Drivers are being urged to be on the lookout for fake online car insurance quotes that could cost them hundreds of pounds.
As motorists seek to save money amid the cost of living crisis, they are warned not to fall victim to scammers who deliberately target those who can least afford to lose money.
New figures from the Insurance Fraud Bureau show the number of so-called “ghost broking” cases has doubled in the past 12 months, and experts fear more drivers, particularly younger motorists, are left out-of-pocket, uninsured and even prosecuted could be a result.
Ghost brokers offer auto insurance at far lower prices than traditional insurers or brokers. They advertise on social media channels such as Facebook and Instagram and often target young and inexperienced drivers and other groups facing higher insurance costs.
After receiving payment for a policy, they either provide fake or tampered with insurance documents or take out a policy to obtain legitimate documents before immediately canceling it and claiming the reimbursed expenses.
In all cases, the victim believes they are insured when in fact they are uninsured. Driving without valid insurance is against the law and offenders face a £300 fine, six penalty points on their license and the risk of having their vehicle impounded.
In the last 12 months, the IFB has identified more than 55,000 fraudulent motor insurance claims – up from 21,000 a year ago.
Ursula Jallow, Director of the IFB, said: “Ghost broking scams are rampant on social media and the impact is far-reaching. Not only do ghost brokers leave victims penniless, without a vehicle and at risk of prosecution, but these scammers pose a cyber threat and cost the economy millions.”
David Phillips, Chairman of the General Insurance Fraud Committee (GIFC), added: “We know that fraud rises in tough times and that unrepentant criminals are out to prey on innocent, cash-strapped drivers.
“Insurance fraud is a socially destructive crime, and those who create illegal and false policies leave young people, who are often among the most vulnerable in society, without cover and without a safety net against the far-reaching consequences of driving without a valid insurance policy.”
A recent YouGov poll revealed that only 17% of people knew about ghost broking scams and how they work, prompting the IDF and the General Insurance Fraud Committee, along with the City of London Insurance Fraud Police Department, to issue advice for young people Giving drivers how to spot and recognize you can avoid a scam.
How to spot a ghost broking scam
know the signs
- The price is much better than anywhere else.
- The seller only wants to communicate via social media or a messaging app (e.g. WhatsApp or Snapchat).
- The seller is vague about how they get you such a good price.
- The seller does not have a legitimate website, landline number or UK address.
Do your checks
- If you are buying through a broker, make sure they are registered with the British Insurance Brokers’ Association (BIBA). Check here…
- If you are buying direct from an insurer, make sure they are a member of the Motor Insurers’ Bureau (MIB). Check here…
- Whether you are a broker or an insurer, check that they are registered with the Financial Conduct Authority (FCA). If not, avoid using them. Check here…
know the consequences
- There is a fine of £300.
- You can get six points on your driver’s license.
- Your car can be impounded and crushed.
- You will be responsible for the cost of recovering your impounded vehicle… if it has not been crashed.
- You will be responsible for the cost of obtaining a new valid insurance policy.
- Legal proceedings can result in a criminal record, an unlimited fine and a driving ban.
- You may be held personally liable for your own and third party’s damage costs.
Ursula Jallow added: “In these tough economic times, it’s crucial for drivers to spot the signs of host broking fraud, which is why we’re proud to launch this campaign in partnership with GIFC and IFED. We urge anyone who has evidence of insurance fraud to report it to us immediately.”
