Car insurance

Ghost brokers are on the rise – here's how to spot them

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Ghost brokers that sell fake car insurance policies are a growing threat, driven by what they see as a soft target for fraud.

These brokers are fraudsters who sell useless car insurance policies to the unsuspecting, often before disappearing.

The ghosts operate in several different ways. These include selling forged insurance policies, or taking out a real policy which they then cancel, pocketing the refund that should be made back to the consumer.

Often victims of ghost brokers will be unaware they have no valid insurance and only realise when a claim is made.

A City of London Police spokesman said it is illegal to drive uninsured and so victims of ghost brokers face points on their driving licence and the possible seizure of their vehicle. They are also left open to claims costs if involved in a crash.

Victims will also be out of pocket for the cash spent on buying the fake insurance and the cash needed to buy a proper policy.

Action Fraud, a financial arm of the City of London Police, said the average loss to victims of ghost brokers is £978.

Earlier this month Toby van der Meer, the boss of insurer Hastings, said the firm had seen a rise in the number of ghost brokers this year.

Insurance fraud tends to be either at the application or claims stage.

Paul Priestley, of Hastings, said fraudsters are attracted to ghost broking because insurance companies have ramped up efforts to target claims fraud such as "crash for cash" and fake whiplash claims.

He said: “There is a lot of talk around fraud in the claims environment, application fraud is an area where there isn’t as much attention shown, so it is natural that fraudsters would move to those areas. But ghost broking is an area the industry is focusing more attention on.”

How to spot a ghost broker

The good news is there are several tell-tale signs that consumers should be aware of.

1) Stay alert on social media 

Action Fraud said social media is the most common route for these fraudsters to find victims, particularly Facebook and Instagram. Men aged 20-29 are the most likely to be targeted, but all age groups can be targeted.

An Action Fraud spokesman said: “Other contact methods include adverts in newspapers and magazines, cold calls and being introduced, either directly or by friends, family members or work colleagues.”

2) Avoid deals that are too good

The main selling point for ghost brokers is that they offer cheaper policies than the market norm, so be aware of this.

Dave Wood, of Hastings, said: “If it looks too good to be true then steer clear of it. Insurance prices are quite competitive, so tend to be quite close together. If you get something that is a third cheaper, you have to wonder why.”

3) Check the website’s registration number

Mr Priestley said that if a website does not look legitimate, or does not have digital payment protection, these are warning signs. In particular, all brokers have to be regulated by the Financial Conduct Authority (FCA) and display their registration number on their website homepage.

If this is missing, this is another sign to steer clear. You can check firm’s FCA numbers here.

If you think ghost brokers have stolen your details then you can also contact fraud prevention service Cifas.

For a £20 fee, your details will be registered on a Cifas Protective Registration database for two years.

Any financial firm signed up to Cifas will then be obliged to do extra fraud checks when these details get used, helping to stop you falling victim to additional scams.

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