Drivers losing thousands to ghost broker scams – the red flags to watch out for

Young motorists are being warned to watch out for fake car insurance policies being offered by “ghost brokers”.

The Insurance Fraud Bureau (IFB) has detected an increase in ghost broker activity in recent years.

Ghost brokers may leave victims out of pocket and facing criminal consequences for driving uninsured.

They are not real brokers but criminals who alter policy details to make them appear cheap. Sometimes it is only when someone tries to make a claim that they realise the policy is not valid.

Ghost brokers often use social media to target their victims.

Young drivers are particularly at risk because they often pay more for insurance and are only in their early years of dealing with financial matters.

A YouGov survey commissioned by the IFB and carried out among more than 2,000 people across the UK in May 2024 found that nearly a fifth (18%) of 18 to 24-year-olds have used social media to search for car insurance.

Criminals may try to lure people by offering cheap upfront quotes, despite insurance prices being based on the risk of the individual.

Policies are taken out using stolen details which belong to people who are cheaper to insure and sold on at an artificially-reduced rate, or they may simply be copied on to a piece of paper.

Ghost brokers may also do further damage to their victims by stealing their personal information to use in other crimes, such as banking fraud.

To help protect young drivers, the Association of British Insurers (ABI), the City of London Police and the IFB, in association with the Government’s Stop! Think Fraud campaign, have launched a drive to raise awareness of the signs of ghost broking.

IFB director Ursula Jallow said: “New drivers are caught out by ghost brokers because they face higher premiums and have had less experience in purchasing insurance policies for themselves, which unfortunately means they are more likely to be attracted to car insurance deals that are too good to be true.

“The impact is devastating. We’ve seen victims lose thousands of pounds, have their identities stolen, their confidence and self-esteem shattered, and, in some cases, they have even had their car seized for driving uninsured.

“It’s really important that we spread the word to help protect young drivers from ghost brokers.”

Around 115,000 fraudulent motor insurance policies were detected by the IFB in partnership with the insurance industry between 2023-24, with ghost brokers believed to be responsible for thousands of cases.

Fraud minister Lord Hanson said: “This type of scam demonstrates exactly why our national campaign is called Stop! Think Fraud.

“In a world where we are all looking for bargain deals, we have to stop and think whether the offers we see online are too good to be true.

“Young people especially need to be aware that the scammers are deliberately targeting them through their social media feeds with attractive and authentic-looking offers which will leave them ripped off and driving uninsured.”

Detective Chief Inspector Nik Jethwa, from the City of London Police’s Insurance Fraud Enforcement Department (IFED), said: “Always be cautious when buying insurance. Ask yourself: is the insurance broker you are dealing with really who they say they are? If you aren’t sure, check the lists of authorised brokers at the Financial Conduct Authority and British Insurance Brokers’ Association websites.”

Mark Allen, ABI head of fraud and financial crime, said: “With many households looking to cut costs, no-one can afford to fall foul to fraudsters.

“In our increasingly digital world, we recognise that young people including students may be particularly vulnerable to ghost brokers who advertise fraudulent insurance deals online or across social media. But it’s important to remember that anyone, no matter their age, can be a victim of insurance fraud.

“If you’re looking for cover online, we recommend contacting insurance companies directly or checking the Financial Services Register to verify broker details. The golden rule is to never act in haste – if a deal seems too good to be true, then it probably is.”

– Here are some red flags that suggest you may be dealing with a ghost broker:

1. The policy may be unrealistically cheap, with an upfront quote.

2. The seller only wants to communicate in private direct messages on social media or WhatsApp.

3. The advert may look unprofessional.

4. The seller may not have a legitimate website, UK landline number or address.

Insurance scams can be reported to the IFB’s confidential CheatLine online or by phone.