GoCompare Car Insurance is warning drivers to swerve away from heavily discounted car insurance deals advertised on social media or marketplace websites, and to trust their gut instincts.
Victims of fraudsters known as ‘ghost brokers’, lose on average £769 and face penalties for uninsured driving.
“Ghost broker” is the name given to someone who poses as a legitimate insurance broker to sell forged or invalid car insurance policies to unsuspecting drivers, who are lured by very cheap, too-good-to-be-true premiums.
According to research carried out by Action Fraud last year, drivers aged 17 to 24, and especially young men, are most likely to fall victim to ghost brokers. Younger drivers are less experienced at buying insurance, making them easier targets, and they face higher premiums and are also likely to have tighter budgets.
Plus, they are more likely to use social media, which scammers like to advertise on. Other drivers identified at being at greater risk include people in non-English-speaking communities.
In return for the promise of low premiums, ghost brokers’ targets are asked for an upfront cash payment. Ghost brokers typically defraud victims in one of three ways: they may forge insurance documents, or they may manipulate the customer’s details to lower the premium (for example by faking no claims discount letters or by giving a lower-risk address).
They may also use the genuine identity of an unauthorised third party to set a policy up, and in some cases cancel the policy soon after to pocket the refund on top of the victim’s fee.
Typically, victims are unaware they don’t have genuine cover until they submit a claim following an accident or are stopped by the police for driving without insurance.
While the police may be sympathetic to victims of ghost brokers, the consequences of buying fake insurance can be the same as driving uninsured. Victims will still be deemed to be driving illegally and left liable for any claims.
Sanctions for uninsured driving include; a fine, penalty points, disqualification from driving, a criminal record, and the risk of having the car seized by the police. Drivers will also be required to buy a valid policy and may find that they face higher premiums in the future.
Fleur Lewis, head of fraud detection and prevention at GoCompare Car Insurance, said, “Younger, less experienced drivers pay more to insure their cars – which makes them particularly susceptible to adverts for heavily-discounted insurance. Ghost brokers often operate on social media, especially Facebook and Instagram, where they often use imagery and logos of established insurers to enhance their believability.
“So, we’re warning people to be highly suspicious of cheap insurance advertised on social media or websites where the deal they are being offered looks too good to be true. Drivers can save money by shopping around for cover, but if the insurance offered is significantly less than you could get on a comparison website – be suspicious.”