Dzanc Books are totally above board and legit. I’ve know the editor for years.
The 2011 Dzanc Short Story Collection Contest
Dzanc is currently holding its fourth annual contest for all authors wishing to submit a short story collection to Dzanc Books. The winning author will be published by Dzanc in late 2014, and will receive a $1000 advance. Entry to the Dzanc Short Story Collection Contest requires a $20 reading fee and the submission of a full manuscript.
The contest deadline is December 31, 2011. All the details can be found here.