How an advance-fee loan scam works
The pattern rarely changes. You see an ad, get a text or receive a call offering a loan, often with slogans like “Bad credit? No problem.” You apply and are told you’re approved. Then comes the catch: before the money can be released, you must pay something first. It may be called insurance, processing, a “first payment,” a deposit or a fee to “secure” the loan. Once you pay, the lender disappears, or invents another fee.
The Federal Trade Commission is blunt about it: “Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away.” And: “No one legitimate will ever ask you to pay for a promise.”
How big the problem is
Consumers reported losing $15.9 billion to fraud in 2025, according to the FTC, across about 3 million fraud reports. Impostor scams, where criminals pretend to be a trusted business or government agency, drew more than 1 million reports and more than $3.5 billion in losses. Fake lenders that borrow the name of a real company are one version of this.
People who need money quickly are targeted on purpose. Scammers know urgency makes it harder to stop and check. Taking ten minutes to verify a lender is the best protection you have.
Six red flags
- Approval is guaranteed before anyone checks your credit. The FTC notes that legitimate lenders check your credit and application before making a firm offer.
- You must pay to receive the loan. Some real lenders charge an application or appraisal fee, but none will tell you that paying a fee guarantees approval or releases your funds.
- Payment by gift card, wire transfer or cryptocurrency. These are hard to trace and hard to recover, which is why scammers prefer them.
- Unsolicited calls or texts. Recorded sales calls offering loans are illegal. Hang up.
- No license in your state. Most states require consumer lenders to be licensed or registered.
- Pressure to act now, or a name, website or email that looks almost like a well-known company’s.
What scammers say
Advance-fee scams lean on a few familiar lines. Hearing any of them should make you slow down:
- “You’re pre-approved, we just need a small insurance payment to release the funds.”
- “Because of your credit, you need to make your first payment up front.”
- “Buy gift cards and send us the numbers to cover processing.”
- “This offer expires today, so we need the fee in the next hour.”
These are paraphrased examples of common pitches, not quotes from a specific case. Scammers also copy the names, logos and web addresses of real lenders, which is why checking the license and typing the address yourself matter so much.
Real lender vs. scam
| Legitimate lender | Scam | |
|---|---|---|
| Credit check | Reviews your credit and income | “Guaranteed approval,” no questions |
| Fees | Disclosed in writing; origination fees usually deducted from the loan | Must be paid up front before funding |
| Disclosures | APR, finance charge and total of payments before you sign | Vague or missing terms |
| Payment method | Normal bank transfer or autopay | Gift cards, wire, crypto, payment apps |
| Licensing | Registered with your state; often listed in NMLS Consumer Access | No verifiable license or address |
How to verify a lender in five minutes
- Check the license. Search the company on NMLS Consumer Access or with your state’s banking or financial services regulator.
- Type the web address yourself. Don’t trust a link in a text or email.
- Search the name or phone number with words like “scam” or “complaint.”
- Read the disclosures. A real offer shows the APR, finance charge and total of payments, as required by the Truth in Lending Act.
More detail is in our loan scams guide.
Habits that keep you safe
- Start the conversation yourself. Apply through a lender’s or marketplace’s site that you found and typed in, not through a link in an unexpected message.
- Never send a fee to get a loan. If a lender’s fee is real, it’s disclosed in writing and normally deducted from the loan amount.
- Keep your Social Security number and bank login private until you’ve verified who you’re dealing with.
- Talk to someone you trust before you pay anything. A second opinion breaks the urgency scammers depend on.
- Check your credit reports regularly at AnnualCreditReport.com for accounts you don’t recognize.
If you already paid
- Contact the company you paid through right away, whether that’s your bank, card issuer, wire service or gift card company, and ask them to reverse the payment.
- Report it at ReportFraud.ftc.gov, including the company name, phone numbers and messages.
- If you shared your Social Security number, visit IdentityTheft.gov and consider a free credit freeze with all three bureaus.
- File a complaint with the CFPB and your state regulator if a lender is involved.
Our promise
Riverstone never charges you to submit a loan request, and we never ask for payment by gift card, wire or crypto. Lenders in our network show their APR, fees and terms before you accept anything. If anyone claiming to be Riverstone asks you for money to release a loan, it isn’t us. Report it to [email protected] and to the FTC.
Looking for a legitimate way to borrow $200–$5,000? Compare offers here.
Frequently asked questions
Is it a scam if a lender charges any fee before I get the loan?
Not always. Some legitimate lenders charge an application or appraisal fee. But a lender that says paying a fee guarantees approval or releases your money is a red flag, according to the FTC.
Can I get my money back if I paid by gift card?
Contact the gift card company immediately and keep the card and receipt. Recovery is difficult, which is why scammers ask for gift cards.
How do I report a loan scam?
Report it at ReportFraud.ftc.gov. You can also file a complaint with the CFPB and your state attorney general or financial regulator.
Does Riverstone ever ask for an upfront payment?
No. Submitting a request through Riverstone is free, and we never ask for payment to release a loan.
This article is general information, not financial advice. Rates and rules change; check the linked sources for the latest figures.