Young drivers are fast becoming victims of online fraudsters also known as “ghost brokers” selling fake car insurance, especially on social media.
Recent data from Action Fraud, has it that, between November 2014 and July 2018, most of the drivers that were target of these fraudsters fell between the age bracket of 17 to 24.
According to the reported figures, drivers who fall within this age group have reportedly lost a total estimate of £912, 993, with each person’s loss at £912.
Rising Ghost Broking
Ghost broking is a trick used by criminals to sell fake car insurance using various methods like forging insurance documents or details while tricking victims into thinking they have bought a valid cover. However, the most attractive part of the Ghost broking is the cheaper price at which they use to lure victims.
They bring the price down or by taking out a genuine policy before cancelling it soon after and claiming the refund.
These fraudsters often lure students on a tight budget with cheap cover via social media platforms like Facebook and Instagram.
This was the case with Paul Jones, an 18-year-old who was lured with a cheap, and hassle-free car insurance on Instagram by a supposed insurance broker.
Paul decided to proceed with them and was sent his full policy documents.
When he got involved in an accident, the insurer told him his policy had been cancelled due to inconsistencies in the information provided when the policy was taken out. On digging deeper, he found out several information in the policy was incorrect.
Paul later tried to contact the broker, but the “ghost broker” had already blocked him, on phone and Instagram.
Avoiding Ghost Broking
Most often than not, ghost brokers usually advertise their services on student websites or money-saving forums, university boards and marketplace websites, the City of London Police said.
Young individuals should be cautious when it comes to brokers that only use mobile phone or email as a means of contact. Not only that, Ghost brokers are reportedly using messaging apps, such as WhatsApp, Snapchat and Facebook.
“Fraudsters don’t want to be traced after they’ve taken your money,” they said.
Nonetheless, people are advised to check the Financial Conduct Authority website or the British Insurance Brokers’ Association website for a full list of all authorized insurance brokers if they are unsure of the Broker.
They can also contact the insurance company directly to verify the broker’s details and check the Motor Insurance Database to confirm the legitimacy of the insurance done on their car.
In response to his predicament, Paul said the feeling was quite horrible, and it had impacted his ability to “get future car insurance” as companies have increased their prices.
“I think a lack of experience and knowledge of the insurance industry was a big factor in why I was fooled. It’s important that people around my age be wary of offers of low prices for car insurance and always carry out the proper checks to ensure it’s legit.”
According to a data report from Compare the Market, the cost of motor insurance for young drivers has increased to £1,234 annually.
Detective Superintendent Peter Ratcliffe of the City of London Police’s economic crime directorate, said, “While offers of cheap car insurance may be tempting for students, purchasing car insurance through a ghost broker will end up costing you far more in the long run – both regarding money and your license.”
To reduce the number of victims being duped on car Insurance, students are being warned about ghost brokers as a number start – or are heading back to – university in the coming weeks.
They recommended that students change the address on their driving license or risk a fine.
The head of motor insurance at Compare the Market, Dan Hutson stated that ‘Students can be charged a fine of up to £1,000 if they don’t update their address on their driving license, even if they are only living at a new residence for a short amount of time – such as a university term.
“The good news is that it’s really easy to update your information online on the DVLA’s website and, even better, you will be sent a new license free of charge.”