Drivers are being warned of cheap car insurance scams that are simply, 'too good to be true'.
An investigation by Which? has found that social media is 'rife' with ads for fake insurance where brokers seem professional, informed, and easy-going. The consumer champions found that the 'brokers' have impeccable feedback and reviews and under-cuts any offer that the victim has se24391877en so far, adding, "The £200-£300 'broker fee' you'll be charged for the service effectively pays for itself".
But drivers are being warned that these are not real brokers and you'll be giving your hard earned cash into a worthless policy, resulting in the victim driving with invalid cover and losing money. The scam is known as 'ghost broking' and it has grown in popularity with con-artists, with tens of thousands of people falling for it and putting them, unknowingly, onto the road with fraudulent insurance cover.
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Which? describes ghost broking as: "Ghost brokers are unlicensed intermediaries that claim to be able to find unbeatable car insurance prices for drivers struggling to get affordable cover. They have various ways of operating - including selling forged paperwork to their victims. Most commonly though, they'll sell a 'real' policy that will appear against the vehicle on the Motor Insurance Database. However, while the cover theoretically exists, the ghost broker will have reduced its price by changing some of the policyholder's details in the application - such as the driver's address or claims record.
"Any serious scrutiny of the policy - which is almost certain if you try to make a car insurance claim - will reveal it was bought under false pretences. This will void the cover, leaving you potentially 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 on average."
Most of these ghost brokers use fake social media profiles. When the consumer choice company looked into 50 profiles and 25 of them appeared to offer quotes to drivers but showed no signs of being authorised by the Financial Conduct Authority (FCA). Last year there were 517 'ghost-broking' reports made to Action Fraud by victims, but Which? reckons this is just a fraction of the true amount.
Which? added: "According to the Insurance Fraud Bureau (IFB) - a fraud intelligence and prevention agency established by the insurance industry - insurers last year collectively reported more than 21,000 policies that could be connected to the scam."
The consumer champions also point out five signs you could be dealing with a ghost broker
1. No sign of FCA authorisation
In order to arrange insurance for you, a company or broker needs to be FCA authorised. They will usually have the FCA registration number on their website and you can find them listed on the FCA's website. If you can't find that evidence, avoid doing business with them.
2. Limited contact options
Most companies can be reached in a number of ways, including a landline number. It's best to stay away from a seller if they will only interact via mobile phone, social media or a messaging app (such as Snapchat or WhatsApp).
3. They're cagey about their methods
It's a red flag is a broker is vague or guarded about their methods where as a genuine company should be able to explain, in understandable terms, how it is able to offer you a bargain.
4. You're getting insurance paperwork out of the blue
If an insurance company is writing to you about cover you didn't take out, it could mean someone is basing a fraudulent policy at your address. Contact that insurer to let it know.
5. Unfamiliar activity on your credit report
It's good practice to check your credit report regularly. Searches or activity involving unfamiliar companies could indicate that someone is using your details to buy financial products.
Read the whole report here.
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