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State announces $2 million lending settlement

State announces $2 million lending settlement

A South Dakota-based payday lender and its California partner are to pay about $2 million under the terms of a settlement designed to address "abusive" lending and collection activities, the Department of Labor, Licensing and Regulation said Monday.

Regulators first placed a cease-and-desist order on Western Sky Financial, owner Martin Webb and related entities in 2011, after complaints from consumers about interest rates of up to 1,825 percent, well above the state cap, which ranges from 24 percent to 33 percent based on the size of the loan.

Payday loans are small, short-term loans that were meant originally to be repaid on the borrower's next payday. The loans are...