It’s tempting, especially for those on a tight budget, to find a seemingly great price on car insurance and make the purchase without much thought.
However, this could be a scam – the insurance company may not be real and the insurance policy is fake. These great prices may be offered on social platforms or websites, and this time of year, the scams can be more prevalent.
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YouGov Survey & Ghost Brokers
Have you heard of ghost brokers? If not, then you’re in the same company as 95 percent of other motorists who have not heard the term before, according to a recent survey by YouGov.
Their survey also found that one in three participants, who have seen ads for Black Friday car insurance deals, were between the ages of 17 and 24. In addition, one in five people have reported seeing the advertisements on various social media platforms.
The survey also found that 32 percent of respondents didn’t know how to tell if a car insurance offer was legitimate insurance or not. The survey also pointed out that about 1/3 of participants have never checked to see if an online insurance offer was actually provided by a legitimate business before purchasing insurance.
Social Media Used to Target Young People
Illegitimate insurance sellers are increasingly using social media to target young people and those looking for the cheapest deal on car insurance. These people are the most vulnerable to cheap prices, those who are already struggling with a tight budget.
These “deals” are highly enticing when it comes to saving money; however, officials are warning motorists that these deals could actually be scams. After making a purchase, the buyer may find out, too late, that they have fraudulent auto insurance.
The car insurance offers are put out during the holidays, at a time when many businesses are offering sales in the run up to Christmas. It’s difficult to tell the real offers from those that are fake.
These fraudsters are termed “ghost brokers,” because they are criminals selling fake car insurance contracts for fake insurance companies. Buyers may not realize they have been scammed until they need to make a claim or are stopped by the police.
How Does the Scam Work?
Criminals will pose as legitimate insurance brokers and their advertisements on social media will be offers for fake car insurance being offered at very cheap prices. Black Friday is the perfect time for fraudsters to perpetrate the crime, as they just blend in with all the other Black Friday deals offered by all types of businesses, just in time for the holidays.
Stephen Dalton, Head of Intelligence and Investigations at IFB said, “Think before you act – an enticing offer might seem like a great way to save money but the reality is if you don’t do basic checks to know that you’re buying car insurance from a genuine Broker, your ‘policy’ may be worth no more than the paper it’s written on.
“When buying through a Broker, always check to see that they’re registered with the British Insurance Brokers’ Association (BIBA) and report suspected insurance fraud to IFB’s Cheatline.”
The Scam is Becoming More Common
The IFB has seen an increase in the number of investigations of ghost broker auto insurance scams. In fact, the scam has increased over the past four years.
The problem has increased by about 80 percent since 2015; as fraudsters are increasingly finding ways to get around laws.
What Happens If You’re Caught Using Fake Car Insurance?
The consequences of falling for this scam are serious. If you happen to buy fake vehicle coverage, and have a traffic incident you could face stiff fines. Police have the right to seize your vehicle if you’re driving without valid insurance.
In addition, you could be slapped with a £300 fine and face points applied to your driving license. You’ll also have to buy a real car insurance policy and it’s not likely you’ll receive a refund from the “Broker” who scammed you.
If you’re in a traffic accident, and then try to make a claim to your insurance company, you’ll be out of luck. There won’t be an insurance company ready to help you, as you didn’t buy an actual auto insurance policy. You’ll have to cover the damages out of pocket.
Officials are urging everyone to be on the lookout for car insurance deals that seem too good to be true. They’re also advising everyone to check out the insurance provider, to see if they’re legitimate, by going to BIBA’s website and doing a search. If the company doesn’t show up, then don’t buy the auto coverage.
Be sure to report the criminal to the authorities, too. You may just save others from being duped into buying this fake auto insurance coverage.