"It's been obvious and still is that these lenders target low-income areas," she says. "They prey on the financially unsophisticated who generally already have financial problems."
Fox says that title lenders make loans with little regard to their borrowers' ability to repay.
"They purposely target borrowers who cannot afford the high-cost, short-term balloon loans, virtually guaranteeing that many of the loans will fail," she says. "These types of loans are an indication that many people have a hard time making ends meet or have trouble with credit."
The lenders' side
Rod Aycox, president of Title Loans of America, defends the practices in his 200 stores across the nation. "They work for me, and they work for the customer. Against any bank product, payday or traditional consumer finance product, I think it's a good value for what it's worth."
Aycox has been in the title lending business for 15 years and says he does more than 50 percent of the business in the country. He says that most of his customers are hard-working Americans from two-income households. He says that he provides a valuable service to consumers who are bad risks for conventional credit.
Aycox says that he is not a predator lender and that most of his clients pay back the loan in full and on time.
Fox views Aycox's practices as bait and switch. Consumer lawyers and advocates see Aycox as a predatory lender who seduces people into believing that title lending is a harmless loan that they've used successfully before and can use successfully again.
"There is no light at the end of the tunnel," says Fox. "How is it possible that if you don't have $1,000 today, that you will have $1,250 30 days from now?
"These lenders are out to make money off desperate, financially downtrodden people. They are not operating fairly and are sucking the wealth out of vulnerable communities across the country."
Ruoff agrees. "It is difficult for me to imagine that a loan where you pay 300 percent is a good loan, particularly when you are putting up an asset so significant as your car."
Ruoff says that many people look at title lending as a business that lends money to high-risk people who could not get a loan otherwise. "Folks view it as one more businessman trying to make a living."