Car insurance fraud by ‘GHOST brokerage’ is on the rise, with victims losing £ 2,250 each on average.
This kind of fraud happens when someone sells you auto insurance that doesn’t exist or is invalid.
Scammers will offer cheaper insurance premiums, usually through social media or word of mouth.
They pose as brokers for well-known insurance companies, claiming that they can offer legitimate auto insurance for a significantly cheaper price.
However, insurance documents can be forged or details can be falsified to artificially lower the price.
A real policy can be purchased but canceled shortly thereafter.
Often times, people who have been scammed in this way only find out when they are stopped by the police or have to make a complaint.
If this happens to you, obviously you will have to spend money on new insurance, but you also risk a fine, points on your license, and higher premiums for insuring your car.
So far this year, £ 786,700 has been lost to ghost brokers, which works out to around £ 2,250 per victim on average.
From January to August 2021, Action Fraud, the national center for the fight against fraud and cybercrime, received 351 reports of “phantom brokering”.
Consumer Action Group Which one? has also found that this type of fraud is on the rise.
In research published late last year, she found that Aviva alone had rescinded more than 3,100 policies and quotes related to shadow brokerage and was investigating 4,000 more cases.
The Insurance Fraud Bureau – an organization funded by insurers to fight fraud – told Which? that shadow brokerage accounted for a third of its ongoing business.
Action Fraud says young men are particularly susceptible to being targeted by fraudsters selling fake auto insurance.
People aged 17 to 29 are the age group most likely to report being a victim, with 34% of reports coming from this group.
This may be because cash strapped students are often targeted and advertisements are often found on social media sites such as Instagram.
The City of London Police Insurance Fraud Enforcement Service (IFED) is urging motorists to beware of ghost brokers.
Chief Detective Inspector Edelle Michaels, IFED Chief Police Officer for the City of London, said: “Many students rely on their cars to get to or around the university from where they are. studies, and so may have recently restarted or renewed their insurance after summer vacation.
“The high cost of insurance premiums and often tight money for students unfortunately make this group a prime target for ghost brokers, so it’s important to verify that you have purchased a legitimate insurance policy.
“While the offer of a cheap deal can be tempting, a fraudulent policy will end up costing you more in the long run in the form of a fine, points on your license, your car seized and run over, and covering the cost of a valid policy. “
Gareth Shaw, which one? head of the money, said: “We have heard dozens of stories from whom? of people who have been the victims of shadow brokerage, sometimes having hundreds of pounds swindled or finding out that some aspect of their identity has been woven into a stranger’s auto insurance policy.
“If you receive suspicious correspondence from an insurer regarding a policy that you do not have, it is possible that a fraudster has used some of your information. Don’t panic, but be sure to contact the insurer and Action Fraud. We also recommend that you keep an eye on your account and check your credit report for any research you don’t recognize.
If you believe you have been the victim of ghost brokerage, you should report it to Action Fraud on actionfraud.police.uk or on 0300 123 2040.
How to recognize a ghost broker
If you’re unsure whether or not the company you’re dealing with is real, look for these telltale signs:
- They use comparison sites to get quotes for you: A legitimate broker would not use a comparison site to find you an insurance deal. Real brokers have direct relationships with the insurers whose policies they sell. Additionally, it is against the terms and conditions of most comparison sites for anyone except an actual customer to use it.
- You cannot contact them on a landline: Ghost brokers are often only accessible by mobile phone, social media, or messaging apps. A real insurance company must be reachable by landline.
- They don’t have a website: If they can’t be found anywhere other than on a simple social media profile, you have no way of verifying if it’s a legitimate business. It should be a huge red flag.
- You cannot find them on the Financial Conduct Authority website: If the broker is legitimate, it must be listed on the financial services register on the FCA website. If you can’t find them here, the alarm bells should ring.
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