Raising Young Drivers’ Awareness of Ghost Broking

What is ghost broking?

Ghost broking is a scam in which fraudsters pose as genuine brokers to sell fake insurance policies to unsuspecting victims. Drivers are attracted to seemingly cheap deals for car insurance and may only realise they’ve been tricked when they attempt to make a claim. 

This type of insurance fraud has been around for a few years now; the Insurance Fraud Enforcement Department (IFED) reported over 850 incidents in the three years from 2015 to 2017, with losses totalling £631,000. They estimate that drivers are losing an average of £769 each to ghost brokers.

How does ghost broking work?

Investigators have discovered several tactics being used by ghost brokers. One method is for the fake broker to purchase a genuine insurance policy, take payment from the customer, then speedily cancel the policy and pocket the refund from the insurer. 

Other tactics are to forge insurance documents or falsify a driver’s details to obtain a lower premium from the insurance company. 

In all these situations, drivers are effectively rendered uninsured, but many will be totally unaware of it until much later. 

How are young drivers being targeted by ghost brokers?

Young drivers who may struggle to find affordable car insurance are ripe for exploitation. Drivers in their 20s seem to be particular targets for this type of crime, with cold calls or hoax ads appearing on social media platforms such as Facebook, Snapchat, Instagram and WhatsApp, where it’s easier for the hoax company to avoid being traced. 

Young drivers are also targeted on student forums, university websites, money-saving websites, clubs, pubs and bars. 

Other implications of ghost broking

As noted earlier, many drivers only become aware they’ve been scammed when they attempt to make a claim and find out that the broker is untraceable and their policy worthless. 

Even worse than having to pay for repairs to their own cars after an accident is the realisation that there’s no insurance to cover third party claims (which they may also have to pay). This puts the driver in the unwitting situation of having broken the law; potentially facing hefty fines, points on their licence and even having their car taken away or destroyed. 

Sometimes the fraud comes to light sooner: police technology can detect uninsured vehicles with relative ease; they often stop drivers who have no idea till that moment that they are driving without insurance.

How to avoid ghost broker fraud

• Brokers should be authorised by the Financial Conduct Authority (FCA), so if in doubt, check their Financial Services Register. This will help you find out if a company you’re using, or plan to do business with, is authorised.
• If you suspect you may already be a victim of a ghost broker you can find out if your car is insured through the Motor Insurance Database. It’s fast and free.  
• Be especially wary of responding to ads for cheap car insurance on social media or other places where ghost brokers hunt for easy prey.
• Trust your instincts. Young drivers are obviously keen to find cheaper insurance, but if a deal seems too good to be, it probably is.  
• Use a reputable broker to help you find an affordable and genuine insurance policy.

Released On 21st Jun 2018