The Insurance Fraud Bureau (IFB) has issued a warning that people should "safeguard their personal finances against fraud" after an investigation by Which? found a scam has given motorists fraudulent cover.
According to Action Fraud, 517 reports were made by victims this year although the IFB says insurers reported more than 21,000 fake policies. The actual amount of fraudulent policies sold could be much higher.
"Young and vulnerable people are constantly being targeted online with fake car insurance deals," says Ben Fletcher, director at the IFB.
"The cost of living crisis means it's never been more important for people to safeguard their personal finances against fraud.”
The rise in fraudulent policies has been partly driven by the cost of living crisis.
According to cyber security expert and former crime officer Jake Moore, more people looking for cheaper deals can "be an additive" to the scam.
What is ghost broking?
Ghost brokers are often individuals that are unlicensed who act as middle men for insurance companies and claim to be able to find cheap car insurance.
They often target people through WhatsApp or advertise on student websites and will sell bogus paperwork to victims or may even sell a policy that appears on the Motor Insurance Database against your vehicle – only then to cancel the policy within a fortnight and recoup the cost of the cover.
The motorist is then unknowingly without insurance, 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 each, on average.
What can you do to avoid falling victim to ghost broking?
- If you use a broker, check they’re verified on the FCA website. If they’re not, don’t use them. You can also check with the insurer direct to make sure they have your policy on record.
- Buy online using trusted companies. Our partners at GoCompare get the best prices from over 140 insurance companies. Buying online through them negates the need to go through an individual broker and both your payment and your cover is completely secure.