Rise of ghost brokers selling phony car insurance on social media

Drivers are being warned to be alert for a rise in ‘ghost broking’ scams that largely originate on social media targeting younger motorists.

The average ‘ghost broking’ scam is said to have cost victims thousands of pounds in 2021, with the average victim losing out on £1,950.

Ghost broking often involves forging insurance paperwork, but can commonly involve selling victim ‘real’ policies, but changing some key details, such as their address or claims record – ultimately invalidating the insurance.

These ‘brokers’ typically sell victims a policy at a reduced price which are attractive to younger, new drivers, who face far larger costs for cover. It potentially leaves motorists liable for fraud and at risk of penalties for driving uninsured.

Dangers: Buying cheaper ‘cover’ from a ghost broker could be costly in the long-run (stock image)

Most ghost brokers operate on social media, with the police and insurance industry agreeing that ghost brokers operate most prolifically on Facebook and Instagram, according to Which? 

Last year, insurers collectively reported more than 21,000 policies that could be connected to the scam, according to the Insurance Fraud Bureau.

In May, Which? searched on social media platforms for profiles and pages that showed signs of being run by scammers offering ‘cheap car insurance’ on Facebook, Instagram and TikTok.

Of the almost 50 profiles that matched Which?’s search on Instagram, more than half appeared to be offering quotes or cover to UK drivers, but showed no signs of being authorised by the Financial Conduct Authority.

One Instagram profile was also found boasting it could save customers ‘up to 50 per cent’ on their premium – it also offered ‘NCB (no-claims bonus) documents’ and ‘speeding ticket removal’. 

It had 45,900 followers – more than the five biggest insurers combined – and claimed to have ‘over six years experience in [its] field’, and has since been taken down by Instagram after being flagged as a scam.

Consumers should conduct background checks with the FCA to avoid scam insurance brokers selling their services on social media

Consumers should conduct background checks with the FCA to avoid scam insurance brokers selling their services on social media 

On Facebook, 14 per cent of profiles were dubious, while only four per cent were flagged as suspect on the video streaming platform, TikTok. 

Over 500 cases of ghost broking – with losses totalling £1million – were reported to Action Fraud in 2021. 

However, this will only be people who make a report to Action Fraud and actually know that they have bought a fraudulent policy, as the true numbers are likely to be much higher.  

Some victims will not report being scammed because they are too embarrassed, while others might be aware their quotes have been manipulated, but ghost brokers can be persuasive in downplaying the significance of this. 

Some ghost brokers also put real effort into creating a positive word-of-mouth buzz, which helps them seem trustworthy.  

Many of these losses were from young drivers, who face the steepest premiums. 

Ghost brokers were also found to be heavily targeting non-native English speakers.

Which also found that social media users may also have been affected by the scam without having bought a false policy, through having their address or other details used as part of forged insurance paperwork.

Five signs you could be dealing with ghost broker:

No sign of FCA authorisation: If you cannot find evidence that the business is regulated, it could be a scam. 

Limited contact options: Most companies can be reached in multiple ways, but if a seller will only interact via mobile, social or messaging app, it’s best to steer clear.

They are cagey about their methods: A genuine company will be able to tell you how its bargain’s work. If a broker is vague, that could be a red flag.

You receive unexpected  insurance paperwork: If a company is writing to you about cover you did not take out, it could mean someone is basing a fraudulent policy at your address. 

Unusual activity on your credit report: Searches or activity involving unfamiliar companies could indicate that someone is using your details to buy financial products.

‘Platforms should be required to prevent it’ 

Which? also decided to test how social media platforms are vetting unregulated insurance middlemen, by setting up six accounts on Facebook, Instagram and TikTok, claiming to be car insurance brokers. 

The two profiles on Facebook were taken down by the site within a few days, as was one Instagram profile linked to an email containing the word ‘ghostbrokerscammer’. 

However, the second Instagram profile, stayed up for 35 days, as did the two TikTok profiles, before Which? took it down themselves.

Experts are arguing for social media companies to have stronger processes in place to protect consumers from fraudulent pages offering financial services, suggesting platforms should be required to prevent this kind of activity.  

Meanwhile, consumers should be wary of insurance brokers selling their services on social media and can take simple steps to ensure they are not being scammed.

If you plan on taking up an offer on social media, users should carry out basic background checks to ensure they are not buying a fraudulent insurance policy – and are dealing with a company that is actually authorised by the FCA.

Jenny Ross, Which? money editor, is calling on the Government to amend the Online Safety Bill to ensure its definition of fraud does not allow scammers to slip through.

She 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.’  

Ben Fletcher, director at the Insurance Fraud Bureau, said: ‘Ghost Broking’ scams are worryingly prevalent on social media, so it’s critical that consumers watch out for them. 

‘Young and vulnerable people are constantly being targeted online with fake car insurance deals that are too good to be true, and if they fall for them they’re immediately left out of pocket and face having their car seized by the police for no insurance.

‘The cost-of-living crisis means it’s never been more important for people to safeguard their personal finances against fraud. 

‘To help raise awareness of the issue of ‘Ghost Broking’ scams, we’ll soon be launching a digital advertising campaign to stop more people from falling victim.

‘If anyone believes they have evidence of a fake motor insurance deal, they can report it to our confidential Cheatline for free or call 0800 422 0421.’

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