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Shropshire motorists are being warned about a car insurance scam that could swindle them out of hundreds of pounds and even leave them with a criminal record.
Mark Freeman, Managing Director of Newport-based Insurance Brokers, Henshalls has 30 years of expertise as an insurance broker. He spoke to JT Hughes about how Shropshire motorists can avoid falling victim to ghost broking and urging them to stay clear of potential scammers.
The advice comes following a national campaign led by the City of London’s Police Insurance Fraud Enforcement warning motorists about the scam after 850 reports of ghost broking had been reported to Action Fraud in a space of three years.
What is Ghost Broking?
Ghost Brokers use a range of tactics to target drivers who are looking to insure their vehicle for the best price. They then sell them fake or invalid insurance policies that are completely worthless.
“Ghost broking comes into the category of insurance fraud – when someone exaggerates or invents a claim or does not tell the truth in order to obtain a cheaper premium,” advised Mark.
“Ghost brokers do exactly this – charge you a fee then tell lies to get you a cheaper premium. They will often take your money off you and pay for the insurance with a stolen credit card.”
The Insurance Fraud Bureau said the scam works in two ways. Policies are bought from legitimate insurance companies using false information and then doctored before being sold on to customers.
Fake policy documents are designed to look like they have been issued by legitimate insurance companies and sold on to customers.
If you fall victim to the scam, then it could leave you out of pocket, uninsured and even a criminal record due to driving uninsured. Drivers may get points on their driving licence, a fixed penalty notice, car seized by the police, costs to get back the impounded vehicle and be liable for claims cost if involved in an accident.
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Ghost Broking Could Be ‘Under-Reported’
Over 850 cases have been reported to national fraud agency Action Fraud in between 2014 and October 2017, with the average victim losing £769 to the scam. The total losses from individuals and organisations come to £631,000.
However, police believe that the true number of individuals who have been conned could be much higher, due to the way ghost brokers deceive motorists.
Many motorists could on the roads thinking that they have legitimate insurance when in fact, it’s worthless. It’s only when they are stopped by the police they find out that their cover isn’t genuine.
Young Men Targeted on Social Media
“Ghost brokers are often run by organised criminals, often a catalyst for crash for cash, and the proceeds are often used for other organised crime,” said Mark.
He said scammers usually target specific groups such as members of their own community where English is not their first language and are thus more vulnerable. They also find people in workplaces or those who would normally pay higher premiums – for example because they are young or old, have previous convictions or live in a particular postcode.
The Insurance Fraud Enforcement Department (IFED) analysis into ghost broking showed that men aged 20-29 are most likely to get targeted. The most common way for scammers to reach out is through popular social media channels including Facebook, Instagram and WhatsApp.
Mark said: “They advertise on the web, social media sites or posters and leaflets in their targeted area. Some may appear legitimate with premises.”
Detective Chief Inspector Andy Fyfe, Head of the City of London Police’s Insurance Fraud Enforcement Department, said:
“Ghost brokers trick unsuspecting victims with offers of heavily discounted car insurance, leaving them with a policy that isn’t worth the paper it’s written on and open to the severe harm that comes with driving without valid insurance.
“Being able to drive is vital for a lot people, whether it be to get to work or pick up their children from school or nursery, so if they fall victim to a ghost broker it could not only impact on them financially but also seriously affect their day to day life and make things very difficult.
“As well as the personal harm experienced by victims, ghost brokers also cause financial harm to the insurance industry, driving up the cost of insurance premiums for all motorists.
“While an offer of cheap car insurance may seem tempting, falling victim to ghost broking will end up costing you far more in the long run – both in terms of money and your licence.”
Ghost Broking a “Disturbing” Crime
Mark Godfrey, Managing Director of RAC Insurance said: “This is a very disturbing crime, which takes advantage of young male drivers who are naturally keen to take out cheaper car insurance as they paying the highest premiums in the market due to higher risk.”
“We urge every young driver to be extremely wary of approaches from so-called insurers via social media. Whenever considering insurance cover, drivers are best advised to choose a reputable motor insurer and to check all of their paperwork. If a deal sounds too good to be true then it probably is.”
People Taking Advantage of the Scam
There are some people who take advantage of the scam to try and get a cheaper premium.
“Not all ghost broker policyholders are victims,” warned Mark. “Many are happy to have ‘beaten the system’ to obtain a cheaper premium. By law, we are required to answer all questions in an insurance proposal honestly and to the best of our knowledge.
“If you deliberately, recklessly or carelessly misrepresent any information then the policy can be cancelled with no refund and no claims paid.”
He added that insurance companies are stepping up their fraud prevention by becoming more sophisticated as more information becomes available to them, and by legally sharing it with each other. This may include claims information and previous fraudulent activity.
“It helps them along with such techniques as social network analysis to identify those more likely to be fraudulent.”
Ben Fletcher, Director of the Insurance Fraud Bureau, said: “Ghost broking is a complex issue and one that we do not take lightly. Ghost brokers often target vulnerable people or communities, but we do also sometimes see cases where people have knowingly bought fraudulent or invalid policies in an effort to pinch the pennies.
“It is essential that we raise awareness about the issue of ghost broking to stop innocent victims being targeted and to educate those who may consider buying insurance from a disreputable source. We work closely with police and insurers to track all those involved in ghost broking scams in order to bring about charges for those guilty parties.”
How to Spot a Scammer
There are a number of ways to prevent being scammed, but Mark advises that you trust your instincts and use common sense if something doesn’t feel right.
“If it seems too good to be true, or dodgy in anyway, it probably is.”
Here are Mark’s top tips on how to ensure that your car insurance is valid and legal:
· Check whether they are on the FCA register, every broker should be on there without exception
· How long has the broker been established? A ghost broker will probably be quite new
· Do they have premises – a ghost broker probably doesn’t
· What does the advertisement say? Be aware of guarantees to beat any price or save you a huge percentage
· What advice are they giving? If they are saying it is alright to lie or be economical with the truth it’s wrong. No broker should give you that advice.
· How do you pay? Ghost brokers often charge a separate feed for finding the policy for you. Legitimate brokers often charge a fee but they will usually collect it as part of the whole transaction and only if you go on to cover.
· Have you been provided with all of your documents? You should have a copy of tour statement of facts on which the policy is based – check it carefully, preferably before you go ahead.
· Does your certificate have the right use on it (e.g. social domestic and pleasure and commuting to work,) or is it limited?
Check Your Policy is Legitimate
If you suspect that your policy isn’t legitimate, you can check whether it’s on The Motor Insurers’ Bureau’s Motor Insurance Database which records all policy details of vehicles insured in the UK. If your policy isn’t on the database then it isn’t legitimate.
However, ABI advises that even if your vehicle is listed on the database, you should contact your insurer to make sure your policy is legal. If your personal details do not match the information held by your insurer then you may have been sold a fraudulent policy.
If you think your policy is fraudulent contact Action Fraud or call 0300 123 2040.
Motorists can also report ghost broking activity to the Insurance Fraud Bureau Cheatline by calling 0800 422 0421 or by filling out a form on their website.