It was four days before Christmas when Sharon Alice first heard from Cigno, a payday loan company, which messaged her offering her a quick, small loan.

Key points: Sharon Alice's $175 loan had turned into a $760 debt in six months

Sharon Alice's $175 loan had turned into a $760 debt in six months Her lender, Cigno, has been named by ASIC as one of the groups using a short-term lending model that may be causing "significant consumer detriment"

Her lender, Cigno, has been named by ASIC as one of the groups using a short-term lending model that may be causing "significant consumer detriment" The corporate watchdog is gathering stories like Ms Alice's to investigate whether it could impose a ban

"I wanted to spend money for my family for Christmas dinner, so I did apply for that loan," Ms Alice said.

"It was $175."

At the time Ms Alice was on the Newstart Allowance, and the money would help her feed the extra family members that would spend the holiday season with her.

Christmas lunch was good, but what Ms Alice did not know was that the loan that helped pay for their celebrations was aggressively accruing fees and charges.

Within one week, the amount owing had almost doubled to $336.95.

One week after that, it was up to $421.90.

It was three and a half weeks after the loan was granted that Ms Alice made her first repayment on the loan.

By that time her balance with Cigno was $427.85.

In that period, Ms Alice had accumulated a 'same day deposit fee', a 'financial supply fee', a 'lender fee', a 'dishonour fee', a 'dishonour letter fee', and three separate iterations of the 'account keeping fee'.

This statement from Cigno shows more than $700 owing on Ms Alice's account. ( ABC Alice Springs: Oliver Gordon )

Her first payback of $94 barely put a dent in what she now owed the Gold Coast-based payday loan company.

"I was surprised. I was in shock," Ms Alice said.

Within a six-month period, Ms Alice's $175 loan had turned into a $760 debt.

The Alice Springs resident said Cigno did not explain the fees and charges attached to the loan when she first applied for it.

"They didn't let me know about the different fees that they had," Ms Alice said.

"I thought it was just a loan that you would just pay straight back to them."

Regulator 'building casebook'

Ms Alice owed $760 on the loan within six months. ( ABC Alice Springs: Oliver Gordon )

Ms Alice's story is just one of many that is being shared about Cigno Loans and its associated company Gold-Silver Standard Finance Pty Ltd in recent months.

The Australian Securities and Investments Commission (ASIC) recently named the companies as one of the groups using a short-term lending model, which it believes may be causing "significant consumer detriment".

The corporate watchdog is spending this month collecting case studies like Ms Alice's.

ASIC Commissioner Sean Hughes said if enough stories like this were uncovered, ASIC might be able to use new powers to crack down on lending that disadvantaged society's most vulnerable.

"We're going to build together a casebook of all this information. That will tell us whether in fact we meet the legal test to impose a ban," he said.

Commissioner Hughes said he would know by mid-August whether or not a ban on this sort of practice would come into effect.

He compelled others who had been affected by payday loan operators with high fees to come forward by the end of July.

"We are very keen to hear from people, so we're speaking to our regional commissioners around Australia, but we're also encouraging financial counsellors to alert their clients to this action."

'We were pretty much living on noodles'

ASIC may not need to look too hard to find stories similar to Ms Alice's.

The ABC has revealed multiple cases in which people say they were signed up to expensive loans they didn't understand and couldn't afford to pay back.

Consumer groups have repeatedly raised concerns about the company's business model.

And hundreds of customers have criticised the company on the website ProductReview.com.au.

On the site, a number of Cigno customers speak of extremely high repayment rates, mysterious fees and charges, and an inability to contact the company.

Sydney mother of two Anna Bedford left a review on the site that said: "If I could give zero stars I would".

Ms Bedford said when Cigno incorrectly took more than $500 out of her account it took multiple phone calls, emails and text messages to contact the company to get her money back.

"I tried calling. It was an hour and 40 minutes on hold, and I didn't even speak to anybody," she said.

Ms Bedford called the next day and spoke to someone who processed her refund, but it took a week to be returned to her.

During that time she and her children struggled to find money to eat.

"I needed to get that money to live," she said.

"We were pretty much living on noodles. It brought me to tears."

Ms Bedford had a clear message for anyone who found themselves looking for a loan.

"Don't borrow from them ever. You'll be in more debt than you will ever know," she said.

Earlier this year, an ABC reporter who attended Cigno's address in Southport on the Gold Coast found only a nondescript entrance next to a restaurant with no obvious signs of occupation.

ASIC said it hoped to know by mid-August if it would be able to intervene and possibly ban the type of lending being practised by Cigno.

All within the law

Cigno was contacted for comment on this story but did not respond.

A Cigno Loans post from its social media account. ( ABC News )

ASIC said the company and its associate Gold-Silver Standard Finance were able to offer their short-term loans with high fees because their business model skirted national consumer credit laws.

By splitting its brokering arm from its lending arm, the business could use a loophole to charge fees far beyond what was normally allowed of a payday lender, the corporate watchdog said.

But Commissioner Hughes said the debts being incurred by consumers using the company were very concerning.

"They highlight the need for us to take action, and to take action quickly," he said.

"Because these are loans for relatively small amounts of money for a short period of time, and the actual credit arrangement itself is within a limit, they essentially operate as an exemption from the Credit Act."