We know that ghost broking is a very real problem in the insurance industry.
In this guide, we explain what ghost broking is, how it works and how to avoid it.
What is ghost broking?
Ghost broking is a type of insurance scam where the scammer (or “ghost broker”) pretends to be a genuine insurance broker in order to sell you fraudulent insurance. This insurance either simply doesn't exist, or it isn’t valid.
Ghost brokers normally target their victims through social media, money saving forums or student websites, where they will offer too-good-to-be-true prices before directing you to a website to try and make the sale.
How does ghost broking typically work?
Ghost broking usually works in one of these three ways.
1. Forgery
This is where the ghost broker uses real insurance documents, but they doctor them to make it look like they belong to you instead.
For example, they might use their own valid insurance policy documentation, but change some of the details so it looks like your details instead. But in reality, there's no policy in your name at all.
2. Falsification
In other cases, the ghost broker can actually buy an insurance policy on your behalf, but they use fake data to make it a lot cheaper.
For example, more experienced drivers are often priced much more cheaply than newer drivers. In this case, a ghost broker might lie about your age to make the policy cheaper. They might also lie about other things like your postcode and the car you drive too, all to bring down the cost (but without telling you).
This means that although there's technically a policy in place, it's a fraudulent one, and when the insurer finds out it's a fake car insurance policy, they'll either cancel or void the insurance.
3. Cancellation
In this case, the ghost broker buys a legitimate policy using your real details, sends you all the documents and then cancels the policy and takes the refund for themselves. That leaves you then driving around uninsured.
This may be the worst type of ghost broking because in this case, not only do you lose the money you paid for the fake insurance policy, but you then have to buy valid insurance.
You're also likely to face punishment for driving without insurance, which can include a large fine, points on your licence, and even disqualification from driving.
How do I avoid ghost broking?
Here are three ways you can help to avoid falling victim to a ghost broker:
- Avoid buying insurance from companies that don’t seem credible, such as people you may come across on social media or on money saving forums.
- Before you buy your policy, double check if the insurance company has a legitimate website, address and UK phone number.
- Before you buy through an insurance company or a broker, make sure they're registered with the Financial Conduct Authority (FCA).
How do I report ghost broking?
If you think you may have been a victim of ghost broking, first report it to the Insurance Fraud Bureau via the IFB Cheatline (powered by CrimeStoppers). Here you can report your suspicions in a free, anonymous and completely confidential way.
We would also recommend that you contact your local police station, or you can use Action Fraud online.