Pathological liars will change their story all the time when questioned about certain details. They will begin contradicting the things they have said, because they lose track of the lies they have told. Even when a simple truth would take care of a situation, pathological liars will exaggerate and lie about the smallest circumstances. These small lies can turn into big headaches. Someone often will get hurt, but pathological liars think nothing of it, because they live in their own world. Because of their insecurity they will act defensively when challenged; or they will continue to lie for sympathy, giving no value to the truth.
Although their lies can damage people, pathological liars seem so used to lying, they will lie when it is not even necessary. There are many reasons people become pathological liars. They might have a low self-esteem and feel they have to prove that they are better than everyone else. They might be depressed about their lack of accomplishments in life. Or they could be bordering on a criminal mentality, lying just to get what they want.
In some cases, they might be suffering from multiple or other personality disorders. They may believe what they are saying and have no memory of what they said earlier. In extreme cases, this can be a serious mental illness that needs to be treated with therapy.
The way you deal with pathological liars depends on how serious you believe the condition to be. If you know someone who changes a simple story or exaggerates too much, remind the person you were told something different the day before. It may work eventually, or it could take a long time for the necessary changes. This will not work with someone who needs professional help.
People with serious personality disorders can be treated with psychotherapy. However, many of these people are not aware they have a problem or refuse to admit it. It puts them and you in a difficult situation. The best advice may be to stay away from these people when you believe the lying is going to continue. You have a right not to be lied to and treated disrespectfully. Ultimately, treating the problem is up to the pathological liar.