15 Cash Advance Scams and How to Avoid Them

If you’re searching for a quick cash advance, you’ve probably wondered whether the app or lender you’re using is legit. With scams getting more sophisticated—and even some real companies hiding costs in tips or subscriptions—it’s tough to know who to trust.

The Consumer Financial Protection Bureau (CFPB) recently flagged concerns about hidden fees and inconsistent disclosures in the paycheck advance market. A 2024 Data Spotlight found that many apps bury true borrowing costs behind suggested tips and express delivery fees, prompting the CFPB to propose a rule requiring clearer disclosures.

In this article, we’ll cover the most common cash advance scams, how to avoid them, and what to do if you’ve been targeted. If you are looking for a legit, trustworthy cash advance app, here are our recommendations below.

Table of Contents

1. 15 types of cash advance scams
   1. 1. Debt cycle entrapment
   2. 2. Upfront application fees
   3. 3. Company name variations
   4. 4. Unsolicited offers
   5. 5. Phone calls
   6. 6. Demand of full payment
   7. 7. Advertising no credit check
   8. 8. Social media scams
   9. 9. Giveaway scam
   10. 10. Overpayment scam
   11. 11. Phishing email scam
   12. 12. Pyramid schemes disguised as peer-to-peer lending
   13. 13. False promises of instant delivery
   14. 14. Misleading “fee-free” claims with hidden tips
   15. 15. Emotional manipulation in tip requests
2. Cash advance red flags
3. Tips to avoid cash advance scams
4. FAQ

15 types of cash advance scams

Here are some of the most common cash advance scams. Some might seem obvious, but scammers use tricks to appear as legitimate companies, so it’s important to be extra careful. Here are 10 to watch for.

1. Debt cycle entrapment

Some apps promote repeated borrowing through gamified systems that encourage users to keep coming back—even if it’s not financially healthy. For example, Klover uses points, games, and raffles to unlock advances, which can encourage a cycle of dependency rather than helping you build stability.

2. Upfront application fees

One of the most common cash advance scams involves so-called “lenders” asking you to pay an application fee upfront before they approve the cash advance. 

Many legitimate lenders charge fees like interest, subscription fees, or expedited funding fees. However, these fees come after you’ve been approved. A trustworthy lender will not ask for payment to process your application while you wait to see if you’re eligible for a cash advance.

In this scam, you’ll pay the fee—often labeled as a “processing” or “administrative” fee—and then never hear from the “lender” again. Scammers might request these fees through wire transfers, prepaid cards, or even cryptocurrency, which is another way to know the company is not legitimate.

3. Company name variations

Scammers often research well-known cash advance companies and alter the name slightly when they reach out to you.

For example, they might create a fake company called “Brighter Advance” to mimic the legitimate company “Bright Advance.” Their goal is for you to Google the name and find the legitimate company, making the scam seem more credible.

These scammers pose as a well-reviewed and trusted company to collect your personal information, which they can later use to steal your identity or access your bank accounts. In some cases, they don’t act right away—they may wait until you’ve forgotten about submitting your information before attempting to use it for fraudulent purposes.

4. Unsolicited offers

Scammers target specific people, like the elderly or those living in low-income areas, to try to convince you they have a solution to your financial problems. It’s possible you’ll get an unsolicited offer in the mail, promising you a guaranteed loan. 

In these situations, scammers are hoping you’re desperate and that you’ll try to cash a check they send you or enter your personal information into their website. Then, they’ll use your banking information and personal identifying factors to take money you have in your account.

5. Phone calls

Legitimate cash advance applications do not take place over the phone. Typically, you can apply for one at a cash advance business or through a cash advance app. Many people don’t realize this, so they answer calls, and scammers promise them financial help.

In this situation, a scammer will try to get banking information over the phone, saying they want to deposit money in your account. In actuality, they will get your account numbers and use them to make purchases or transfer money to themselves.

6. Demand of full payment

Many scammers are also hackers. They use illegal data to find out if you already have a cash advance loan or are likely to have one. Then, they contact you and demand full payment of your loan upfront.

Their goal, of course, is to get you to make a full payment to them on their fake website or over the phone. They might even threaten you with consequences or ruined credit if you don’t pay in full immediately. 

Unfortunately, by the time you realize it’s a scam, your money is gone, and you still owe your legitimate cash advance company.

7. Advertising no credit check

Several reputable lenders, like Empower, Money Lion, and Brigit, do not check your credit when you apply for a cash advance loan. However, other companies use this promise as a tactic to draw in those who are in desperate need of cash to access their private banking information.

When it comes to a credit check, do your due diligence. Lenders that are legitimate will have reviews online, positive ratings, and happy customers. If a lender that advertises no credit checks doesn’t have an online presence or reviews, steer clear and choose a reputable cash advance lender instead.

8. Social media scams

Scammers are getting bolder. It used to be easy to spot a scammy social media profile or realize when a direct message isn’t authentic. Now, however, scammers can create social media profiles with very similar names to other financial companies. They can buy followers and make themselves seem legitimate.

Never “apply” for a cash advance loan using a link on a social media profile. If you apply for a cash advance loan, make sure you’re using a reputable, secure website or an app from a legitimate cash advance company.

9. Giveaway scam

In this scam, fake “companies” advertise that they’re hosting a giveaway or limited-time offer, where they’ll be giving away free cash to one winner. They encourage you to click a link and enter your personal information.

However, instead of entering you into a raffle, the link has tracking data that allows hackers to access your banking information and steal from you.

10. Overpayment scam

In this scenario, a scammer will contact you and inform you that you’ve overpaid your cash advance loan. They’ll use sophisticated language and explain that you made an extra interest payment or accidentally double paid.

The sole purpose for doing this is to get you to give them your checking account information for them to “deposit” the over-payment or refund. Of course, what they really end up doing is transferring your money to themselves.

11. Phishing email scam

Phishing is when scammers get your email address and solicit your business while posing as a legitimate company. In the email, a “company” will offer you a small loan or say you’re eligible for a special financing deal. The goal is to get you to click a link that instantly enables them to steal your identity. 

12. Pyramid schemes disguised as peer-to-peer lending

Some peer-to-peer cash advance apps, like SoLo Funds, have been criticized for resembling pyramid schemes. Borrowers often feel pressured to pay high tips or “donations” to maintain access to the platform or secure future loans. This structure can disproportionately benefit early users or those who pay extra—raising ethical concerns.

13. False promises of instant delivery

Some apps advertise “instant” cash, but fail to disclose that real-time payments may still take a few hours—or require a paid express service. Dave, for instance, was flagged by regulators for misleading marketing around instant deposits. The company has since addressed the situation.

14. Misleading “fee-free” claims with hidden tips

An app may say it’s fee-free but auto-apply a suggested tip by default when you request an advance. If you’re not paying close attention, you might approve a transaction that includes a sizable fee—just not one labeled as such.

15. Emotional manipulation in tip requests

In a complaint to the FTC, Dave was flagged for using manipulative messaging—like animations of food and water—when asking users to add a tip, suggesting that not tipping could harm others. This kind of messaging can guilt users into paying more than they want or need to. The company has since remedied the issue.

Once somebody gains access to your identity, there is no limit as to what they may potentially have access to. They can easily update passwords and contact information so that when you try to fix it, the authentication codes no longer come to your phone or email, allowing them more time to gain access to other things in your life.

If they drain your bank account, you may start to have overdraft fees, checks that bounce, late payment fees, and as all these items begin to tick up. They will ultimately go onto your credit report and may hurt your future chances at owning a home or obtaining your dream job.

Cash advance red flags

If a cash advance company does any of the following, it’s a red flag, and you shouldn’t give them any of your private banking information.

• Engages in high-pressure sales tactics or unsubstantiated threats to tell your boss or family members about your financial situations
• Has a website with typos or an unprofessional design
• Refuses to show you a license to operate a lending business
• Asks for a payment before you can be approved for a loan
• Has a name that is extremely similar to an existing, reputable cash advance company
• Calls you on the phone to discuss lending
• Claims that they won’t check your credit, but they have no online presence or several negative online reviews
• Promises you’re guaranteed approval for a cash advance
• Has unprofessional behavior or grammar
• Hard to get into contact with them
• Returning their calls leads to disconnected numbers

What to do if you think you’re being scammed

If you suspect you’re being scammed, stop all communication with the scammer right away. Then, contact your local police department to report fraudulent activity. You should also make a complaint with the Federal Trade Commission (FTC).

When consumers report scam activity, it helps the authorities to notice patterns and help other consumers protect themselves. If you’ve already been scammed and given out your personal information, freeze your credit to ensure scammers don’t get access to your personal data. It’s also a good idea to notify your bank and change your bank passwords. 

I never share information unless I am the one initiating the call. If a bank calls you to verify suspicious information, simply say, “Thank you. I’m going to call back to verify that this is legitimate.” From there, look for the financial institution’s phone number on a recent statement or a reputable online source and call them back. It may take you a few more minutes, but it may save you thousands in the long run.

Tips to avoid cash advance scams

Although cash advance scams are becoming more prevalent, here are tips to stay vigilant and avoid becoming a victim. Share these tips with others who might need to see them, especially your loved ones who are elderly, as they are prime targets.

• Trust your instincts: If an offer feels too good to be true, it usually is. Reputable lenders will check your credit and will not contact you by phone.
• Be wary of application fees: Lenders won’t charge fees, like instant payment fees or interest costs, until after you’re approved for a cash advance. You should not have to pay fees, like an application fee, before being approved for a cash advance.
• Verify everything: Always double check the company name, website, and contact information of a cash advance lender. As mentioned, some scammers pretend to be companies and create fake websites.
• Check online reviews: A reputable cash advance company will have online reviews on platforms like TrustPilot, the Better Business Bureau (BBB), Google Play, and the Apple App Store. If a company doesn’t have an online presence or has scant reviews, it’s better to choose a different one.
• Don’t give out personal information: Be careful of giving out your personal information until you’ve verified a lender is legitimate. Scammers can access your financial information with very few private details.
• Check for a proper license: Lenders must have a license to operate. Each state has a financial regulator you can contact to see if a company is legitimate.

When receiving texted codes, be sure to read the message in full. This code should never be shared with anyone over the phone. And finally, to protect yourself, set up two-factor authentication on your devices. This is easily done by using an app such as Duo, Google Authenticator, or Microsoft Authenticator.

FAQ

Can I trust online cash advance companies?

Some online cash advance companies are legitimate, but others may not be. (You can check out our list of the best cash advance apps to borrow money. Our latest analysis reviewed 180 data points from nine apps and financial institutions, with 20 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives, and we’re confident all the companies on this list are trustworthy.)

To determine whether an online cash advance company is trustworthy, look for clear contact information, including a physical address and customer service number. Verify the company’s registration with your state’s financial regulatory agency or the BBB. Also, read reviews from multiple sources to understand other customers’ experiences. Avoid companies that make unrealistic promises, guarantee approval regardless of credit history, or request upfront fees.

Are there safer alternatives to cash advances?

We think these six cash advance app companies, which provide short-term cash without charging traditional interest, are safe. However, if you need to borrow more than these apps offer or are exploring payday loans, consider alternatives such as personal loans from a reputable bank or credit union. 

Using a credit card with a lower interest rate, setting up an emergency savings fund, borrowing from friends or family, or exploring community-based financial assistance programs can provide options. 

How is a cash advance different from a personal loan?

Cash advance apps such as Dave, EarnIn, or Empower provide small, short-term advances on money from your regular earnings, typically ranging from $20 to $500, without traditional credit checks or interest rates. Instead, they may charge optional tips, a small fee, or require a subscription. 

Personal loans usually offer larger amounts, have fixed interest rates, and have a longer repayment schedule. Personal loans may be a better option if you need a more substantial amount or more time to repay.

We prefer both options to traditional payday loans, typically short-term loans with sky-high interest rates and fees. They’re designed for emergency cash needs, but you must repay them quickly to avoid high costs.

Are there upfront fees to take a cash advance?

Yes. Cash advance apps may include fees, though they may not be labeled as such. Some apps charge a monthly subscription fee or suggest tips to access cash advances, which could add to the total cost.

Payday loans and credit card cash advances often come with upfront fees, which can include a cash advance fee (usually a percentage of the amount borrowed, often around 3% to 5%, and a high interest rate that begins accruing immediately, with no grace period. Some lenders may also charge additional fees, such as processing or service fees. 

How can I check a cash advance company’s legitimacy?

To check a cash advance company’s legitimacy, start by verifying its registration with your state’s financial regulatory agency. Check the BBB for complaints or ratings, and read online reviews from multiple sources.

Confirm that the company provides clear contact information, including a physical address and a phone number. Be wary of companies that use high-pressure tactics, guarantee approval, or lack transparency about their fees and terms.