So-called “ghost broker” extortion is on the rise, typically using social media to scam motorists into buying fraudulent insurance. This practice leaves you out of pocket and circulating illegally. Besides costing you a lot of money, it can have serious long-term consequences, including landing you with a criminal record.
But “ghost brokerage” is an umbrella term that covers a number of scams used by cybercriminals. So what exactly is the ghost running? Who is most at risk? And how do you avoid becoming a victim of car insurance fraud?
What is Ghost Broking?
This scam works in three main ways, but all involve the fraudster pretending to act as a middleman between you and an auto insurance company. The result is that you end up without proper insurance on your vehicle.
Two methods involve the cybercriminal actually taking out policies on your behalf with a real insurer. However, they may enter falsified details in order to obtain cheap premiums for vehicles or drivers who might otherwise charge high rates. The documents can then be doctored to appear authentic. This always means that the victims' cars are not insured properly.
They can also take out a specific policy, but once you pay for it, the scammer can cancel it and keep the refund for themselves.
The other practice is forgery, bypassing the insurance company entirely and creating a fake policy.
In all these cases, fees may be charged for the supposed brokerage services.
What risks do victims take?
What are the consequences of buying from a fraudster? It depends on local law enforcement, but at the very least victims will have to pay for proper insurance again.
However, depending on your jurisdiction, you also risk:
- A fixed penalty for not having an insured vehicle
- Seizure of your car
- Points on your license
If you are unlucky enough to be involved in an accident, you are responsible for paying for all repairs.
Not only will you be defrauded – and believe us, it's a horrible feeling – but you'll still lose a lot of money to the scam.
More worryingly, you won't know you're driving an illegal vehicle until it's too late. The fact will only appear when you try to make a claim or the authorities arrest you.
Who is most at risk from ghost brokerage?
Car insurance premiums are increasing attractively every year, so it's only natural that we try to get a better deal.
It is therefore not surprising that young people between the ages of 17 and 24 are the most likely to fall for such a scam. After all, this is the demographic most commonly impacted by insurers. Companies believe that inexperienced drivers are more likely to be involved in a collision. However, the high fees of well-known insurers also force young people to seek cheaper rates from unknown brokers.
But your age doesn't really matter. If you are looking for auto insurance, you may fall victim to this.
How to Spot Ghost Brokers
Keep an eye out for common mistakes cybercriminals make like poor spelling, grammar, and punctuation. However, you cannot rely solely on these. Ghost brokers are usually experienced in this area, so they may not slip so easily.
Google is your friend. If you think you've found a great deal at a reputable company, look for any online presence, including customer reviews. These can be faked, so don't base your decision on just one source. Look for them on social media. They might not have a Facebook page, but if they're a decent company, or even if they've scammed others before, people will talk about it.
And if a supposed broker wants you to pay in cash or by wire transfer, don't. No respectful company does. It's a scam.
These tips apply to all purchases, but there are a few common ghost brokerage factors you need to be wary of.
First, avoid listings that simply display basic contact details like a location and name, along with promises of huge savings. It may sound obvious, but many fall for it when engaging with ads, forums, and WhatsApp. Review how to spot social media fraud.
Some will only communicate via social media and are reluctant to give you a phone number. Others will only give you a cell phone number or an email address, but it will be difficult for you to keep track of things with them.
More importantly, if someone immediately offers you insurance, that's a clear sign that it's a scam. No insurer will because they need to know a wealth of information about you and your vehicle. What type of car do you own? When did you get your license? What is your claims history?
What to do if you think it's a scam
If something doesn't seem right, it probably isn't.
Certainly, do not sign any document and do not hand over personal information (including financial data). Also, don't give anyone physical money, don't use money apps, and don't send wire transfers.
The National Association of Insurance Commissioners can tell you if you live in the United States, or at least give you contact information for the relevant insurance service. If you live in the UK, check with the Financial Conduct Authority or British Insurance Brokers.
If the broker is not listed, do not follow the so-called "deal". Instead, report them to local authorities.
How to know you are insured
If you are now worried about driving in an illegal car, you should check your insurance. You don't want your car impounded because you can't produce the correct paperwork.
In the UK this is easy as you can enter your vehicle registration number on the Motor Insurance Database .
But in America, it's not controlled on a national basis, which makes it a slightly more difficult proposition. Some states have their own databases, so contact your local authorities to find out.
Nevertheless, you should have insurance documents handy, or at least know who your insurer is. Contact them and tell them you just want to check your status. If it's a reputable company, they won't mind; in fact, they should appreciate your diligence.
Don't be taken for a ride
We're very tired of auto insurance scams, but ghost brokerage remains an increasingly popular method of extortion.
Don't forget the adage that if it sounds too good to be true, it probably is. Looking for a bargain, not a miracle. And remember to be skeptical: don't get suckered into silly promises of massive discounts.
Still, it's easy to fall for scams, especially those that proliferate on popular apps like WhatsApp.
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