We understand that ghost broking is a very real problem in the insurance industry. This blog will explain ghost broking: what it is, how it works and how to steer clear of it.
What is ghost broking?
Ghost broking is a type of insurance scam where the scammer (or “ghost broker”) pretends to be a genuine insurance broker in order to sell you fraudulent insurance that either simply doesn't exist or isn’t valid.
It tends to affect people who don't know exactly how insurance works in the UK - often younger drivers, for example, who tend to get higher premiums than more experienced drivers, and people who have moved to the UK from abroad and don't speak much English.
Ghost brokers normally appeal to their victims via social media, money saving forums or student websites, where they will offer too-good-to-be-true prices before directing victims to a website to try and make the sale.
How does ghost broking typically work?
Ghost broking typically works in one of the following three ways.
1. Forgery
This is where the ghost broker uses real insurance documents, but they doctor them to make it look like they belong to you instead.
For example, they might use their own, valid insurance policy documentation, but change some of the details so it looks like your details instead. But in reality, there's no policy in your name at all.
2. Falsification
Differently, the ghost broker actually buys an insurance policy on your behalf, but they use fake data to make it a lot cheaper.
For example, more experienced drivers are often priced much more cheaply than newer drivers. In this case, a ghost broker might lie about your age to make the policy cheaper. They might also lie about other things like your postcode and the car you drive too, all to bring down the cost - but without telling you.
This means that although there's technically a policy in place, it's a fraudulent one, and when the insurer finds out it's a fake car insurance policy, they'll either cancel or void the insurance.
3. Cancellation
In this case, the ghost broker buys a legitimate policy using your real details, sends you all the documents and then cancels the policy and takes the refund for themselves. That leaves you then driving around uninsured.
This may be the worst type of ghost broking because in this case, not only do you lose the money you paid for the fake insurance policy, but you then have to buy valid insurance.
You'll also face the standard punishment for driving without insurance, which is:
- £300 fine
- 6 points on your licence
In these cases, the law isn't particularly kind to victims of ghost broking. There's no distinction between a victim of insurance fraud and someone deliberately breaking insurance laws.
How do I avoid ghost broking?
It is fair to say that ghost brokers are worth being aware of and definitely worth avoiding. On that note, here are three things we advise you to do to avoid falling victim to a ghost broker.
- Avoid buying insurance from companies that don’t seem credible, such as people you may come across on social media or on money saving forums.
- Before you buy your policy, double check if the insurance company has a legitimate website, address and UK phone number. (For example, ours would be zego.com, 5th floor, FORA Shoreditch, 21-33 Great Eastern St, London, EC2A 3EJ and 020 3053 9815.)
- Before you buy through an insurance company or a broker, make sure they're registered with the Financial Conduct Authority (FCA) here: https://register.fca.org.uk/s/. You can find us under reference number 757871, Extracover Ltd (trading as Zego).
How do I report ghost broking?
If you believe you have already been a victim of ghost broking, we would recommend that you report this matter immediately to the Insurance Fraud Bureau via the IFB Cheatline (powered by CrimeStoppers) on 0800 422 0421 or online via https://insurancefraudbureau.org/cheatline/. Here you can report your suspicions in a free, anonymous and completely confidential way.
We would also recommend for you to contact your local police station or Action Fraud on 0300 123 2040, https://www.actionfraud.police.uk/reporting-fraud-and-cyber-crime