Nobody wants to pay for car insurance, but there’s a certain satisfaction we all feel once we’ve done it. Unfortunately for thousands of unsuspecting motorists this feeling is short-lived thanks to the rise of ‘Ghost Brokers’ across the UK.
Action Fraud, the UK’s national reporting centre for fraud and cyber-crime, have received over 850 reports of fake car insurance policies over the past three years, with individual victims losing on average £769 each.
Men aged 20-29 are most likely to be targeted by Ghost Brokers, as they currently pay some of the highest premiums in the market and could be more likely to be lured in by seemingly cheap deals.
What is a Ghost Broker?
How do they work and most importantly how do you avoid falling foul of this latest scam?
A Ghost Broker is someone who poses as a legitimate insurance broker to sell unsuspecting drivers forged or invalid car insurance policies at heavily discounted prices, designed to attract cash-strapped drivers.
Many victims of the scam are unaware they don’t have genuine cover until they try to claim following an accident or are stopped by the police for driving without insurance.
The financial impact doesn’t just end at one victim though, it affects everyone who takes out legitimate vehicle insurance too.
That’s because Ghost Brokers take business away from genuine insurance brokers, which in turn, drives up the cost of insurance premiums for all motorists.
How does the scam work?
The scam typically works in one of the following ways;
- car insurance policies are bought from legitimate insurance providers using false information. These are then doctored before being sold on to unwitting customers
- the drivers’ correct information will be used, but other details such as their address or age, will be falsified to lower premiums
- fake policy documents are created to look like they have been issued by legitimate insurance companies, then sold on to customers
- taking out a genuine insurance policy before quickly cancelling it and claiming the refund as well as the victim’s continued payments.
How do I know if I’ve been a victim?
A lot of victims won’t suspect they don’t have genuine insurance because they will have received, what they believe to be ‘official’ documentation when the policy was taken out.
You can check for yourself if your car is insured and registered on the Motor Insurance Database.
It’s an official industry tool and easy to use; just enter your car’s registration number and the insurance checker will instantly reveal if you’re covered.
Can victims be prosecuted?
Although the police may be understanding if you have fallen foul of an insurance scam, you’ll still be deemed to be driving illegally and you’re therefore left liable for any claims.
The consequences of buying a fake policy can often be the same as having no policy at all;
- your car may be seized by the police
- you’ll have to pay a fixed penalty notice of £300
- you’ll have to buy valid insurance & pay at least £150 to release your car from the pound
- you could be liable for any damage you cause while driving without insurance, including compensation if you injure someone
What should people look out for?
Ghost Brokers often contact victims on social media including Facebook, Instagram, Snapchat and WhatsApp.
They also advertise on student websites, university notice boards, money-saving forums and marketplace websites.
It’s also not unusual for Ghost Brokers’ to advertise insurance policies on posters in pubs, clubs or bars, newsagents and car repair shops.
They also use more conventional tactics such as newspaper and magazine adverts, cold calling and getting friends, family or work colleagues to introduce them to potential ‘customers’.
With genuine insurance companies using more and more creative ways to advertise, it can be difficult to know which methods are from genuine brokers and which are bogus.
Be wary of unsolicited calls from brokers or of being approached in unconventional ways, such as on social media.
If a broker contacts you by email or mobile only, do some background research into the company. Look for a website, office address and corresponding landline number to back it up.
How many people have been conned by the scam?
Over the last three years there have been over 850 reports of these type of scams with victims losing an estimated total of £631,000.
Police say the actual number of victims could be much higher as drivers are often unaware their policy is invalid.
Police action has been taken in 417 cases linked to ‘ghost broking’ with one fraudster found to have set up 133 fake policies while another had made £59,000 in total from the scam.
How do I check my car insurance is valid?
You can check if your vehicle has valid insurance on the Motor Insurers’ Bureau (MIB). Their database is a central record of all insured vehicles in the UK and is used by both the police and the DVLA.
When buying car insurance, always check that your insurance advisor is on the Financial Services Register so you know it is approved by the Financial Conduct Authority (FCA).
You can also find a legitimate broker on the British Insurance Brokers’ Association (BIBA) website.
If you suspect a Ghost Broker is trying to contact you, call the Fraud Bureau on 0800 422 0421.
Mustard.co.uk only work with reputable, FCA approved insurance brokers, so you can compare car insurance quotes online or over the phone with peace of mind.
