Motorists aged 17 to 25 are being warned about “ghost broking” scams, as a survey indicates around half (49%) of young drivers have bought insurance through social media or messaging apps.
Around four in 10 (39%) young drivers surveyed said they would not feel confident in spotting the signs of a fake policy, the Financial Conduct Authority (FCA) said.
Ghost brokers are not real brokers, they are criminals trying to scam people and sell bogus insurance policies through social media and messaging platforms.
They often target young people and students who may have less experience of buying insurance policies.
Young motorists, who often pay more for insurance, may be tempted by the offer of a deal that appears to be cheap.
But the policies ghost brokers sell are either entirely fake or have had falsified details entered to artificially reduce the price. Criminals may also cancel the policy shortly after it is purchased.
This leaves the person buying the policy unknowingly left uninsured and at risk of prosecution, fines and even having their car seized.
More than two-fifths (45%) of young people surveyed said they generally trust products or services bought through social media.
One in seven (15%) said they find it difficult to fit insurance into their monthly budget.
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The FCA is urging young drivers to be wary of offers that sound too good to be true and avoid deals that are only available through social media and messaging platforms.
Genuine sellers should have a legitimate website, phone number and address, the FCA said.
It also suggested that people check the firm’s contact details match those listed on the FCA’s Firm Checker tool, which can be found on its website, to make sure they are dealing with the genuine firm.
Graeme Reynolds, director of insurance at the FCA, said: “Tight budgets make cheap offers tempting – and scammers take advantage of that.
“Don’t get ghosted by a policy that doesn’t exist. Check the FCA Firm Checker before you buy, because driving uninsured could cost you far more than any premium.”
Kantar surveyed 1,000 drivers aged 17 to 25 across the UK in April and May.
Chris Bose, director of general insurance at the Association of British Insurers, said: “Ghost broking leaves victims uninsured, out of pocket and potentially facing serious legal and financial consequences.
“That’s why tackling fraud remains a top priority for our industry.
“Motorists can stay vigilant by avoiding offers which are solely advertised on social media, contacting insurers directly to verify legitimacy, and using the FCA Firm Checker to check a broker’s details.
“The golden rule is to never act in haste – if a deal seems too good to be true, then it probably is.”
