Ghost broking, a type of insurance fraud where fake or unlicensed brokers sell invalid insurance policies, has become a significant concern in recent years, especially with the rise of online platforms. So who do you turn to if there's something weird and it don't look good?
Ghost broking is a form of insurance fraud in which unauthorised or counterfeit brokers deceive unaware customers by selling them fake or invalid insurance policies. The “broker” appears to offer legitimate car insurance, often at a lower-than-market price, but the policy is either entirely fabricated or tampered with (e.g., using fake documents or altered details).
How Ghost Broking Works
Ghost brokers often target young drivers or immigrants unfamiliar with the insurance market. Here are some common tactics they use:
Fake Documentation: They might create fake insurance documents to make it seem like a real policy, but no real insurance company backs it.
Policy Alteration: Ghost brokers may buy legitimate insurance policies but falsify information (e.g., stating a lower-risk address or using a different age group) to reduce premiums. These falsified policies are often void if claims are made.
Unauthorised Cancellations: In some cases, the ghost broker purchases an actual policy and then cancels it after receiving payment, leaving the victim unknowingly uninsured.
Social Media and Online Ads: Ghost brokers often operate through social media platforms, messaging apps, or online marketplaces, advertising “cheap insurance” to appeal to cost-sensitive buyers.
Risks of Falling Victim to Ghost Broking
If caught driving with an invalid policy, a driver can face serious consequences:
Legal Fines and Penalties: Driving without valid insurance can lead to fines, points on your license, or even license suspension.
Vehicle Impoundment: Authorities may impound or seize vehicles with fraudulent insurance policies.
Financial Losses: Victims lose the money paid to ghost brokers, often between £300 and £1,000, and still need to purchase legitimate insurance.
Liability for Damages: Without real insurance, drivers are responsible for covering costs in accidents, potentially leading to high out-of-pocket expenses.
How to Avoid Ghost Broking
Here are some essential tips for avoiding ghost brokers and ensuring you have genuine insurance:
Buy Insurance from Reputable Sources:
Only purchase insurance from known insurance companies or authorized brokers. Most official insurers list their authorised brokers on their websites.
If you’re using a price comparison website, ensure it’s a legitimate site with good reviews.
Check Broker Credentials:
Verify brokers or companies on the official database of insurance regulators. In the UK, for example, the Financial Conduct Authority (FCA) maintains a register of authorised insurance brokers and companies.
If a broker is registered, confirm that the website or phone number matches the official listing to avoid impersonation scams.
Be Cautious of Deals that Seem “Too Good to Be True”:
Extremely cheap premiums can be a red flag. Research the typical costs for your age group and vehicle type, and be wary of prices that are significantly lower.
Avoid Paying with Cash or Untraceable Methods:
Legitimate insurance companies usually offer secure payment methods and don’t require cash payments. If asked to pay via cash, bank transfer, or other hard-to-trace methods, it’s likely a scam.
Look for Warning Signs in Communication:
Be cautious of brokers who only communicate through social media or messaging apps and don’t have a professional website or contact information.
Ghost brokers often lack a physical business address, a professional email domain, or any official business registration.
Confirm Your Policy with the Insurance Company:
After purchasing a policy, contact the insurance company directly to confirm your policy number and details. This ensures that your policy is legitimate and active.
Reporting Suspicious Brokers
If you suspect ghost broking, report it to your country’s insurance fraud bureau or regulatory authority. In the UK, for instance, the Insurance Fraud Bureau (IFB) and Action Fraud accept reports on ghost brokers. Reporting helps authorities crack down on these operations and protect others from falling victim to them.
The stats
1. Prevalence of Ghost Broking
According to the UK’s Association of British Insurers (ABI), there were approximately 21,000 cases of ghost broking detected in 2021 alone.
In 2020, ghost broking cost the UK insurance industry an estimated £18 million in fraud losses, with similar figures observed annually.
Some estimates suggest that ghost broking makes up about 10-15% of all insurance fraud cases in certain countries, particularly in the UK and the US.
2. Common Victims
Young drivers, especially those aged 18 to 24, are primary targets. This demographic is drawn to ghost brokers due to the promise of “cheaper” car insurance.
Migrants and individuals with limited English proficiency are also commonly targeted, as they may be less familiar with local insurance processes.
3. Fraudulent Techniques Used by Ghost Brokers
Many ghost brokers operate through social media platforms like Facebook, Instagram, and Snapchat, where they advertise fake policies as affordable alternatives.
A 2021 report noted that over 60% of ghost broking scams in the UK began through online marketplaces and social media platforms.
Some ghost brokers use fake documentation, while others alter or manipulate legitimate policies to present them as custom offers.
4. Financial Impact on Victims
Individual victims typically lose between £300 and £1,000 after discovering their policies are invalid.
When drivers are found with fraudulent insurance, they face additional costs, including potential legal fines, the cost of impounding their vehicles, and increased premiums due to lapses in legitimate insurance coverage.
5. Law Enforcement and Regulatory Efforts
In the UK, the Insurance Fraud Bureau (IFB) has been actively investigating ghost broking cases, working alongside the police to reduce cases of fraud.
As of 2022, approximately 500 people have been prosecuted for ghost broking-related offenses in the UK since the beginning of targeted crackdowns in the late 2010s.
Increased awareness campaigns and stricter regulations on online ad content have led to a 20% reduction in ghost broking cases in certain regions, such as the UK, over recent years.
6. Consumer Awareness
A survey conducted in 2021 found that nearly 30% of young drivers were unaware of ghost brokers or the risks associated with buying insurance through unofficial channels.
Awareness campaigns have reached an estimated 5 million people globally through social media and public service announcements, although many consumers still remain unaware of ghost broking risks.
These statistics underscore the widespread nature of ghost broking and the growing focus on preventive efforts from regulatory bodies.
Reporting
Report all Fraud and Cybercrime to Action Fraud by calling 0300 123 2040 or online. Forward suspicious emails to report@phishing.gov.uk. Report SMS scams by forwarding the original message to 7726 (spells SPAM on the keypad).
Comentários