GoCompare Car Insurance is warning motorists to avoid too good to be true car insurance deals on social media following concerns that fraudsters known as ‘ghost brokers’ are preying on people’s financial worries caused by the Covid pandemic.
The warning comes following the arrest at the end of May, of a man by the City of London Police for selling fraudulent car insurance online and targeting NHS workers with discounts.
Ghost broker is the name given to a scammer who pretends to be a legitimate insurance broker to sell forged or invalid car insurance policies to unsuspecting drivers lured by cheap premiums. In return for the promise of low premiums, ghost brokers ask their victims for an upfront cash payment, which they class as an ‘arrangement fee’. Ghost brokers typically defraud victims in one of three ways:
- They may forge insurance documents, or
- They may manipulate the customer’s details to lower the premium (for example by faking a no claims discount letter or by giving a lower-risk postal address).
- They may also use the genuine identity of an unauthorised third-party to set a policy up, and in some cases cancel the policy soon after to pocket the refund on top of the victim’s fee.
Victims are usually unaware they don’t have genuine cover until they submit a claim following an accident or are stopped by the police for driving without insurance. In some cases, ghost brokers also retain the victim’s card details
While the police may be sympathetic to victims of ghost brokers, the consequences of buying fake insurance can be the same as driving uninsured. Victims will still be deemed to be driving illegally and left liable for any claims.
The minimum sanctions for uninsured driving include a £300 fine, six penalty points and, the risk of having your car seized by the police. Newly qualified drivers receiving six penalty points within the first two years of passing their test will have their licence revoked.
Drivers will also be required to buy a valid policy and may find that they face higher premiums in the future.
How to spot ghost broker warning signs:
- Be wary of unsolicited calls from insurance brokers - authorised firms are unlikely to contact you out of the blue.
- Be cautious of being approached by brokers in unconventional ways such as on social media, by brokers selling car insurance through adverts in newsagents or universities.
- Be suspicious of brokers who only provide scant contact details (e.g. DM only on social media or phone number for WhatsApp), check to see if they have an office address and landline telephone.
- Check the broker firm is on the Financial Services Register and authorised by the Financial Conduct Authority or the British Brokers’ Association.
- If you suspect that you have been contacted by a ghost broker, or have fallen victim to an insurance fraud, you can report it to Action Fraud at actionfraud.police.uk / 0300 123 2040 or to the Insurance Fraud Bureau’s Cheatline at insurancefraudbureau.org/cheatline / 0800 422 0421.
Lee Griffin, founder and CEO of GoCompare, commented: “Lockdown restrictions have left many people struggling on reduced incomes, making them more vulnerable to fraudsters offering enticing deals. It’s obvious from the recent arrest of a suspected ghost broker who has allegedly targeted NHS workers, that fraudsters don’t have any scruples about who they rip-off. The cost of car insurance can be a significant expense, especially for young or inexperience drivers, or those struggling to make ends meet, which makes them soft targets for criminals.
“We’re warning drivers to be extremely suspicious of cheap insurance advertised on social media or websites, especially where the deal on offer looks too good to be true. This is usually because it is. Being aware that criminals are exploiting drivers desperate to save money and, knowing the warning signs of ghost broking scams, can help people from falling victim.
Lee Griffin concluded, “Criminals prey on peoples’ fears and anxieties during times of crisis, so we’re concerned that the economic downturn caused by the coronavirus creates fertile ground for ghost brokers.
“There is good new though, drivers can legitimately and safely save money by shopping around for cover. Customers comparing policies and switching using GoCompare Car Insurance could save up to £289 on their premium, without sacrificing their cover1.”
GoCompare was the first comparison website to join the Insurance Fraud Bureau and, in December 2018, partnered with Featurespace, a globally recognized industry expert in combatting financial crime, to incorporate real-time machine-learning to spot anomalies, block new fraud, and recognise genuine customers.
Top tips from GoCompare Car Insurance to get the best car insurance deals:
Consider opting for a car with a smaller engine – if you are buying a car, remember that insurance premiums will be lower for car with a small engine (under 1000cc) in a low insurance group. Also, avoid cars with modifications, as they can push the price of insurance up.
Always compare prices AND check the small print – use a comparison site to shop-around for the best deals and check all the charges, penalties, exclusions and terms and conditions.
Consider opting for a higher excess – This may lower the premium, but you will need to decide if that is worth having to contribute more towards the cost of a claim if you have an accident.
Consider a ‘telematics’ policy – Your driving will be monitored and your premiums can come down faster than with a traditional policy if you prove to be a safe driver.
Added extras – Some policies include a courtesy car, legal assistance, breakdown cover and key cover but they’re not free. The cost will be built into the premium, so you may be able to save money by removing them or choosing a different policy.
Adding a safe driver – Adding another named driver with a clean licence and several years claim free driving can reduce your premium.
Drive safely – By being careful on the road you will avoid accidents, fines, and penalty points, all of which will affect your insurance premium.
NEVER accept your renewal quote - always check that the renewal price you are offered is competitive – even if your insurer was the cheapest last year,
Give yourself time to review your cover – note your renewal date in your diary and shop around at least a week before your policy renews to get the best deal.
For further information please contact:
Anders Nilsson or Louisa Marsden at GoCompare on 01633 654 054 / 01633 655 132
Gordon, Jason or Liz at MAW Communications on 01603 505 845
Keep up-to-date with GoCompare on Twitter; @GoCompare
Notes to editors
1.51% of people shopping around for car insurance with GoCompare could save up to £289 - based on independent research by Consumer Intelligence, conducted between 1 April to 30 April 2020.
GoCompare is a comparison website that enables people to compare the costs and features of a wide variety of insurance policies, financial products and energy tariffs.
GoCompare does not charge people to use its services, and it does not accept advertising or sponsored listings, so all product comparisons are unbiased. GoCompare makes its money through fees paid by the providers of products that appear on its various comparison services when a customer buys through the site.
When it launched in 2006, it was the first comparison site to focus on displaying policy details rather than just listing prices, with the aim of helping people to make better-informed decisions when buying their insurance. GoCompare has remained dedicated to helping people choose the most appropriate products rather than just the cheapest, and has teamed up with Defaqto, the independent financial researcher, to integrate additional policy information into a number of its insurance comparison services. This allows people to compare up to an extra 30 features of cover.
GoCompare is the only comparison website to be invited to join the British Insurance Brokers’ Association (BIBA) and is authorised and regulated by the Financial Conduct Authority (FCA).