Ghost broking rife on social media: How to spot car insurance scams
Drivers are urged to watch out for bogus motor insurance deals that are rife on social media as concerns are raised that ghost broking scams will rise amid the cost-of-living crisis.
Fake motor insurance deals or ghost broking scams involve fraudsters pretending to be brokers in a bid to offer unsuspecting drivers cheap policies. But they’re entirely fake and mean people are left out of pocket and are driving without valid insurance.
Victims can also face criminal charges for driving without valid insurance as well as a £300 fine, six penalty points and potential vehicle seizure.
Ghost brokers can also pose a cyber threat as they harvest the victim’s personal information to take out policies under the names of individuals – such as experienced older drivers who usually have cheaper insurance – in order to forge and sell on policies in other people’s names.
Over £1bn in fraudulent insurance applications is detected each year, based on annual figures released by Association of British Insurers (ABI).
And in the past 12 months, the Insurance Fraud Bureau (IFB) which investigates organised insurance fraud, has already uncovered 55,000 fraudulent insurance applications – more than double the figure previously discovered.
However, just one in six people are currently aware of ghost broking scams, according to YouGov data, despite its prevalence on sites such as Facebook and Instagram.
But amid the cost-of-living crisis, there are concerns the number of ghost broking victims will rise fast unless more is done to alert people to the signs of the scam.
How to spot the signs of ghost broking
The IFB together with the General Insurance Fraud Committee (GIFC) and City of London Police’s Insurance Fraud Enforcement Department (IFED), has launched an ghost broking awareness campaign.
It is targeted at young drivers – those most likely to fall victim to the scam – and reveals how to spot the signs and how serious the consequences can be:
Up-front fixed prices: Many ghost brokers offer up-front fixed prices without any form of assessment, even though motor insurance is priced based on the risk of the information provided by the policyholder. In some instances, they will carry out a mock assessment, but the price tends to be unrealistically cheap.
Unprofessional: Ghost Brokers may behave in an unprofessional way and encourage victims to speak on end-to-end encrypted messaging apps like WhatsApp, to keep illegal dealings in private.
Reassure legitimacy: They may also boast that the insurance policy is legitimate because it appears on the Motor Insurance Database (MID). In reality, this is only because they have taken out a policy using false information which makes it entirely invalid.
Instead, drivers shopping around for insurance online should check the following sites to ensure legitimacy:
- Insurance Brokers are registered with the British Insurance Brokers’ Association (BIBA).
- Insurance Advisors are registered with the Financial Conduct Authority (FCA).
- Motor insurers are members of the Motor Insurers’ Bureau (MIB).
If you come to realise that you have been the victim of an insurance scam such as ghost broking, report it to IFB’s Cheatline online or via its phoneline (powered by CrimeStoppers) on 0800 422 0421. Ghost Broking can also be reported to the police via Action Fraud.