AT RISK Warning as millions of young and vulnerable drivers could be fined £100s if they fall for ‘ghost broker’ scam
MILLIONS of young and vulnerable drivers could see their cars seized if they fall for a new scam, according to the UK’s largest car insurer.
Nearly one in three (30%) young drivers have purchased car insurance from someone operating illegally on social media platforms by selling invalid or fake car insurance, says Aviva.
The insurance firm surveyed 2,000 drivers aged 17-25 in an effort to highlight the issue of ghost broking.
This involves fraudsters posing as legitimate insurance companies, illegally selling fake or invalid insurance to young drivers and motorists who find it difficult to buy insurance.
Aviva says those who purchased such car insurance via social media likely dealt with a fraudster and bought worthless cover.
This means they are at risk of having their car seized, as well as facing an unlimited fine and receiving a driving ban.
The survey showed of the young drivers who purchased car insurance via social media, 89% had serious problems with their policy.
Type of problems identified by young drivers
According to the Aviva survey, types of problems identified by young drivers include:
- 49% said their details (e.g. age, address) were misrepresented on the policy, meaning it was not valid;
- 22% said they made a claim which was declined because they weren’t properly insured;
- 21% said the seller didn’t help them when they raised concerns;
- 17% said the police stopped them and impounded their vehicle or issued a fine for driving without adequate insurance.
Katriona Cunningham, Policy Application Fraud Lead at Aviva, said: “Young drivers aged 17–25 are the first generation to grow up with social media being an integral part of their daily lives.
“It is understandable, then, that when looking for car insurance, 30% of young drivers said they turn to social media.
“However, ghost brokers are actively targeting young drivers on social media platforms, offering cheap-but-worthless car insurance that puts the young driver at risk of being uninsured.
“I would say to all young drivers: if a deal looks too good to be true, it probably is. If you engage with someone offering cheap insurance on a social media site, they are probably fraudsters. Avoid anyone offering access to cheap car insurance via social media.
“If you suspect you’ve encountered a ghost broker, report it to the Insurance Fraud Bureau or Action Fraud so they can investigate and prevent others from being scammed.”
Other types of insurance fraud to beware of
Ad spoofing is particularly high risk for motorists as it typically plays on the emotions of someone who has just had a car accident.
However, there are several types of online insurance fraud that are increasing in prevalence.
The Association of British Insurers (ABI) said “account takeovers” are also common, where someone comes across your insurance account and logs in and then makes a fraudulent claim on your behalf.
Insurance fraud is a serious criminal offence, so it’s important to report if you think you’ve been a victim of a scammer so you aren’t held responsible for making the false claim.
Account takeovers can also involve fraudsters changing the bank details so they receive your insurance payout instead.
The ABI said it had found 81% of customers had never heard of account takeovers.
Meanwhile, it warned that “ghost broking”, where scammers sell fake insurance products, and “data farming”, where cold-callers get personal details from you and then sell them on, are both common.
You can report any instances of fraud to Action Fraud on 0300 123 2040 or online at actionfraud.police.uk.
You can also report it to the Insurance Fraud Bureau via its confidential “cheatline” on 0800 422 0421 or on insurancefraudbureau.org.
Doing so helps these organisations keep track of any increases in certain types of fraud and learn how to tackle them.
According to the insurer, young drivers gave a range of responses for why they would look for insurance on social media, including one in five (19%) who say they “can’t see any reason not to buy insurance on social media” – demonstrating a lack of awareness of the risks and penalties involved.
Once on social media, young drivers are seized upon by ghost brokers, with nearly four out of five young drivers (77%) reporting that they have seen a social post advertising cheap car insurance.
Young drivers are split on how trustworthy those individuals are, with 48% saying the people approaching them with offers of cheap insurance are trustworthy, and 48% saying they are not trustworthy.
That said, 63% agree they “would be suspicious of anyone offering cheap car insurance on social media,” while only 15% said they would not be suspicious.
Tips to ensure policy is legitimate
Aviva has the following tips to ensure a policy is legitimate:
- Too good to be true? It probably is. Beware of super cheap deals.
- Verify the broker: Check BIBA and FCA registrations.
- Check the insurer: Ensure they’re in the Motor Insurers’ Bureau.
- Avoid social media deals: Legit brokers don’t operate solely on TikTok or Snapchat.
- Spot red flags: Watch out for bad spelling, vague details, and messaging app requests.
- Do your research: Contact insurers directly and check the Financial Services Register.
- Report suspicious activity: Suspect ghost broking? Report it to the IFB’s CheatLine.