Social media websites should do more to crack down on car insurance scammers, according to Which?
The consumer group said “ghost brokers” operate primarily online, particularly on social media.
Ghost brokerage is a scam that falsifies insurance documents to make them look like real policies – those who buy them risk driving without insurance.
Young drivers, who often pay higher insurance premiums, may be most at risk, while ghost brokers also heavily target non-native English speakers, Which? said.
People who have not even purchased a policy can also be hit by the scam by having their address or other details used on forged documents.
In May, which one? scoured social media platforms for cheap car insurance.
Of 47 profiles matching an Instagram search, more than half, 25, appeared to offer quotes or cover for UK drivers while showing no sign of clearance by the Financial Conduct Authority (FCA), according to Which?
On Facebook, which one? said seven pages out of 50 profiles were suspicious.
On the video-sharing site TikTok, two of the 50 profiles analyzed were suspicious, he said.
Who? contacted Meta, which is behind Facebook and Instagram, and TikTok, reporting the suspicious profiles it found, and the consumer group said it removed them.
Meta told Which? “We don’t allow fraudulent activity on our platforms and have removed these accounts for violating our policies.
“We continue to invest in people and technology to tackle this industry-wide problem and have donated £3 million to Citizens Advice to set up an action program against scams at UK and join Stop Scams UK to help identify and remove scams at source.
“We encourage our community to report such activity using our reporting tools and also to the police.”
TikTok said: “Our community guidelines make it clear that we do not tolerate any type of fraud or scam on TikTok and will continue to take an aggressive approach to removing this type of content.
“We were the first platform to require all advertisers of financial services products, including insurance, to be registered with the FCA and work closely across the industry to identify new and emerging scams. “
According to the Insurance Fraud Bureau, last year insurers collectively flagged more than 21,000 policies that may be linked to the scam.
Some victims will not report being scammed because they are too embarrassed or, perhaps, because ghost brokers can be persuasive by downplaying the scam. said.
He said some ghost brokers also put in real effort to build positive word-of-mouth, which helps them appear trustworthy.
Some 517 cases of phantom brokerage – with losses totaling £1million – were reported to Action Fraud in 2021.
To test how social media platforms control unregulated insurance intermediaries, which one? created six accounts on Facebook, Instagram and TikTok, claiming to be car insurance brokers.
Who? promised cheap quotes and asked interested drivers to get in touch via cell phone number or direct message.
The two profiles Which one? set up on Facebook were deleted within days, as was an Instagram profile linked to an email address containing the word “ghostbrokerscammer”.
However, a second Instagram profile, connected to a less visible email, remained active for 35 days until Which? took him down.
Two TikTok profiles, one linked to a “ghostbrokerscammer” email, also remained active for 35 days until Which? deleted them.
Who? said consumers should be wary of insurance “brokers” selling their services on social media and perform other basic checks to ensure they are not purchasing a fraudulent or misleading insurance policy – and that they are dealing with a company that is in fact authorized by the FCA.
Jenny Ross, which one? The editor of Money, said: “Ghost brokerage is a really nasty type of fraud, where scammers operate stealthily and usually take advantage of those who feel left out or confused by the car insurance market.
“Social media sites need to do a lot more to crack down on car insurance scammers infiltrating their sites and harming consumers, and should address these issues now, before the online safety bill becomes law. .
“The Online Safety Bill should require platforms to tackle this type of fraudulent content.”
While car insurance scammers are often referred to as ghost brokers, they are not brokers but people engaged in criminal activity.
There are steps people can take to make sure they are dealing with a genuine broker.
Graeme Trudgill, executive director of the British Insurance Brokers’ Association (Biba), said: ‘If you have any doubts about a company, check their credentials.
“It is a legal requirement in the UK for insurance brokerage firms to be authorized and regulated by the Financial Conduct Authority (FCA). The FCA website contains a register of all authorized and regulated companies, it can be found at register.FCA.org.UK
“As a general rule, if something seems ‘too good to be true’, it could be that a mistake has been made or the company is not a regulated broker.
“While a professional broker may find cover at reasonable prices, they will not offer to manipulate your quote such as offering to add non-existent drivers to a policy just to reduce the premium.
“Insurance is legitimately sold through many channels, but it might be a good idea to check approaches through social media.”
He added: “Always look for evidence that it is a regulated insurance broker or company. You can find a regulated insurance broker at www.biba.org.uk or by calling Biba on 0370 950 1790.”
Ben Fletcher, Director of the Insurance Fraud Bureau, said: “Young and vulnerable people are constantly being targeted online with bogus car insurance offers that are too good to be true, and if they fall in love with they are immediately left behind and risk having their car seized by the police without insurance.
“The cost of living crisis means it has never been more important for people to protect their personal finances from fraud. To help raise awareness of the problem of ghost brokerage scams, we will soon be launching a digital advertising campaign to prevent more people from falling victim to them.
“We are working closely with insurers and the police to disrupt ghost brokerage scams. If anyone thinks they have proof of a bogus car insurance contract, they can report it for free to our confidential cheat line at www.insurancefraudbureau.org/cheatline or 0800 422 0421.
Here are five signs you might be dealing with a ghost broker, which one?
1. There is no FCA authorization sign
In order to arrange insurance for you, a company or individual must be approved by the FCA. You can check this on the FCA website. If you can’t find evidence that it’s regulated, avoid doing business with it.
2. Contact options are limited
Most businesses can be reached in several ways, including a landline number. If a salesperson only interacts through mobile, social media, or a messaging app, consider staying away.
3. They are suspicious of their methods
A genuine business should be able to explain, in understandable terms, how it can get you a good deal. If a broker is cautious or vague about what they do, take that as a red flag.
4. You receive insurance documents out of the blue
If an insurance company writes to you about coverage you haven’t purchased, it could mean someone is founding a fraudulent policy against your address. Contact this insurer to let them know.
5. There was unknown activity on your credit file
It is recommended that you check your credit report regularly. Searches or activity involving unknown companies could indicate that someone is using your details to purchase financial products.
A Home Office spokesperson said: ‘Fraud can have a devastating impact, with some victims losing hundreds or even thousands of pounds to criminals at a time when we face a squeeze in the cost of life.
“We are working with industry, including the banking, technology and telecommunications sectors through the Joint Fraud Task Force to crack down on these scams, and we are releasing our landmark fraud strategy later this year. to solve the problem.
“Our online safety bill will mean that technology companies have a duty to proactively fight online fraud and use their vast resources to find solutions to prevent users from being targeted by this content. and to eliminate scams as soon as they are reported.”