The ‘ghost broking’ car insurance scam targeting young drivers on social media
Drivers aged 17 to 25 are being warned about “ghost brokerage” scams as a survey shows nearly half (49%) of young drivers buy insurance through social media or messaging apps.
The Financial Conduct Authority (FCA) said nearly four in 10 (39%) young drivers surveyed said they would not feel confident spotting signs of a fraudulent policy.
Ghost brokers are not real brokers, but criminals who try to defraud people and sell fake insurance policies through social media and messaging platforms.
They usually target young people and students who have less experience buying insurance policies.
Young drivers, who typically pay more for insurance, may be tempted by a seemingly cheap offer.
However, the policies sold by ghost brokers are either completely fake or fake details have been entered to artificially lower the price. Criminals may also cancel the policy shortly after purchase.
This leaves the person purchasing the policy unknowingly uninsured and at risk of prosecution, fines, or even having their car seized.
More than two-fifths (45%) of young people surveyed said they often trust products or services purchased through social media.
One in seven (15%) said they struggle to fit insurance into their monthly budget.
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FCA is urging young drivers to be wary of offers that seem too good to be true and to avoid deals offered only through social media and messaging platforms.
The FCA said genuine sellers must have a legitimate website, phone number and address.
People are also advised to check that the firm’s contact details match those listed in the Firm Checker tool, which can be found on the FCA’s website, to ensure they are dealing with the real firm.
FCA Insurance Director Graeme Reynolds said: “Tight budgets make cheap offers attractive and fraudsters are taking advantage of this.
“Don’t be fooled by a non-existent policy. Check the FCA Company Checker before buying, as driving without insurance could cost you much more than any premium.”
Kantar surveyed 1,000 drivers aged 17 to 25 across the UK in April and May.
Chris Bose, general insurance manager at the Association of British Insurers, said: “Ghost broking leaves victims uninsured, out of pocket and facing potentially serious legal and financial consequences.
“That’s why fighting fraud remains a top priority for our industry.
“Motorists can stay alert by simply avoiding offers advertised on social media, contacting insurers directly to verify legitimacy and using the FCA Firm Checker to check a broker’s details.
“The golden rule is to never act in haste; if a deal seems too good to be true, it probably is.”
