Advance Fee Loan

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.