‘Ghost broker’ scams prompt urgent consumer warning

As ‘ghost broker’ scams increase, experts are urging households to be vigilant and take steps to avoid falling victim to these increasingly sophisticated fraudsters.

In a recent survey, Quotezone found a massive 79% were not aware of ghost broking. The insurance experts have issued tips to help prevent consumers from getting caught out by this modern scam. 

A ghost broker is a fraudster who sells fake or invalid insurance policies, typically for car insurance. 

They pose as middlemen for well-known insurance companies and even go so far as to forge documents and input fake customer information to bring the cost of the premium down.

They often advertise through social media, online forums, and word of mouth, claiming to offer significantly cheaper insurance rates. 

Victims of ghost brokering may only discover their insurance is invalid when they need to make a claim or are stopped by the police, which could lead to potentially serious legal and financial consequences.

As the prevalence of these scams grows, the insurance experts at Quotezone are emphasising the importance of awareness and caution to protect against losses.

UK insurers reported a 6 per cent rise in ‘ghost broking’ last year.*

Greg Wilson, Founder and CEO of Quotezone.co.uk, said: “Ghost brokers use a variety of methods to appear legitimate and gain the trust of unsuspecting consumers including professional looking websites, sophisticated advertising strategies, and even seemingly ‘official’ documents.

“They may also present themselves as agents of reputable insurance companies, adding an extra layer of credibility to what is ultimately fraudulent activity. 

“By offering significantly lower premiums, they attract budget-conscious shoppers, especially young drivers, who may not be aware of the risks associated with these ‘too good to be true’ deals.

“As these scams increase, it’s crucial for consumers to stay informed and exercise caution when purchasing insurance. Always take care to verify the broker’s credentials, be wary of unusually low prices, and if in doubt, contact the insurer directly.

“If caught driving without valid insurance, drivers could face unlimited fines, penalty points, a driving ban and even a criminal conviction.**”

Top tips to help protect against ghost brokers:

Verify the broker’s credentials:

Check if the broker is registered with the appropriate regulatory body in your country, for example, the Financial Conduct Authority (FCA) in the UK. Look up the broker’s name or company on the regulatory body’s website to ensure they are authorised to sell insurance.

 Be wary of unusually low prices:

If a deal seems too good to be true, it probably is. Compare quotes from multiple reputable insurance companies to get a sense of the typical price range for your insurance or check average costs via a price index,  data available that gives you an idea of averages in your area throughout the year.

Contact the insurer directly:

If you are unsure about the legitimacy of a broker or policy, contact the insurance company directly using contact details from their official website to verify the policy’s authenticity.

Avoid cash transactions:

Legitimate insurance brokers usually accept payment through traceable methods like credit/debit cards or direct bank transfers. Be suspicious of anyone asking for cash payments.

Check policy documents thoroughly:

Ensure that all details in your policy documents are correct and that you receive all necessary paperwork, including the certificate of insurance and policy schedule. You should also look for any signs of tampering or alterations in the documents. Note legitimate insurers should be able to provide you with your driving history such as your no claims bonus years.

Beware of unsolicited offers:

Be cautious of offers received via unsolicited calls, emails, or social media messages. Always research and verify the offer independently.

Read reviews and testimonials:

Look up reviews and testimonials about the broker or insurance company, and be cautious of brokers with no online presence or those with predominantly negative reviews. Also check the review site is legitimate.

Stay informed:

Be sure to review the latest news on common insurance scams and stay up to speed on new types of fraud schemes – spreading the word amongst family members, especially young or elderly relatives.

Check the website is legit:

Legitimate domains should have their brand name at the beginning of the URL. Watch out for strange or additional characters within the domain name that may indicate a phishing attempt.

Also check the URL has a secure connection, either a padlock or an ‘S’ in ‘https://’ should indicate that it is safe to use.

Check comparison websites:

If using an online comparison site, ensure it is reputable, has partnerships with well-known insurance companies and a high score from a recognised customer review site. 

Quotezone helps millions of UK drivers every year compare car insurance quotes and find real savings across all sorts of products including car insurance for learner drivers, affordable car insurance for new drivers and even temporary car insurance for one day. 

References:

*https://crimestoppers-uk.org/news-campaigns/news/2024/jul/rise-of-dangerous-%E2%80%98brokers%E2%80%99-targeting-young-drivers-online#:~:text=UK%20insurers%20reported%20a%206,increase%20as%20financial%20 pressures%20 continue. 

**https://www.insurancefraudbureau.org/insurance-fraud/ghost-brokers#:~:text=A%20%22Ghost%20Broker%22%20is%20term,of%20mouth%20or%20local%20businesses.