Drivers aged 17 to 24 are the most likely to fall victim to fraudsters selling fake car insurance – also known as “ghost brokers” – figures show.
Reports received about this type of crime by Action Fraud between November 2014 and July 2018 were most likely to have come from victims in the 17 to 24 age bracket.
On average, people in this age group lost £912.
Ghost broking is a tactic used by criminals who sell fraudulent car insurance using various methods – tricking victims into thinking they have bought valid cover.
They may forge insurance documents, falsify details to bring the price down or take out a genuine policy, before cancelling it soon after and claiming the refund plus the victim’s money.
It is a legal obligation to have valid car insurance – and those buying from a fraudster risk points on their driving licence, having their vehicle seized and possibly destroyed, a fixed penalty notice and being liable for claims costs if they are involved in an accident.
Students are often targeted because they may tempted by what looks like a good deal while living on a tight budget as well as having less experience of buying insurance than older adults. They may also be faced with relatively high insurance premiums due to the higher risks associated with younger drivers and so are looking to bring their costs down.
The City of London Police’s Insurance Fraud Enforcement Department (IFED) is encouraging young people, particularly students, to be wary of heavily discounted prices on the internet or cheap prices offered directly for car insurance.
The police said in one case, an 18-year-old was offered what appeared to be cheap, hassle free car insurance via social media by someone who said they were an insurance broker.
He received what he believed were legitimate insurance documents in the post and was later involved in a minor collision.
But when he contacted the insurer he was told the policy had been cancelled due to discrepancies in the details provided when the policy was taken out.
He then discovered that various details in the policy were incorrect. Police said the reason the broker would have given incorrect details would be to bring to the premium down.
The victim tried to contact the broker, but the broker had blocked his number. In total, he lost £2,200.
He said: “It’s a horrible feeling and it’s really impacted on my ability to get future car insurance as companies are now offering me even higher prices than before.
“I think a lack of experience and knowledge of the insurance industry was a big factor in why I was fooled. It’s important that people around my age be wary of offers of cheap prices for car insurance and always carry out the proper checks to ensure it’s legit.”
Detective Superintendent Peter Ratcliffe of the City of London Police’s economic crime directorate, said: “While offers of cheap car insurance may be tempting for students, purchasing car insurance through a ghost broker will end up costing you far more in the long run – both in terms of money and your licence.”
Detective Inspector Graeme Towndrow from Merseyside Police’s economic crime team, said: “Merseyside Police are working with the City of London Police to promote awareness of ghost brokers.
“These fraudsters promise low premiums on policies such as car insurance and often target young people. We will be working with our communities, in particular the universities within Liverpool to promote awareness.
“If you suspect a ghost broker or any fraud contact your local police force and report via Action Fraud.”