What practice has led to increased criticism of the payday lending industry?

The criticism of the payday lending industry primarily revolves around the practice of charging high interest rates. These rates can often reach exorbitant levels, leading borrowers into a cycle of debt that is difficult to escape. Many payday lenders charge annual percentage rates (APRs) that can exceed 300% or even higher. This makes borrowing extremely costly for individuals who are already in financial hardship, and it raises ethical concerns about exploiting vulnerable populations.

Furthermore, high interest rates can result in borrowers taking out multiple loans over time, increasing their financial burden as they struggle to repay the original loan along with the steep interest. This dynamic exacerbates financial instability for many individuals, which is a core reason why the industry faces significant scrutiny and criticism from consumer advocates, regulators, and the wider public.