California law caps at 30% the interest rate on loans of $2500 or less. So what did lender CashCall do? It made every loan — no matter how small — into a loan of $2600 or more, by having low-dollar borrowers "prepay" the amount up to $2600 that they didn't want. And what interest rates did CashCall charge? In the neighborhood of 135% or more, according to California's Department of Business Oversight (DBO), which initiated administrative action against the lender last summer over this practice.
Earlier this month, the state announced a settlement "that requires the lender to provide restitution to thousands of California borrowers, reform its business practices, and pay the DBO $1 million in penalties and cost reimbursement."
Read the press release and get more details here.