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The City of London Police’s Insurance Fraud Enforcement Department (IFED) is relaunching its #SteerClearofFraud campaign to raise awareness of insurance fraud amongst students as universities across the UK take part in National Student Money Week.
The latest figures, released today, show that 17-29 year olds are most likely to fall victim to fraudsters selling fake car insurance, also known as ‘ghost brokers’, with a number of these likely to be students.
From January to December 2020, Action Fraud, the national fraud and cyber crime centre, received 694 reports of ‘ghost broking’, with almost a third (29%) coming from victims aged 17-29. The reported losses for these victims alone totalled £113,500, nearly three times the amount lost by 30-39 year olds, with each individual losing an average of £559.
Figures also indicate that over half (58%) of all reports in 2020 were submitted by men. Of the reports made by 17-29 year olds, over two-thirds (69%) were from men.
A previous survey by YouGov commissioned by the Insurance Fraud Bureau (IFB) also revealed that one in three 18-24 year olds have seen a suspicious insurance advert on social media.
Detective Chief Inspector Edelle Michaels of the City of London Police’s Insurance Fraud Department said:
“Whilst the coronavirus pandemic has halted some forms of criminal activity, reports to Action Fraud show that this is certainly not the case for ‘ghost broking’. 2020 saw nearly a 10% increase on the previous year for the total number of reports for this type of fraud, indicating that these fraudsters are still able to operate in the current circumstances.”
“There have been examples of ‘ghost brokers’ exploiting the pandemic – we have even seen a case of someone offering discounts to NHS workers on fraudulent insurance policies. Clearly fraudsters have no qualms in manipulating vulnerabilities, and with students being in a difficult situation shrouded with uncertainty at the moment, it is vital that they remain wary of this type of fraud.”
What is ‘Ghost broking’
‘Ghost broking’ is the name given to a tactic used by fraudsters who sell fake car insurance by a number of different methods. Fraudsters mainly target drivers, offering cheaper insurance premiums, usually via social media or by word-of-mouth. These individuals or groups pose as middlemen for well-known insurance companies, claiming they can offer you legitimate car insurance at a significantly cheaper price.
This type of fraud is typically carried out either by forging insurance documents, falsifying your details to bring the price down, or by taking out a genuine policy for you but cancelling it soon after. Whichever method is used, most victims do not realise that they do not have genuine cover until they are stopped by police or try to make a claim.
Why are young people targeted?
Young people, and especially students, are often vulnerable to approaches from ‘ghost brokers’.
Money is typically tight for students whilst completing their studies, and, coupled with the high insurance premiums they face, cheap offers are hard to resist. These factors combined, unfortunately, make prime targets for ‘ghost brokers’.
On top of this, some young people may not yet have a complete understanding of the insurance industry and how to insure their car legitimately, due to lack of experience.
IFED, with support from the Insurance Fraud Bureau (IFB), are therefore encouraging young people
to be wary of heavily discounted prices on the internet or cheap prices they are offered directly for car insurance, as they may well be offers from ‘ghost brokers’.
How to protect yourself from ‘ghost brokers’
‘Ghost brokers’ often advertise on student websites or money-saving forums, university notice boards and marketplace websites such as Gumtree. They may also try to sell insurance policies to you through adverts in pubs, clubs or bars, newsagents and car repair shops.
Be wary of brokers using only mobile phone or email as a way of contact. Ghost brokers have even been reported using messaging apps, including WhatsApp, Snapchat and Facebook. Fraudsters do not want to be traced after they have taken money from their victims.
If a deal seems too good to be true, then it probably is. If you are not sure about the broker, check on the Financial Conduct Authority or the British Insurance Brokers’ Association website for a list of all authorised insurance brokers. You can also contact the insurance company directly to verify the broker’s details.
You can check to see if a car appears to be insured on the Motor Insurance Database website.
If you think that you have been a victim of a ghost broker, you can report your concerns to Action Fraud at actionfraud.police.uk or on 0300 123 2040.
You can also contact the Insurance Fraud Bureau via its confidential Cheatline on 0800 422 0421 or on the IFB website.
Stephen Dalton, Head of Intelligence and Investigations at the IFB, said:
“It’s a really tough time for students right now and the last thing they need is to lose their freedom to drive. That’s why we’re warning young people to watch out for unrealistically cheap, fake car insurance ‘deals’ currently being promoted on social media. Frustratingly this scam is all too common and it’s causing more people to drive without insurance and get their car seized by police. We must be savvy and carry out checks if we see a car insurance deal that looks too good to be true.”
Case study, Paul Jones, 18:
After passing his driving test, Paul began looking for car insurance, searching various insurance companies online. As he had enabled ‘cookies’, a number of posts appeared on Paul’s social media feeds about car insurance.
As a result, Paul came into contact with a person on Instagram who claimed they were an insurance broker and could get Paul cheap cover because they had exclusive contact with a reputable insurance company.
At the time, Paul was under a great deal of stress as he had recently undergone surgery and was going through university interviews and A-Level examinations. With the broker offering cheap, ‘hassle-free’ car insurance, Paul decided to proceed with the offer.
After Paul had provided various details to the broker, including his name, address and driving licence, he was sent screenshots of a policy document with his details – though only part of the policy could be viewed. A few weeks later, Paul then received his full policy documents in the post, which he checked and the details appeared to be correct.
Under the assumption that he had legitimate insurance, Paul started driving and was involved in a minor collision. However, when he contacted the insurer about his insurance, they claimed it had been cancelled as there were a number of discrepancies in the details provided when the policy had originally been taken out.
Paul went through the policy with staff from the insurer and identified various details that were incorrect. For example, in the policy it stated that Paul was a homeowner, a student nurse and had bought the car several years ago – all of which were untrue.
This incorrect information had been inputted by the broker when they incepted the policy, in order to reduce the cost of the premium. Paul tried to contact the broker, but they had blocked his number and were no longer on Instagram. In total, Paul lost £2,200.
After falling victim to the fraud, Paul described how dreadful the experience had been:
“I couldn’t believe what I was hearing when staff from Direct Line Group told me that my insurance was void and read out details from my policy that were completely wrong.
“It’s a horrible feeling and it’s really impacted on my ability to get future car insurance, as companies are now offering me even higher prices than before.
“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 cheap prices for car insurance and always carry out the proper checks to ensure it’s legitimate."