The wonderful Writers Beware blog led me to this excellent list of tricks vanity presses use to con desperate, and gullible aspiring writers into believing that they are "real" publishers…which also double as rationalizations the suckers use to convince themselves that they haven't been swindled. Among them, the myth that if a publisher doesn't accept all submissions (eg. Tate), and pays a token advance (eg. PublishAmerica), they aren't a scam.
vanity presses are supported primarily by the money that writers pay
them, the less-than-honest vanities try to pass themselves off as real
publishers. One way to do so is to pay advances (or claim to do so).
how to be an advance-paying publisher and still make a profit from
writers? Well, the advances could be very low. For instance, $1 per
author, non-negotiable. The publisher could also pay – or claim to pay
– advances to some authors but not others. Maybe you’ll get it, maybe you won’t.
They can afford to pay you the $1 or the $100 because they know they will make it all back in the money they make off of you and your family buying copies of your own book…which, in fact, is their actual business. They make are in the "selling books to authors" business.