Ghost Broking Cost Victims £1,950 on Average Last Year

Thousands of motorists who thought they nabbed a great deal on car insurance on social media actually paid fraudsters for false or non-existent policies and are driving around without legally-required cover.

That’s the warning from Which?, following new research into ghost broking. 

In ghost broking scams, unauthorised ‘brokers’ sell victims fake car insurance policies, with forged paperwork, or fudge details on the applications for real insurance policies, making them cheaper but legally invalid. Sometimes ghost brokers will take out legitimate policies for their ‘clients’ but will cancel them within the 14-day cooling-off period and pocket the refund.

The fake policies leave motorists liable for penalties for driving uninsured, including fines, points on their licence, and a possible suspension from driving. The cost can be huge: ghost broking cost the average victim £1,950 last year.

Last year, 517 victims reported ghost broking schemes to Action Fraud. But the reports likely just skim the surface of the problem. According to the Insurance Fraud Bureau (IFB), insurers detected more than 21,000 policies connected to ghost broking scams.

Action Fraud said scammers target young motorists, who face the highest premiums, and non-native English speakers. And they often net these victims on social media, Which? said.

The magazine conducted a search for ‘cheap car insurance’ on Instagram and found 25 pages offering quotes or policies for UK drivers although they didn’t appear to be authorised by the Financial Conduct Authority (FCA), as is required for brokers and comparison sites.

One of these Instagram pages had nearly 46,000 followers—more than the five biggest UK car insurers combined. It promised it could help drivers save up to 50% of their car insurance premiums and offered “speeding ticket removal.” Which? flagged the page, along with a sister page with 15,000 followers, and they were removed by Instagram. 

However, social media platforms are often slow to remove pages and posts selling financial services without authorisation. To test tech companies’ responses to fraudulent insurance brokers, Which? created pages on Facebook, Instagram, and TikTok. The posts promised cheap quotes for car insurance and asked drivers to make contact through a mobile number or email address.

Facebook took down the posts within a matter of days. Instagram reacted quickly to a post that included the phrase “ghostbrokerscammer.” But a second Instagram post with a "normal name" remained up for 35 days until the researchers removed it.

Two profiles on TikTok stayed up just as long, with the social media network doing nothing to block access to them until Which? researched them after more than a month.

The consumer group says social media sites should be legally required to identify and remove profiles offering fraudulent financial services.

Money editor Jenny Ross said: “The Online Safety Bill should require platforms to tackle this type of fraudulent content. The government must ensure this happens by amending the Bill so that its definition of fraud does not allow some scammers to slip through the net and guaranteeing Ofcom is ready to enforce these new laws when they come into force.”

Earlier this year, a cross-party committee of MPs urged the government to consider holding social media sites liable for money users lose to fraudsters using their platforms.

Meanwhile, trade body UK Finance revealed that Britons lost £1.3 billion to fraud last year, with scammers emboldened by the pandemic and the ongoing cost of living crisis.

Sources