The core rule that kills most payday scams in one second: real lenders take fees out of the loan, never out of your pocket first. Everything else on this page is detail — but that single filter, applied before you pay anyone anything, would end advance-fee fraud overnight. Here are the nine tells we tell every borrower to check, in the order they usually appear.
The Nine Red Flags
- “Guaranteed approval” before you’ve applied. No legitimate lender guarantees approval — underwriting exists for a reason, and our own myth-busting guide covers why the claim is always false. Guaranteed approval is bait, not underwriting.
- A fee requested before funding. Insurance, “processing,” “collateral verification,” taxes on the loan — the names change, the scam doesn’t. Licensed lenders recover costs from the finance charge, which is disclosed and deducted from proceeds.
- Payment by gift card, prepaid card, crypto or wire. No regulated lender on earth takes Apple Gift Cards. These payment methods are requested because they’re irreversible and untraceable — the opposite of every property a real lender wants.
- No state license you can find. Where you live decides which licenses a lender needs. Check your state regulator — every state page links the licensing authority, and most publish searchable licensee databases. No record, no loan.
- The lender hides behind vague “we work with a network of trusted partners” while refusing to name who actually makes the loan. Referral services (like this site) must be upfront that they’re not the lender; lenders must be identifiable. An entity that is neither a named lender nor an honest broker is playing both sides.
- Pressure to act within the hour. “This rate expires today” on a product whose rates are set by state statute — the statute doesn’t expire at 5 PM. Urgency is a sales tool; in scams it’s a firewall against you checking step 4.
- Contact that starts you. A cold call, text or email offering you a loan you never requested. Legitimate lenders respond to requests; they don’t presell them to phone numbers bought in bulk.
- No written terms before signature. Federal truth-in-lending law requires APR, finance charge, payment schedule and total of payments before you commit. If the numbers only appear after you’ve handed over ID and bank logins, you’re being processed, not underwritten.
- Requests for your banking password or full online credentials. Lenders verify accounts through read-only services or micro-deposits. Anyone who asks for the password itself intends to be you, not to check you.
The Five-Minute Verification Routine
- Name the lender. Get the legal entity, not the brand.
- Check the license. Search your state regulator’s database (or NMLS Consumer Access for mortgage-adjacent products).
- Search the entity + “complaints” in the CFPB complaint database and the FTC site.
- Demand the TILA disclosure — the payment schedule in writing — before sending any document.
- Walk if any step fails. There is always another lender; there is rarely a refund.
If You’ve Already Paid
Contact the payment provider first (banks can sometimes reverse recent ACH debits; gift card sellers can sometimes freeze unredeemed balances), then file with the FTC and the CFPB, then your state attorney general — links to every state regulator are on the state pages. Report even if the amount feels small: complaint volume is what triggers the investigations that shut these operations down.