The city of San Francisco alleges in a lawsuit that two city-licensed payday lenders and their online affiliates are colluding with a Delaware bank to market short-term loans at illegal interest rates to low-income borrowers.

The suit, filed on April 26 in San Francisco Superior Court, is the latest in a protracted litigation war between the payday lending industry on one side, and consumer advocates and government entities such as the U.S. Department of Defense on the other.