Gumtree, a classified ads website in the United Kingdom, has shut down its insurance ads category after a court granted a 12-month conditional discharge to a 19-year-old for posting four advertisements online for worthless insurance.
Brokers appeared to be exerting pressure on Gumtree to do something about unlicensed “ghost brokers” posting phony insurance ads on the website. Gumtree denied it shut down the insurance ads category because of ghost brokers, saying it was rather because there weren’t enough ads to support that section of the site.
Brokers in the United Kingdom were nevertheless pleased to see the insurance ads removed from the classified ads website. “While we accept Gumtree’s statement, our view is that there has been court evidence that individuals have used advertising to promote ghost-broking services,” Towergate broking director Paul Williams told Post Online. “The effect of ghost brokers on brokers like us [is detrimental].”
The British Insurance Brokers Association (BIBA) said it doesn’t like the term “ghost broking.”
“Broking is a profession, and there’s nothing professional about what these fraudsters are doing,” BIBA chief executive Steve White told Post Online. “Undertaking regulated activity without authorisation, which is what these people are doing, is a criminal activity. It’s criminal, it’s fraud and it damages all our reputations.”
Canada has its own share of classified advertising sites, such as craigslist and kajiji. And Ontario’s insurance regulator, the Financial Services Commission of Ontario (FSCO) has posted public warnings about unlicensed fraudsters trying to take money from people by posted bogus insurance ads.
But Jeff Bear, CEO of Ontario’s broker regulator, the Registered Insurance Brokers of Ontario (RIBO), told Insurance Business that unlicensed individuals purporting to be brokers are not the main problem when it comes to online classified ads.
“As far as I know, this hasn’t been a problem here in Ontario,” Bear told Insurance Business. “Most of the complaints we get deal with an individual broker not properly identifying the firm through which they are licensed to sell insurance. In some cases, making the principal broker aware of this type of activity with their staff leads to a problem being corrected as well.”
Randy Carroll, CEO of the Insurance Brokers Association of Ontario (
IBAO), said he is not aware of any regulatory activity specifically related to online “ghost-broking,” although he does observe that RIBO does occasionally post insurance scam warnings.
“I know that there have been RIBO warnings sent out regarding these types of false advertising schemes in Ontario, but other than warnings I have not seen or heard of any other actions being contemplated [related to classified ads websites],” he said.
For its part, FSCO said it publishes warning notices on its website to alert consumers of unlicensed and potentially fraudulent activity in the sectors it regulates.
“These notices can cover cases of insurance fraud like those being discovered in the United Kingdom,” said FSCO spokesman Robert Snow.
In June 2013, FSCO launched a new service designed to help consumers report suspected cases of fraud. FSCO’s dedicated Fraud Hotline is intended to make it easier for Ontarians to bring suspected fraud to FSCO’s attention. Consumers now have a direct channel to report tips about suspected auto insurance fraud 24 hours a day, 7 days a week.
