Tips on how to keep away from faux auto insurance offers as 21,000 circumstances had been reported final yr – Motley Idiot
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If you've ever been a victim of scam, you know how stressful it can be. In the UK, one consumer area where scams are rife is car insurance.
One of the fastest growing auto insurance frauds is ghost broking. This is a scam in which scammers pose as legitimate brokers and sell fake insurance policies to unsuspecting people. They often do this through social media.
New statistics from the Insurance Fraud Bureau (IFB) actually show that counterfeit auto insurance contracts have more than doubled in recent years, with over 20,000 cases reported to the office in the last year alone. So how can drivers avoid falling victim to these scams? Let's take a look.
More and more cases of fake car insurance
The IFB reports that 21,169 fraudulent auto insurances have been reported in the past 12 months that can be linked to “ghost broking”.
That equates to nearly 60 fake policies sold to unsuspecting buyers on a daily basis. Unsuspecting victims are left out of their own pockets and either without car insurance or with coverage that doesn't meet their needs.
This is how scammers target drivers
According to the IFB, false deals are often advertised on social media platforms such as Facebook and Instagram. Destinations often range from young and inexperienced drivers (who often face higher premiums) to communities less familiar with UK insurance laws.
In recent months, ghost brokers have been particularly targeting the influx of new drivers who may have been delayed in obtaining their driver's licenses by the pandemic.
Ghost brokers offer policies via social media at a fraction of the cost of regular insurance policies.
They then provide forged or altered documents to victims, or even take out a policy to get the necessary papers before they are canceled and the refund withdrawn. You can also get coverage from a legitimate insurance provider but provide false information to get a lower premium.
Consequences of falling victim to a fake deal
A fake insurance contract may not just leave you out of your pocket. You could also be prosecuted for driving without insurance.
Unfortunately, most people don't realize they have a fake policy until they are stopped by the police or when they make an insurance claim and are denied.
If you are caught driving a car without insurance, you could face heavy penalties. To begin with, you could expect a standard £ 300 penalty plus six penalty points. In the event of a legal dispute, you face an unlimited fine and / or a driving ban. Your vehicle could also be confiscated.
An uninsured driving conviction will also appear on your file and could affect your career prospects.
This is how you avoid falling victim to fake deals
Here are a few tips to help you avoid falling victim to fake auto insurance fraud:
- Avoid buying insurance through ads on social media sites and messaging apps like WhatsApp. Instead, only buy auto insurance from reputable sellers. If you're looking for a new deal, stick to reputable auto insurance comparison sites like Confused.com and MoneySuperMarket.
- When buying a policy through an insurance broker, check that they are registered with the British Insurance Brokers ’Association (BIBA).
- If you are buying direct from a specific insurer, check to see if they are a member of the motor insurance bureau.
- Verify that all of the insurance advisors you speak to are registered with the Financial Conduct Authority.
- Remember that if a deal sounds too good to be true, it probably is. No matter how tempting it may be to jump on it, make sure you do your research first. This includes carefully checking the seller or broker's website, phone number, and UK address to make sure they are not fake.
If you suspect that you have been the victim of fake car insurance, you can report this to the IFB cheatline online or by calling 0800 422 0421.
You can also report it to Action Fraud, the UK's official national fraud and cybercrime reporting office, by calling them 0300 123 2040 or visit their website.
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About the author
Sean is a personal finance writer with a strong passion for helping others gain financial literacy and make better financial decisions. It covers everything from credit cards to savings to investments.
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