Motorists have been warned against buying cheap insurance from “ghost brokers” after consumer group Which? found that the scam is costing the average victim £1,950.
Ghost broking is a scam that involves “brokers” forging insurance paperwork or selling a “real” policy at a reduced price by changing some of the victim’s details in the application, like an address or claims record.
Which? did a quick search of “cheap car insurance” on Facebook, Instagram and TikTok and found that more than half of profiles offering quotes and coverages to UK drivers have no authorization from the Financial Conduct Authority (FCA).
Even more alarming is that Which? stumbled upon one Instagram profile with 45,900 followers, which is more than the follower count of the five biggest insurers combined. Customers are supposedly able to save up to 50% on premium through them. If that’s not enough, it also claimed to offer no-claims bonus documents and speeding ticket removal.
The account has since been taken down, but the very real danger of encountering another ghost broker – or 100 – continues to put uninsured motorists in a vulnerable position.
In 2021, the Insurance Fraud Bureau received more than 21,000 policies from insurers that could be connected to the scam. Only 517 were confirmed to be cases of ghost broking with a total loss amounted to £1 million. However, Which? said the actual count is likely to be higher.
Non-native English speakers are the usual targets for ghost brokers, as well as new drivers who have no former experience buying a policy. Those who fall victim to ghost brokers could be held liable for fraud or any penalties for driving uninsured.
Practicing due diligence in looking for a new policy might not be enough to avoid ghost brokers, either. Those who haven’t purchased a policy can also be affected by the scam by having their address or other details used on forged paperwork.
“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,” said Jenny Ross, money editor at Which?. “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.”
Ross also called for more protections in the upcoming Online Safety Bill, starting with a broader definition of fraud to cover for ghost brokers. That way, communications watchdog Ofcom can easily legislate against online service providers if needed.