Direct Line says it has taken action to have 500 “ghost brokers” – unregistered firms claiming to sell insurance – shut down.
The firm said fake policies from other brands such as Admiral, Hastings Direct, AVIVA and Churchill were also being sold by the companies, which are prevalent on social media.
People who buy these policies and believe them to be valid are at risk of finding out that they do not have insurance if they needed to claim. Meanwhile, drivers who have taken out motoring policies through ghost brokers are driving illegally. Drivers caught by the police, whose policy is fraudulent or has been cancelled without their knowledge, risk a fixed penalty of £300 and six penalty points on their licence. If the case goes to court a driver can face an unlimited fine and be disqualified from driving.
Ghost brokers sell fraudulent insurance policies that never exist, use false information to secure a policy in someone’s name, or even buy a legitimate policy only to then cancel it, pocketing the refund.
Direct Line said that by working with these social media platforms to delete accounts that were fraudulently targeting consumers using its brand, it has now assisted in the closure of over 500.
Steve Barrett, head of motor insurance at Direct Line, said: “Social media platforms are being targeted by these scam artists, and it is important we continue to work together to protect consumers from being misled into buying a worthless car insurance policy. Fraud adds £50 to the insurance premiums of honest customers, so for every person who mistakenly thinks they save money using a ghost broker; everyone else pays more.
“Consumers need to be beware when responding to adverts and profiles that appear ‘too good to be true’ on social media, as they could find themselves a victim of fraud, losing money and potentially facing criminal charges. Whilst insurers are doing all they can to spot these fake accounts to protect honest policyholders, drivers may only find out they have been scammed when they come to make a claim or if pulled over for a random police check.”
He added: “We proactively engage with social media owners, identifying ghost brokers and petitioning for the removal of these pages to protect the public. We also have stringent processes in place to identify potentially fraudulent insurance applications. Anyone we suspect of operating as a ghost broker will be reported immediately to the authorities.”
One ghost broker identified promises that they “100 per cent use a client’s details” to secure fully comprehensive insurance yet are also offering the first five people to contact them a car insurance policy for just £200, which is impossible to guarantee. Direct Line said that many of the scam artists also promise “£50 to refer a friend” to attract even more victims to their scams.