A CRACKDOWN on easy credit is claimed to have led up to one million drivers to take out illegitimate car insurance.
Restrictions aimed at ensuring consumers meet affordability checks and can’t take out credit they are unable to repay are thought to have inadvertently pushed motorists into the hands of fraudulent “ghost brokers”.
The Times reports that the average annual cost of cover for young drivings is more than £1,300. Many cannot afford to pay upfront and apply to repay by credit but are turned down due to the affordability checks.
The drivers then unwittingly turn to fraudulent insurance brokers. The so-called ghost brokers take money from their victims in return for providing a fake insurance certificate or one that has been bought with a cloned credit card.
Another scam is to buy genuine cover with their victims’ money, then cancel the policy and pocket the refund.
In February, Driving.co.uk revealed that City of London police were warning drivers to be on their guard against scammers who use social media to dupe drivers into buying invalid car insurance.
Smart Driver Club, an insurer, has reported a 14% rise in the number of such invalid policies, in the past three months.
Penny Searles, its chief executive, said: “As premium levels have soared, ghost broking has become a real challenge and risk for unsuspecting motorists.”
The company says that it is discovering 30 invalid policies for every 1,000 issued. If the same rate was replicated across the country’s 30 million cars it would mean almost a million are on the roads without legitimate cover.
Typically, the victim only discovers they have been driving without cover when they have an accident and try to make a claim, or the genuine holder of the original credit card that has been cloned reports the fraud.
Ghost brokers: how to spot a car insurance scam
- Check whether any broker is authorised, using the Financial Conduct Authority or the British Insurance Brokers’
- Association websites: register.fca.org.uk and biba.org.uk
- Contact the insurance company directly to verify the broker’s details
- Trust your instincts – if an offer looks too good to be true, then it probably is
- Ghost brokers often advertise on student websites or money-saving forums, university notice boards and marketplace websites
- Be wary of brokers using only mobile phone or email as a way of contact
- Ghost brokers may use messaging apps, including WhatsApp, Snapchat and Facebook, to minimise the risk of being traced after they’ve taken your money
- You can check to see if your car is legitimately insured on the Motor Insurance Database website: ownvehicle.askmid.com