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$3.1M repaid CT ‘payday’ borrowers

Connecticut consumers overcharged by a pair of high-interest “payday” lenders have gotten back a remarkable 84 cents of each dollar in usurious interest because the state intervened, regulators say.

State Banking Commissioner Howard F. Pitkin said Wednesday that, as the claim period closes, eligible borrowers have gotten back about $3.1 million of the $3.7 million available for restitution from CashCall Inc.; Western Sky Financial Inc.; and Western Sky’s owner, Martin Webb.

“The claims rate for this restitution fund was extraordinarily high,’’ said Minneapolis fund administrator Jeff Dahl. “Funds of this sort are similar to class action settlements. A similar type class action would typically result in claims rates between 10 percent to 20 percent. The big difference here was the extensive outreach done by the Connecticut Department of Banking.”

The banking department last April said it investigated and determined that CashCall made approximately 3,800 unsecured consumer loans in amounts less than $15,000 with annual interest rates ranging from 89 percent to 355 percent. State law limits such loans to a maximum 12 percent, if the lender lacks a small-loan license.

CashCall wasn’t licensed to make those kinds of loans in Connecticut, authorities said. None of three could be immediately reached Wednesday for comment.

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In addition to the restitution fund, CashCall, Western Sky and Webb have paid a $350,000 civil penalty and an additional $50,000 to the agency to help affected borrowers make their claims and educate Connecticut consumers about consumer credit lending.

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