Advance Fee Loan

What you need to know

This is a scam wherein a scammer will represent themselves as a legitimate lender able to secure loans for individuals with little or bad credit. Potential victims will be told they need to pay an upfront fee to collect the loan; this is commonly called a processing fee, application fee, or "credit insurance." While lenders may charge fees for their services, reputable companies will deduct these costs from the loan itself or require they be paid only after the loan is approved.

Targets for this type of scam have typically already applied for short-term, high-interest loans. Scammers are able to learn this because some individuals, while under the impression that they are submitting an application for such a loan, will unknowingly provide their information to a third-party broker who then sells this information to potential lenders. As there is no limit to how many times this information can be resold, it can end up in the possession of scammers. Assuming that applicants for short-term loans have poor credit and may already be in debt (and thus unable to secure loans through traditional avenues), scammers prey on these individuals and attempt to leverage a victim’s stress for illicit financial gain.

Scammers may have victims pay via gift card, reloadable credit card (such as Green Dot), or wire transfer. Once payment is sent in these ways, the funds are usually not recoverable.

Warning Signs

  • Promise of a "guaranteed" loan. Legitimate lenders will have some minimum credit requirements in place and will run a credit check before approving a loan. Beware of anyone who claims they can provide you a loan without a credit check.
  • Loan offers via phone. Under federal law, it is illegal for companies doing business over the phone to promise individuals a loan or credit card and ask for payment before they deliver.
  • Request that an application be delivered by a service other than USPS. Scammers may request you use alternate delivery services in an attempt to avoid federal postal inspectors and deflect charges of mail fraud.
  • The lender is based out of state. Scammers often operate outside the state they are actually located in to make gathering information on the company more difficult and to complicate prosecution efforts.
  • The lender is not registered. Lenders generally must notify the Utah Department of Financial Institutions that they are conducting business in Utah. You can browse the list of current Consumer Lenders at: