Tag: insurance fraud

Drivers warned to avoid bogus car insurance deals on social media

Over 21,000 fraudulent policies identified

  • The Insurance Fraud Bureau (IFB) is warning consumers to avoid an increasingly popular scam known as ‘Ghost Broking’, which sees fake car insurance being sold on social media, leaving motorists out of pocket and driving without insurance.
  • The insurers working with the IFB have reported over 21,000 fraudulent motor insurance policies over 12 months which could be linked to the scam.
  • The warning comes as 45 police forces take to the road for Op Drive Insured, in a national week of action to seize uninsured drivers’ vehicles. 

The Insurance Fraud Bureau (IFB) is warning drivers to avoid bogus car insurance deals on social media, as it reveals over 21,000 fraudulent motor insurance policies were reported to it by insurers in the past 12 months which could be linked to the scam.

‘Ghost Broking’ is a growing scam, which involves fraudsters pretending to be Brokers in order to sell unrealistically cheap and completely fake policies.

The bogus deals are often advertised via Facebook and Instagram with victims ranging from young and new drivers, to communities less familiar with UK insurance laws. The scam not only leaves victims out of pocket, but facing serious penalties for driving without insurance.

The IFB – which acts as a central intelligence hub for insurers to tackle organised fraud – received reports of 21,169 fraudulent motor insurance policies in the past 12 months which could be linked to ‘Ghost Broking’ – equating to nearly 60 bogus policies being generated each day.

With 45 police forces executing Op Drive Insured this week in a national crackdown on uninsured motorists, the IFB is urging drivers to watch out for ‘Ghost Broking’ scams or face the consequences for driving without insurance.

Stephen Dalton, Head of Intelligence and Investigations at the IFB, said: “Clearly, fraudsters are attempting to take out a high volume of fraudulent car insurance policies so they can profit at the expense of insurers and honest consumers. This is a serious problem and I believe the figures we’ve uncovered only begin to scratch the surface. 

“With police forces upping their efforts to crackdown on uninsured driving, it’s essential that consumers aren’t tempted by ‘too good to be true’ car insurance deals on social media. They’re entirely fake and will result in the driver’s vehicle being seized for no insurance.

“If anyone has seen evidence of a suspicious motor insurance deal, it should be reported to our confidential Cheatline on 0800 422 0421 or at www.insurancefraudbureau.org.”

Ghost Brokers’ operate by tempting victims with unrealistically cheap prices up front, despite the fact insurance is meant to be priced based on the risk of the individual. Once they’ve caught their victim’s attention, they’ll encourage contact through popular end-to-end encrypted messaging software such as WhatsApp to keep illegal dealings in private.

The IFB has seen its percentage of investigations into ‘Ghost Broking’ double in recent years and believes tens of thousands of motorists could unwittingly be driving with fraudulent cover, who will face serious consequences when caught out by the police.

So far this year over 100,000 uninsured drivers have had their vehicle seized.

Drivers without valid insurance also face a £300 fixed penalty notice and six licence points. If the case is taken to court, they could also receive an unlimited fine and/or a driving ban.

Detective Chief Inspector Edelle Michaels, Head of the City of London Police’s Insurance Fraud Enforcement Department (IFED), said: “The Op Drive Insured campaign has been an important reminder to the public of the consequences of driving uninsured. Whilst some drivers may knowingly be uninsured, there are many who do not realise that they are driving without valid insurance, having purchased their policy through a ‘Ghost Broker’.

“IFED has investigated a number of cases in 2021 which have exposed the immoral tactics used by these criminals to catch out their victims, including two young men who took advantage of their peers being charged high insurance premiums, and an individual who pretended to help those looking to insure their first vehicle in the UK.

“It really is crucial to check that the person you are speaking with is the real deal. It is quick and easy to find out if a broker is authoriser, simply check the FCA or BIBA website – it could end up saving you a lot of money and help you to avoid issues in the long run.”

Avoiding fake car insurance deals

  • Consumers are urged to avoid deals on social media or messaging apps and to only purchase car insurance through reputable sellers.
  • If buying through an Insurance Broker they should check the seller is registered with the British Insurance brokers’ Association (BIBA).
  • If buying directly through an insurer they should appear as a registered member of the Motor Insurers’ Bureau (MIB).
  • Checks can also be made to see Insurance Advisors are registered with the Financial Conduct Authority (FCA).
  • Anyone with evidence of an insurance scam should report it to the police and the IFB’s Cheatline which is quick, easy and confidential to use. The Cheatline can be contacted online or via a phoneline (powered by Crimestoppers) on 0800 422 0421.
  • Insurance fraud reports can also be submitted to Action Fraud.

Industry calls on public to help ‘stop the scams’

** predicted rise in insurance fraud **

A national campaign, called ‘Stop the Scams’, has been launched by the insurance industry to help the public spot signs of scams and report them to the Insurance Fraud Bureau (IFB) Cheatline following predictions that insurance fraud will rise.

Recent figures show fraudulent insurance claims rose by 5% in 2019 with many being linked to dangerous scams. There are concerns the current economic climate could see this figure rise further, following the 2008 recession where fraudulent insurance claims increased by 17%.

Currently at least one insurance scam takes place every minute in the UK, leaving victims devastated and costing honest consumers more than £3 billion each year. 

To help protect the public and stop insurance scams rising, the IFB along with the Association of British Insurers (ABI) which represents the UK’s 200 insurers, and the City of London Police Insurance Fraud Enforcement Department (IFED), are launching the ‘Stop the Scams’ ad campaign which will see animated scam warnings rolled out across social media.

Common insurance scams highlighted by the campaign:

Compensation scams

This is when a fraudster or unscrupulous firm contacts someone out of the blue to tell them they may be entitled to compensation.

If convinced, victims will hand over their personal details which can be used to steal their identity or bank funds, or they could be encouraged to take out a fraudulent insurance claim.

With record numbers out of work or losing money due to the disruption of Covid-19, these scammers may offer to recover financial losses incurred as a result of the pandemic.

‘Ghost Broker’ scams

A ‘Ghost Broker’ is a fraudster who poses as an insurance provider to target people who struggle financially with unrealistically cheap fraudulent insurance deals on social media.

These fraudsters are known for selling fake car insurance. However, with Covid-19 impacting so many people’s work and travel plans, ‘Ghost Brokers’ could also offer deals that claim to compensate further disruption.

‘Ghost Broker’ scams are rising. The IFB has seen its percentage of investigations into the issue double in recent years. Research also shows one in three 18-24 year-olds has seen a suspicious insurance advert on social media.

‘Crash for Cash’ scams

This involves a fraudster who intentionally drives dangerously (such as slamming on their brakes with a car close behind) to cause an innocent motorist to crash into them so they can claim for compensation.

With many people still getting back into the habit of driving after months of reduced activity, the risk of falling victim to a ‘Crash for Cash’ is higher if driving skills are not up to scratch.

One in every ten injury claims for a motor collision is linked to a suspected ‘Crash for Cash’. The scam often leaves victims injured and facing the loss of their no claims discount. 

Ben Fletcher, Director of the IFB, said: “With Covid-19 causing so many people to lose out financially it sadly means there are more opportunities for insurance scammers to exploit the vulnerable. These fraudsters don’t care who suffer – from the elderly to key workers, we’ve seen them get targeted.

“It’s never been more important to raise public awareness of insurance fraud which is why we’re launching the ‘Stop the Scams’ campaign. If anyone sees something that doesn’t look right, they should report it to the IFB Cheatline.”

Mark Allen, Fraud and Financial Crime Manager at ABI, said: “Insurance fraud is no victimless crime. While the Coronavirus crisis has led to financial hardship for many, no one should think that committing an insurance fraud is a path to easy money.

“From getting a criminal record and possibly a jail sentence, to finding future insurance and other vital financial products like mortgages and loans, much harder to obtain and more expensive, the consequences of committing fraud will be severe and long-lasting.

“The industry makes no apology for its relentless pursuit of insurance cheats to protect genuine customers who end up footing the bill through their insurance premiums.”

Detective Superintendent Peter Ratcliffe, Head of the City of London Police’s Economic Crime Funded Units, said: “Fraudsters will use any opportunity to try and steal money from the public, including the exploitation of tragic events such as the current worldwide COVID-19 pandemic.

“We work effectively with the IFB, ABI and insurers to tackle insurance fraud, and our unit has continued the fight against criminals, despite the challenges posed by coronavirus.

“Our industry partners provide us with valuable intelligence to help us identify suspected fraudsters and carry out this enforcement activity, but we also rely on information from the public. As such, it’s vital people report to IFB’s Cheatline when they have information about a suspected insurance fraud or fraudster.”

Evidence of an insurance scam can be reported to the IFB’s confidential and anonymous Cheatline (powered by Crimestoppers) on 0800 422 0421 or online.

The IFB uses information from Cheatline reports to work with insurers, the police and industry watchdogs to help fight fraud, keep people safe and keep costs down.