Utah - Life Elevated
Bottom of state seal Home Complaints Registrations Buyer Beware Consumer Information Contact Us

Advance Fee Loans

The Division of Consumer Protection often receives complaints from individuals who have lost money to scam artists promising a "guaranteed" loan in exchange for an up-front processing or application fee.  More often than not, by the time a consumer learns they have fallen victim to a scam, their application fee is lost and gone.

Advertisements for these loans usually appear in classified sections of newspapers, magazines and tabloids but can also be marketed on the Internet, or over radio and television.  They usually target people who are out of work or who have poor credit ratings.  Many times, people who seek these types of loans are in a desperate financial condition and see these offers as their last hope.

The following are common in most advance-fee loan schemes:

  • An individual responds to an advertisement, usually by calling an "800" or "900 number.
  • The company will either promise or strongly suggest a loan will be provided for an up-front fee (sometimes totaling several hundred dollars), regardless of the applicant's credit record.  The promise is usually made that the fee will be credited toward the repayment of the loan or refunded if the loan application is denied.  Often the up-front fee is said to be for "credit insurance".
  • The consumer waits for several weeks or months only to find out the loan has been denied and the fee is not refundable, regardless of earlier promises.  Or the consumer never hears from the company and may even learn that money is being withdrawn from bank accounts or credit card charges are being made with information provided in the loan application.

It is important to recognize an advance-fee loan before becoming involved with one.  Beware of the following:

  • A loan requiring a large up-front fee.  Even if a refund is promised, the operator may have no intention of honoring such a promise.
  • Any offer of a guaranteed loan. Any legitimate lending organization will require a minimal credit level for loan recipients.
  • A request to send applications and fees through a delivery service other than the U.S. Postal Service.  This is a ploy used in an effort to avoid postal inspectors and possible mail fraud charges.
  • A company operating from another state.  In almost any scam, operators seldom do business in their home state, which makes it harder for consumers to get reliable information about the company.  These operations also change location frequently in an effort to avoid detection and prosecution.  The operations may also use mail-drop boxes and might not even work from the state to which you sent your application.
  • Advertisements that direct you to call an "800" or "900" number.  Some "800" numbers direct the caller to call a "900" number or you may even be switched to a "900" line without your knowledge.  Charges for "900" number calls have been reported to be more than $50 for a single call.
A company that advertises through a recognized medium or offers a money-back guarantee is not necessarily legitimate.  A guarantee is only as good as the organization behind it.  Be sure that the company you are dealing with is bonded or has a trust account established in Utah.

For additional information, visit the Department of Financial Institutions at:  www.dfi.utah.gov.


Department of Commerce  |  About Us  |  Public Notices  |  Press Releases
consumerprotection@utah.gov  |  160 East 300 South   Salt Lake City, Utah 84111  |  Phone: 801-530-6601  |  Toll-Free: 1-800-721-SAFE  |  Fax: 801-530-6001
Utah.gov Home | Utah.gov Terms of Use | Utah.gov Privacy Policy | Utah.gov Accessibility Policy | Translate Utah.gov
Copyright © 2017 State of Utah - All rights reserved.