Social media sites are rife with ads for fake insurance, a Which? Money investigation has found.
The brokers seem professional, informed, and easy-going when you talk to them. On top of that, they've come highly recommended, and you've seen reams of feedback from happy customers.
So just as you would when getting any quote you've handed over your details. Moments later you're offered a price that undercuts everything else you've seen so far by hundreds of pounds. The £200-£300 'broker fee' you'll be charged for the service effectively pays for itself.
Unfortunately in this case you're not dealing with a real broker. If you go ahead you'll be sinking that money into a worthless policy. The scam is known as 'ghost broking' - and it's estimated to have put tens of thousands of motorists unwittingly onto the roads with fraudulent cover.
Here we look at how ghost brokers' tactics have evolved, and how to spot a deal that's too good to be true.
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Ghost brokers are unlicensed intermediaries that claim to be able to find unbeatable car insurance prices for drivers struggling to get affordable cover. They have various ways of operating - including selling forged paperwork to their victims. Most commonly though, they'll sell a 'real' policy that will appear against the vehicle on the .
However, while the cover theoretically exists, the ghost broker will have reduced its price by changing some of the policyholder's details in the application - such as the driver's address or claims record. Any serious scrutiny of the policy - which is almost certain if you try to - will reveal it was bought under false pretences.
This will void the cover, leaving you potentially liable for fraud and at risk of penalties for driving uninsured. In 2021, ghost broking victims who contacted Action Fraud reported losses of £1,950 on average.
Ghost brokers mainly operate online, particularly on social media. In May, we searched on social media platforms for profiles and pages that showed signs of being run by scammers.
Of the first 50 pages returned when we searched for 'cheap car insurance' on Facebook, seven were dubious. On video-sharing site TikTok, two of the 50 profiles we analysed were suspect.
But of the 47 profiles that matched our search on Instagram, more than half (25), appeared to be offering quotes or cover to UK drivers, while showing no signs of being authorised to do so by the Financial Conduct Authority (FCA).
We found one Instagram profile that boasted it could save customers 'up to 50%' on their premium - it also offered 'NCB (no-claims bonus) Documents' and 'Speeding Ticket Removal'. It had 45,900 followers - more than the five biggest insurers combined - and claimed to have 'over six years experience in [its] field.' It also had a sister profile with an additional 15,200 followers. Which? flagged these to Instagram, and both have since been taken down.
To test how social media platforms are vetting unregulated insurance middlemen, we set up six accounts of our own on Facebook, Instagram and TikTok, claiming to be car insurance brokers. We promised cheap quotes and asked interested drivers to contact us via a mobile phone number or to directly message us through the website.
The two profiles we set up on Facebook were taken down by the site within a few days, as was an Instagram profile linked to an email address containing the word 'ghostbrokerscammer'. However, a second profile - connected to a less conspicuous-sounding email address - stayed up for 35 days until we took it down. The two TikTok profiles (one also linked to a 'ghostbrokerscammer' email) also stayed up for the same period.
We contacted Meta (which owns Facebook and Instagram) and TikTok. We reported the 36 profiles we'd come across - which the sites took down. We also challenged Instagram and Tiktok about the general lack of difficulty we'd encountered setting up and maintaining our own fake ads.
A Meta spokesperson said: 'We do not allow fraudulent activity on our platforms and have removed these accounts for violating our policies. We continue to invest in people and technology to tackle this industry-wide issue and have donated £3 million to Citizens Advice to deliver a UK scam action programme as well as joining Stop Scams UK to help identify and remove scams at the source. We encourage our community to report activity like this using our reporting tools and also to the police.'
A TikTok spokesperson said: 'Our community guidelines make clear that we do not tolerate any kind of fraud or scams on TikTok and will continue to take an aggressive approach to removing this kind of content. We were the first platform to require all advertisers of financial services products, including insurance, to be registered with the FCA and work closely across industry to identify new and emerging scams.'
Last year, 517 'ghost broking' reports were made by victims, to Action Fraud - but these probably represent a tiny fraction of those affected. According to the Insurance Fraud Bureau (IFB) - a fraud intelligence and prevention agency established by the insurance industry - insurers last year collectively reported more than 21,000 policies that could be connected to the scam.
Some owners of fake policies won't be aware they're driving with effectively invalid cover. Others who have lost money won't report it because they're too embarrassed.
Another group affected are those whose identifies are co-opted when their addresses or other details are attached to the illegal policies. Fraud prevention organisation Cifas saw insurance-related identity fraud cases rise by 66% between 2020 and 2021. The group most likely to be targeted in this way are people aged 51 to 60.
According to the IFB, the percentage of its investigations into ghost broking has doubled in recent years. The crime also represents around a fifth of the caseload of the City of London's Insurance Fraud Enforcement Department (IFED).
Ghost brokers' tactics are constantly evolving. We saw impressive levels of sophistication in some of the profiles and websites we came across in our investigation - some are a far cry from the gaudy ads we found in our .
Some of the more sophisticated sites which still left us suspicious (companies that appeared to be unregulated - while purporting to be able to provide tailored insurance deals for UK drivers) included a polished-looking website with an online chat service, and a convincing-looking comparison website.
The Online Safety Bill - first drafted last May and working its way through government - will place stronger requirements on internet platforms to protect their users against online harms, including fraud and scams.
Which? is calling on the government to amend the Bill to ensure its definition of fraud does not allow some scammers to slip through the net and to guarantee that Ofcom has appropriate powers to adequately enforce the Bill when it comes into force.
Meanwhile, we'll all need to be extra wary of insurance middlemen plying their services through social media. Carry out the checks below to ensure you don't fall victim.
In order to arrange insurance for you, a company or individual needs to be FCA authorised. Authorised firms usually have the FCA registration number of their website - and you'll also be able to find them listed on the FCA's website. If you can't find evidence that a company is regulated, avoid doing business with it.
Most companies can be reached in multiple ways, including a landline number. If a seller will only interact via a mobile phone, social media or a messaging app (such as Snapchat or WhatsApp), it's best to steer clear.
A genuine company should be able to explain, in understandable terms, how it can net you a bargain. If a broker is guarded or vague about what it does, take that as a red flag.
If an insurance company is writing to you about cover you didn't take out, it could mean someone is basing a fraudulent policy at your address. Contact that insurer to let it know.
It's good practice to check your credit report regularly. Searches or activity involving unfamiliar companies could indicate that someone is using your details to buy financial products.
The full version of this article appeared in the July 2022 edition of Which? Money magazine. Subscribe now to get our expert insight delivered to your door every month. £4.99 a month, cancel anytime.Sign up now
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