, by the way, you’ve got $100 available,” Kristin said, “would you want to take it now, or do you want to wait until next month?”

“Well, what does this mean?” customers would inquire. Buys remarked. “And you say, ‘Oh, you’re simply beginning again with your loan,’ as if your payments would be the same.”

Former workers claim that the organization often persuades consumers to renew their loans by claiming it would help fix their credit scores since World reports to the three major credit agencies. Customers that continue their loans regularly become eligible for more outstanding loans from World. Sutton, for example, gained an additional $40 after renewing her loan twice.

“We were educated to persuade [clients] that it was in their best interests,” Buys added.

“Retail (i.e., consumer) lending is not fundamentally different from other retail businesses, and World does sell its services, just like those other types of retail,” the firm responded in answer to concerns.

According to World’s public records, almost three-quarters of the company’s loans are renewals. According to former staff, customers often renew their loans after two payments.

The firm wouldn’t specify how many of its loans are renewed after two payments or how often the typical borrower continues a loan. It said that renewals are only given to debtors who can be anticipated to repay the new loan.

These methods seem to be widespread in the business, according to lawsuits filed against other prominent installment lenders. Security Finance, a lender with roughly 900 outlets throughout the United States, was accused of inducing a borrower to renew her loan 16 times over three years, according to a complaint filed in Texas in 2010. The case was finally settled. In 2004, an Oklahoma jury awarded $1.8 million to a mentally disabled Security Finance borrower who had renewed two loans 37 times. The dispute was resolved after the firm successfully contested the number of damages. Security Finance has refused to comment on the lawsuits.

Another lawsuit filed in 2010 says that Sun Loan, a lender with over 270 sites, persuaded a husband and wife to renew their loans more than two dozen times apiece over five years. Renewals are requested by the consumer, according to Cary Barton, an attorney defending the corporation in the lawsuit. Renewals are commonly asked because the client does not have enough money to complete the monthly payment on the prior loan.

Because renewals are so often, the yearly percentage rates on loan contracts for many of the World’s clients don’t even come close to capturing the actual expenses. If a borrower takes out a $700 loan for 12 months at an annual rate of 89 percent but renews the loan after four $90 installments, he will get a payout of $155 with each renewal. He is, in effect, borrowing $155 again and over. And the effective yearly rate on each of those loans isn’t 89 percent. The percentage is 537 percent.

This computation is “totally erroneous,” according to World because it does not account for the money the consumer got from the initial transaction. The annual percentage rate calculated by World if a borrower followed this pattern of renewals for three years: around 110 percent.

Debt for a Decade

Employees said that loan files at every World office had become inches thick after hundreds of renewals.

Emma Johnson of Kennesaw, Ga., was that customer at not one but two World locations. Her story demonstrates how profitable borrowers like her are for World — and how the company’s renewal strategy can turn long-term, lower-rate loans into short-term loans with triple-digit annual rates like World’s payday competitors.

Johnson, 71, has lived primarily on Social Security since being laid off from her janitorial job in 2004. This amounted to $1,139 in monthly income last year, plus a housing voucher and food assistance.

Johnson couldn’t recall the first time she took out a loan from World. She couldn’t remember why she needed any of the loans, either. She can, however, give you the names of the branch managers who’ve come and gone over the years (Charles, Brittany, Robin), as well as the status of her debts.

According to World, Johnson took out her first debt in 1993. Since then, she has taken out 48 loans from one branch, including both new and refinancings. She took out a loan from the second branch in 2001 and started a similar cycle of renewals.

Johnson’s two outstanding debts had face values of $3,510 and $2,970 when she filed for bankruptcy early this year. According to her credit records, she had renewed each loan at least 20 times. According to a ProPublica analysis based on her credit reports and loan documents, she had made at least $21,000 in payments toward those two loans over the last ten years, and likely several thousand more.

Even though each loan was supposed to last two years, Johnson would renew them every five months on average. She said that the reasons differed. “Sometimes things would simply appear out of nowhere,” she said. Something needed to be fixed, and one of her children needed money.

She said it was sometimes too tempting to acquire that additional few hundred bucks. “I believe I was hooked in certain ways.”

She claimed that renewing the loan usually took just a few minutes. She remembered how the World employee would flick through the document, encouraging her to sign here, here, and here.

Her latest loan contracts suggest that the payments were tiny, usually about $200. That wasn’t much more than Johnson was paying on each loan each month, ranging from $115 to $135. APRs on the contracts ranged from roughly 23 percent to 46 percent.

In actuality, Johnson was taking out small loans with annual rates often in the triple digits, ranging from more than 800 percent, since most of her payments went to interest and other costs. The world also contested this calculation.

The world would sometimes boost her amount, giving her a higher payoff, but her monthly payment would climb as she continued to pay. Going from one Social Security check to the next became more challenging. She took out a new loan in 2010, this time from an auto-title lender unrelated to World.

She eventually gave up trying to balance the three debts. She ran out of money at the end of each month. She ultimately understood that if she had to choose between basic needs like petrol and food and repaying her debts, the decision was simple.

Customers are being ‘pursued.’

Former staff said that in a typical month at World, roughly 30% of clients are late on their payments. Because they rely on Social Security or pension cheques that arrive later in the month, some customers were often delinquent. They may be charged a $10 to $20 late fee, but they were generally dependable. Others demanded active participation.

Phone calls are the first choice for routinely overdue clients, and they begin right away – sometimes even before the payment is due. When repeated calls to the borrower’s home or mobile phone, frequently many times a day, do not result in an amount, World’s personnel begin phoning him at work. Calls to friends and relatives, or anyone the borrower listed as one of the seven “references” on the loan application, follow.

Simmons, who operated the Pine Mountain, Ga., business, stated, “We phoned the references regularly to the point where they were sick of us.”

If the phone calls fail, the next step is to visit the client at home, known as “chasing” in the industry. “If they hung upon us, we’d go track them down,” Kristin from Texas stated.

Customers may be intimidated by the process, mainly when threats of seizing their belongings are made, but former staff indicated they disliked it as well. “That was the scariest part,” Thacker, a former Marine, told of going deep into the Georgia countryside late at night to knock on a borrower’s home as part of his duties at World. He stated he was threatened many times, including once with a baseball bat.

It is also typical to pay a visit to the borrower’s job. According to complaints filed with the Federal Trade Commission by World customers, visits and calls at work typically continue even after borrowers urge the firm to cease. Some debtors claimed that the company’s harassment put them in danger of being sacked.

ProPublica got the FTC complaints about World and other installment lending firms through a Freedom of Information Act request. They demonstrate industry-wide practices such as persistent phone calls and personal visits.

Johnson said that World personnel phoned her two to three times a day after she stopped paying. She said that one employee threatened to “grab some crap at your home,” but she seemed unfazed. “I told them, ‘You can have this stuff if you want it.'” She also claimed that a World employee knocked on her door three times.

Former employees claim that the purpose of the calls and visits is only partly to persuade the customer to make a payment. It’s also often to encourage them to renew the loan.

“‘Pay and renew, pay and renew, pay and renew,’ is [World’s] favorite phrase,” says the author. According to Simmons. “It had been instilled in us.”

It’s a tempting offer: rather than hurrying for cash to meet that month’s payment, the borrower receives some money back. The renewal also moves the loan’s next due date forward 30 days, effectively buying time.

However, the payouts for these renewals are frequently small, if not nil. In two of the contracts examined by ProPublica, the customer agreed to restart the loan in exchange for no money. In other cases, reimbursements were as little as $1, even while the new loan’s total was more than $3,000, as in one case.

Wages are garnished

Making her monthly payments was always a hardship for Sutton. When she phoned World to notify them that she would be late with a price, they suggested she come in and renew the loan instead.

Consequently, Sutton wasn’t paying her last payment seven months after receiving the first $207 loan from World. She was renewing the loan for the second time. She borrowed $336 in all, paid $300 in interest, and now owed another $390. She was reversing direction.

Walmart cut her hours shortly after the second renewal, Sutton claimed, and they’re just wasn’t enough money to go around. “At the time, I contacted them and told them I didn’t have the money to pay them,” she said. The rest of the world told her she had to pay.

Then came the phone calls and house visits. She recalled three visits from a World employee to the Walmart store where she worked.

The world didn’t deny that its employees visited Sutton’s workplace. Still, it added that “any borrower at her place of employment would be contacted only after attempts to contact the borrower at her residence had failed.”

According to an examination of court papers, World files hundreds of similar claims each year in Georgia and other states, but the business refuses to disclose specific data.

Sutton was an excellent target for a suit since she worked. While Social Security income is exempt, a creditor in Georgia may garnish up to 25% of a debtor’s salary with a court order.

“[World] regarded it as the jackpot when we got to sue someone,” Buys remarked. Her Oklahoma store considered it useless to collect the junk people had pledged as collateral. The garnishment was a more reliable method of collecting money for the company, and any legal fees were the borrower’s responsibility.

World said that while 11 of the states where it does business allow lenders to “garnish customers’ wages for loan repayment,” it “does not generally resort to litigation for collection purposes, and rarely attempts to foreclose on the collateral.”

The sheriff issued Sutton a summons in front of her coworkers at Walmart. Sutton responded to the court with a written note stating that she would pay but could only afford $20 per month. She was given a court date, and when she showed up, she was welcomed by the branch manager, who had initially offered her the loan. Sutton was ordered to pay $25 every two weeks by the manager. She concurred.

Sutton is paid with a “payroll card,” a debit card issued by Walmart. World filed a lawsuit to take $450 from Sutton’s credit card. She’d already paid the corporation more than $600 by that time.

Sutton’s account, which was her sole source of income, was immediately frozen due to the move. She was unable to fill up her automobile with petrol. As a result, she was unable to drive herself to work.

Sutton said she dialed a number for World’s corporate office in a panic. “You’re going to abandon me with no money to live on?” I asked. The World employee explained that the company had no choice because Sutton hadn’t kept her end of the bargain, and then made an offer: if Sutton’s available wages in her account hadn’t covered her total debt to World after 30 days, the company would unfreeze her account and allow her to begin a new payment plan.

Desperate, she gave up trying to deal with the company independently and sought help from Georgia Legal Services Program, a non-profit that represents low-income clients throughout the state.

Michael Tafelski, a lawyer with GLSP who specializes in collections matters and defended Sutton, said, “Her situation is outrageous.” He claimed that the world had overstated Sutton’s legal debt and gotten around laws limiting the number of money creditors can seize. The corporation was effectively garnishing her full salary. “I have seen a lot of dodgy collectors,” Tafelski added, “and this is beyond anything I have ever seen.”

The world made a hasty retreat as Tafelski threatened to sue them. It ruled Sutton’s responsibility met and dismissed all pending complaints against her.

World stated that Tafelski had intimidated the billion-dollar firm in its response to ProPublica: “Mr. Tafelski utilized harsh out-of-court threats to achieve a goal he knew he couldn’t get via judicial procedure.”

“It’s a typical practice among attorneys to contact the opposite side to try to settle difficulties promptly, rather than launching a lawsuit,” Tafelski said.

On the other hand, Sutton had missed several workdays, but her account had been unfrozen, and she was no longer with World Finance.

“I would never have fooled with them if I’d known then what I know now,” she said.

Gordon K. Morehouse