Auto insurance is vital for all motorists, but a new scam by the name of phantom brokerage threatens not only to leave drivers without valid insurance, but out of pocket as well. Senior Fraud Officer Stephen Adams at Confused.com spoke to Express.co.uk to share an overview of shadow brokerage and how drivers can avoid it.

According to data from Action Fraud, there were 351 reports of shadow brokerage between January and August 2021.

The majority of these were reported by drivers aged 17-19, with individuals losing an average of £ 2,250 each, as well as the risk of driving with invalid insurance.

What is a ghost brokerage scam?

Shadow brokerage is a form of insurance fraud in which victims unwittingly purchase bogus auto insurance policies.

Ghost brokers, the people behind the scam, are professional fraudsters who sell counterfeit or invalid discounted insurance policies.

These scams are most often advertised online, but can also be promoted within local communities.

More often than not, their main selling point is cheap auto insurance.

READ MORE: Some elderly road users ‘will have to stop driving’, experts warn

How to spot and avoid a ghost brokerage scam?

Mr Adams explained to Express.co.uk the top four signs consumers should look out for when buying car insurance and what to do if they suspect their details have been used by a broker ghost.

How they communicate with you

Reputable businesses are always connected to a landline number and should have it listed as the primary point of contact on their official website.

Mr Adams said: “Usually you won’t find a phantom broker with a landline number as they tend to only use mobile phone numbers, often communicating through WhatsApp or Facebook Messenger.”

These seasoned professionals also know how to sell a business, and this can be noticeable in their use of the language.

Mr Adams explained, “When you sell a deal if you have doubts, the shadow broker will have ways to redirect the doubt.

“It might involve dazzling yourself with jargon or confidence. “

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How they advertise their services

Advertisements for car insurance deals on social media should be a major wake-up call, according to the expert.

He explained, “Scammers also tend to advertise on student websites, social media platforms, and money saving platforms, clearly targeting a younger audience.

“There are plenty of Instagram ads from ‘brokers’ promising to guarantee quality insurance at great prices, with some particularly emphasizing the legitimacy of what they offer, while others touting their talents to cover. the difficult ones to insure. “

Ghost brokers can also use comparison sites when they are looking for quotes for you.

Mr. Adams also pointed out that they can even claim to work for well-known insurance companies.

He said: “Legitimate brokers will generally have direct relationships with insurers and policies and be able to find you the best quotes, so be sure to check both and do your research.”

The price is too good to be true

According to the expert, if the price seems too good to be true, it probably is.

He said: “Always keep in mind that if one insurance quote is considerably cheaper than several others you have received, chances are it is offered by a fraudster.”

When purchasing auto insurance, it is a good idea to take note of any offers you have received and compare them.

Mr Adams noted: “If they are all much more expensive, then the alarm bells should ring.”

Checking customer reviews for the business is also a good idea to see the reputation of the business citing your offer.

Mr Adams added: “Be aware that while you normally have to pay an ‘administration fee’ before or after the policy is put in place, ‘shadow brokers’ may tend to control the process.

“Sometimes they’ll even make the payment for you first and then send you some paperwork to fill out, asking that the administrative fee be passed to them directly from the bank instead of the insurance company.”

Always check the FCDO

A legitimate insurance broker with proper authorization must appear on the Financial Services Register on the Financial Conduct Authority (FCA) website.

Mr Adams said: “If the ‘broker’ isn’t around, doesn’t have their own website, or only discloses a cell phone number or email address as a contact, you absolutely must beware. “

What to do if your details were used by a shadow broker

In the unfortunate event that your details have been used by a shadow broker, the first step is to contact the insurer and ask them to terminate the policy.

Mr Adams explained: “This will prompt the insurance company to perform additional checks if someone re-requests a policy using your contact details.”

If you are involved in a scam, it is essential that you report it to Action Fraud.

Mr. Adams urges clients to provide “as much information as possible about the ‘broker’ and how they contacted you.”

He added: “You can also contact the Insurance Fraud Bureau (IFB) cheat line or the Credit Industry Fraud Avoidance System (CIFA) registration.

“Keep an eye on your bank accounts to make sure everything is as it should be.

“Also check your credit report, as this will allow you to flag any research done by companies that you don’t recognize that could point to a fraudulent request made on your behalf. “


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