‘Ghost broking’ is a scam which involves ‘brokers’ forging insurance paperwork or selling victims a ‘real’ policy at a reduced price after details have been changed.

This leaves drivers potentially liable for fraud as well as penalties for driving uninsured. According to consumer champion Which?, ‘ghost broking’ cost the average victim £1,950 last year.

Its research found social media sites are rife with these brokers. A search for ‘cheap car insurance’ revealed 25 profiles on Instagram offering quotes or cover for UK drivers, though they didn’t appear to be authorised by the regulator, the Financial Conduct Authority.

In one Instagram post with nearly 46,000 followers – more than the five biggest insurers combined – it boasted that drivers could save up to 50% on their premiums as well as ‘speeding ticket removal’. Its sister site also had over 15,000 followers but once flagged to Instagram, both posts were removed.

On Facebook, seven of the 50 profiles it investigated were dubious, while on video-sharing site TikTok, two were suspect.

Which? set up its own posts on Facebook, Instagram and TikTok claiming to be car insurance brokers to see how social media platforms vet unregulated insurance firms. It promised cheap quotes and asked drivers to contact it by calling a mobile number or via email. The two posts on Facebook were taken down within a few days, as was an Instagram post containing ‘ghostbrokerscammer’.

But its second Instagram post with a ‘normal’ name stayed up for 35 days before Which? took it down.

Its two TikTok profiles also stayed up for the same amount of time. Following this experiment, it said social media sites should have stronger processes in place to protect customers from fraudulent pages offering financial services.

According to the Insurance Fraud Bureau, 21,000 policies were reported for potential connection to the scam. But Which? said many people may not report it because they’re too embarrassed. And according to Action Fraud, 517 cases of ghost broking were reported in 2021, with losses totalling £1m. The campaign group said this figure could be higher as this number is only by those who know they’ve actually bought a fraudulent policy.

It said many losses were from young drivers who face the steepest premiums. They also heavily target non-native English speakers.

As such, it listed these five signs that could suggest you’re dealing with a ghost broker:

1) No sign of FCA authorisation

To arrange insurance, a company or individual needs to be FCA authorised. You can double-check this on the FCA’s website. If you cannot find evidence that it is regulated, avoid doing business with it.

2) Limited contact options

Most companies can be reached in multiple ways, including a landline number. If a seller will only interact via mobile phone, social media or a messaging app (such as Snapchat or WhatsApp), it is best to steer clear.

3) They are cagey about their methods

A genuine company should be able to explain, in understandable terms, how it can offer you a bargain. If a broker is guarded or vague about what it does, take that as a red flag.

4) You are getting insurance paperwork out of the blue

If an insurance company is writing to you about cover you did not take out, it could mean someone is basing a fraudulent policy at your address. Contact that insurer to let it know.

5) Unfamiliar activity on your credit report

You should check your credit report regularly. Searches or activity involving unfamiliar companies could indicate that someone is using your details to buy financial products.

‘Nasty kind of fraud’

Jenny Ross, Which? money editor, said: “Ghost broking is a really nasty kind of fraud, where scammers operate by stealth and typically take advantage of those who feel locked out of, or bewildered by, the car insurance market.

“Social media sites must do much more to crack down on car insurance scammers that are infiltrating their sites and harming consumers, and should address these problems now, ahead of the Online Safety Bill becoming law.

“The Online Safety Bill should require platforms to tackle this type of fraudulent content. The government must ensure this happens by amending the Bill so that its definition of fraud does not allow some scammers to slip through the net and guaranteeing Ofcom is ready to enforce these new laws when they come into force.”