Social media sites are rife with dodgy companies offering car insurance that is either non-existent or missing key details, resulting in tens of thousands of drivers being potentially left uninsured on the roads, Which? research has found.
‘Ghost broking’ is a scam that cost its average victim £1,950 last year. It involves ‘brokers’ forging insurance paperwork completely or more commonly selling victims a ‘real’ policy at a reduced price, by changing some of the victim’s details in the application, such as their address or claims record. It leaves those affected potentially liable for fraud and at risk of penalties for driving uninsured.
Ghost brokers mainly operate online, particularly on social media. In May, Which? searched on social media platforms for profiles and pages that showed signs of being run by scammers. Which? analysed the first 50 pages returned from a search for ‘cheap car insurance’ on Facebook, Instagram and TikTok.
Of the 47 profiles that matched Which?’s search on Instagram, more than half, 25, appeared to be offering quotes or cover to UK drivers, while showing no signs of being authorised by the Financial Conduct Authority (FCA).
In a separate search, Which? found one Instagram profile that boasted it could save customers ‘up to 50%’ on their premium – it also offered ‘NCB (no-claims bonus) Documents’ and ‘Speeding Ticket Removal’. It had 45,900 followers – more than the five biggest insurers combined – and claimed to have ‘over six years experience in [its] field’. It also had a sister profile with an additional 15,200 followers. Which? flagged these to Instagram, and both have since been taken down.
On Facebook, seven pages of the 50 profiles were dubious. On video-sharing site TikTok, two of the 50 profiles analysed were suspect.
Experts Which? spoke with in the police and insurance industry seem to agree that ghost brokers generally operate most prolifically on Facebook and Instagram.
According to the Insurance Fraud Bureau, last year insurers collectively reported more than 21,000 policies that could be connected to the scam. Some victims will not report being scammed because they are too embarrassed. Others might be aware their quotes have been manipulated, but ghost brokers can be persuasive in downplaying the significance of this. Some ghost brokers also put real effort into creating a positive word-of-mouth buzz, which helps them seem trustworthy.
Some 517 cases of ghost broking – with losses totalling £1 million – were reported to Action Fraud in 2021. However, this will only be people who make a report to Action Fraud and actually know that they have bought a fraudulent policy. The true numbers are likely to be much higher.
Many of these losses, unsurprisingly, were from young drivers, who face the steepest premiums. Ghost brokers also heavily target non-native English speakers.
People who have not even bought a policy can also be affected by the scam through having their address or other details used as part of forged insurance paperwork.
To test how social media platforms are vetting unregulated insurance middlemen, Which? set up six accounts of its own on Facebook, Instagram and TikTok, claiming to be car insurance brokers. Which? promised cheap quotes and asked interested drivers to contact via a mobile phone number or directly message through the website.
The two profiles Which? set up on Facebook were taken down by the site within a few days, as was an Instagram profile linked to an email address containing the word ‘ghostbrokerscammer’. However, a second Instagram profile, connected to a less conspicuous email with a ‘normal’ name (e.g. ‘johnsmith’), stayed up for 35 days until Which? took it down. The two TikTok profiles, one linked to a ‘ghostbrokerscammer’ email, also stayed up for the same period.
Which? believes social media companies should have stronger processes in place to protect consumers from fraudulent pages offering financial services.
When the Online Safety Bill comes into force, platforms should be required to prevent this kind of activity. To ensure this is the case, Which? is calling on the government to amend the Bill to ensure its definition of fraud does not allow some scammers to slip through the net and to guarantee that Ofcom has appropriate powers to adequately enforce the Bill when it becomes law.
Meanwhile, consumers should be wary of insurance brokers selling their services on social media and carry out other basic background checks to ensure they are not buying a fraudulent or misleading insurance policy – and are dealing with a company that is actually authorised by the FCA.
Jenny Ross, Which? Money Editor, said:
“Ghost broking is a really nasty kind of fraud, where scammers operate by stealth and typically take advantage of those who feel locked out of, or bewildered by, the car insurance market.
“Social media sites must do much more to crack down on car insurance scammers that are infiltrating their sites and harming consumers, and should address these problems now, ahead of the Online Safety Bill becoming law.
“The Online Safety Bill should require platforms to tackle this type of fraudulent content. The government must ensure this happens by amending the Bill so that its definition of fraud does not allow some scammers to slip through the net and guaranteeing Ofcom is ready to enforce these new laws when they come into force.”
Notes to editors
Analysis of Action Fraud data from 2021 by the Insurance Fraud Enforcement Department found that ‘ghost broking’ is a scam that cost its average victim £1,950 last year.
Five signs you could be dealing with ghost broker:
No sign of FCA authorisation
In order to arrange insurance for you, a company or individual needs to be FCA authorised. You can double-check this on the FCA’s website. If you cannot find evidence that it is regulated, avoid doing business with it.
Limited contact options
Most companies can be reached in multiple ways, including a landline number. If a seller will only interact via mobile phone, social media or a messaging app (such as Snapchat or WhatsApp), it is best to steer clear.
They are cagey about their methods
A genuine company should be able to explain, in understandable terms, how it can net you a bargain. If a broker is guarded or vague about what it does, take that as a red flag.
You are getting insurance paperwork out of the blue
If an insurance company is writing to you about cover you did not take out, it could mean someone is basing a fraudulent policy at your address. Contact that insurer to let it know.
Unfamiliar activity on your credit report
It is good practice to check your credit report regularly. Searches or activity involving unfamiliar companies could indicate that someone is using your details to buy financial products.
Rights of reply
Which? contacted Meta (which owns Facebook and Instagram) and TikTok, reporting the 36 profiles it found, and they took all of these profiles down.
Meta said: “We do not 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 issue and have donated £3 million to Citizens Advice to deliver a UK Scam Action Programme as well as joining Stop Scams UK to help identify and remove scams at the source. We encourage our community to report activity like this using our reporting tools and also to the police.”
TikTok said: “Our Community Guidelines make clear that we do not tolerate any kind of fraud or scams on TikTok and will continue to take an aggressive approach to removing this kind 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 industry to identify new and emerging scams.”
Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.
The information in this press release is for editorial use by journalists and media outlets only. Any business seeking to reproduce information in this release should contact the Which? Endorsement Scheme team at firstname.lastname@example.org.