Social media sites are rife with dodgy companies offering car insurance that is either non-existent or missing key details, resulting in tens of thousands of drivers being potentially left uninsured on the roads, Which? research has found.
‘Ghost broking’ is a scam that cost its average victim £1,950 last year. It involves ‘brokers’ forging insurance paperwork completely or more commonly selling victims a ‘real’ policy at a reduced price, by changing some of the victim’s details in the application, such as their address or claims record. It leaves those affected potentially liable for fraud and at risk of penalties for driving uninsured.
Ghost brokers mainly operate online, particularly on social media. In May, Which? searched on social media platforms for profiles and pages that showed signs of being run by scammers.
Which? analysed the first 50 pages returned from a search for ‘cheap car insurance’ on Facebook, Instagram and TikTok. Of the 47 profiles that matched Which?’s search on Instagram, more than half, 25, appeared to be offering quotes or cover to UK drivers, while showing no signs of being authorised by the Financial Conduct Authority (FCA).
In a separate search, Which? found one Instagram profile that boasted it could save customers ‘up to 50%’ on their premium – it also offered ‘NCB (no-claims bonus) Documents’ and ‘Speeding Ticket Removal’. It had 45,900 followers – more than the five biggest insurers combined – and claimed to have ‘over six years experience in [its] field’. It also had a sister profile with an additional 15,200 followers. Which? flagged these to Instagram, and both have since been taken down.
On Facebook, seven pages of the 50 profiles were dubious. On video-sharing site TikTok, two of the 50 profiles analysed were suspect.
Experts Which? spoke with in the police and insurance industry seem to agree that ghost brokers generally operate most prolifically on Facebook and Instagram.
According to the Insurance Fraud Bureau, last year insurers collectively reported more than 21,000 policies that could be connected to the scam.
Some victims will not report being scammed because they are too embarrassed. Others might be aware their quotes have been manipulated, but ghost brokers can be persuasive in downplaying the significance of this.
Some ghost brokers also put real effort into creating a positive word-of-mouth buzz, which helps them seem trustworthy.
Some 517 cases of ghost broking – with losses totalling £1 million – were reported to Action Fraud in 2021. However, this will only be people who make a report to Action Fraud and actually know that they have bought a fraudulent policy. The true numbers are likely to be much higher.
Many of these losses, unsurprisingly, were from young drivers, who face the steepest premiums. Ghost brokers also heavily target non-native English speakers.
People who have not even bought a policy can also be affected by the scam through having their address or other details used as part of forged insurance paperwork.
To test how social media platforms are vetting unregulated insurance middlemen, Which? set up six accounts of its own on Facebook, Instagram and TikTok, claiming to be car insurance brokers.
Which? promised cheap quotes and asked interested drivers to contact via a mobile phone number or directly message through the website.
The two profiles Which? set up on Facebook were taken down by the site within a few days, as was an Instagram profile linked to an email address containing the word ‘ghostbrokerscammer’. However, a second Instagram profile, connected to a less conspicuous email with a ‘normal’ name (e.g. ‘johnsmith’), stayed up for 35 days until Which? took it down.
The two TikTok profiles, one linked to a ‘ghostbrokerscammer’ email, also stayed up for the same period.
Which? believes social media companies should have stronger processes in place to protect consumers from fraudulent pages offering financial services.
When the Online Safety Bill comes into force, platforms should be required to prevent this kind of activity. To ensure this is the case, Which? is calling on the government to amend the Bill to ensure its definition of fraud does not allow some scammers to slip through the net and to guarantee that Ofcom has appropriate powers to adequately enforce the Bill when it becomes law.
Meanwhile, consumers should be wary of insurance brokers selling their services on social media and carry out other basic background checks to ensure they are not buying a fraudulent or misleading insurance policy – and are dealing with a company that is actually authorised by the FCA.
Jenny Ross, Which? Money Editor, said: “Ghost broking is a really nasty kind of fraud, where scammers operate by stealth and typically take advantage of those who feel locked out of, or bewildered by, the car insurance market.
“Social media sites must do much more to crack down on car insurance scammers that are infiltrating their sites and harming consumers, and should address these problems now, ahead of the Online Safety Bill becoming law.
“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.”
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This Car Insurance scamming started almost immediately following the removal of the visual validity scrutiny when issuing RoadFund licenses, which was a vital function performed by Post Offices.