Find out how insurance and warranty scams work, how to spot a ghost broker, and what to do if you are scammed.
If you buy a mobile phone, a TV, or a home appliance, you may think about getting it insured. Especially if you'd struggle to get it fixed or replaced if something went wrong.
Some scammers take advantage of this by selling fake insurance.
Other fraudsters target individuals looking for cheaper car insurance. This is known as 'ghost broking', and it could leave you with no protection if you need to make a claim.
If you're looking to buy a financial product or service, you can use the FCA Firm Checker[1] to make sure the business is authorised and has our permission to provide the services you're looking for.
Ghost broking
Ghost brokers are criminals posing as legitimate insurance brokers. They sell fake or invalid insurance policies, often for cars, at seemingly cheap prices.
These fraudsters often use social media to target young drivers, producing fake documents that look very similar to the real thing.
They'll often ask you to use messaging apps like WhatsApp, hoping it will be harder for anyone to catch them. Once you’ve paid, they then disappear.
Getting caught with fake insurance can cause big problems. You could see your car seized and crushed by the police, face penalties of up to £300, and potentially face court and a driving ban.
If you have an accident, you could also have to cover the costs of any injuries or damage caused.
In some cases, contact with these fraudsters can lead to identity theft, which can seriously affect your finances and emotional wellbeing.
Warranty scams
A warranty is a guarantee to replace or repair an item if it breaks. It’s usually provided by the manufacturer when you buy a product such as a washing machine.
Warranties are technically insurance contracts. And because arranging and providing insurance is a regulated activity, the company offering it to you must be authorised by us.
The fraudsters may contact you unexpectedly soon after you buy an item or start a new contract.
They may claim they’re linked to your provider, or the store or company where you bought the product. They may also advertise their offers on social media or on online forums, often at cheaper rates than real policies.
If you agree to the offer, the scammers may give you fake documents, or they may use fake details to buy cheaper insurance, which they then sell to you.
Unfortunately, you may only find out you don’t have the cover you need when your claim is rejected.
Common warning signs
- Not on the FCA Firm Checker: The broker or insurance company is not listed on our Firm Checker.
- Social media and messaging apps: Scammers mainly use WhatsApp, Snapchat, Facebook Messenger, or Instagram rather than professional email or landline numbers.
- No professional presence: Scammers lack a legitimate company website, physical office address, or UK landline number.
- Quick sell: Scammers create artificial urgency to pressure you into purchasing quickly.
- 'Too good to be true' deals: Often, the cost is significantly lower than quotes from reputable, mainstream insurers.
- Unusual payment methods: Scammers often ask for payment via direct bank transfer, cryptocurrency or cash, rather than secure, established payment systems.
- Upfront fees: Scammers often charge an upfront flat fee for their service.
How to protect yourself
- Check your policy: You should always check the details on your insurance policy to make sure they’re correct. This includes your name, address, contact details and the details of the item you need cover for.
- Check if they're real: To make sure the firm or broker you're dealing with is genuine, search our Firm Checker[1] to find out if they're authorised and have permission for the service they're offering you. Only contact them using the contact details listed on our Firm Checker, to make sure you're dealing with the genuine firm. A firm or broker must be authorised and have permission for the right activities. If it doesn’t, you won't have access to the Financial Services Compensation Scheme[2] (FSCS) if anything goes wrong, or the Financial Ombudsman Service[3] if you want to complain.
- Check your car is insured: For car insurance, also check the Motor Insurance Database[4] to confirm your vehicle is listed.
- Check-in with us: If you're worried about a potential scam, or you think you may have been contacted by a fraudster, call us on 0800 111 6768 or use our contact form[5] to get in touch.
- Report it: If you've lost money to a scam, contact Report Fraud[6] and then report it to us. If the incident involves a ghost broker, contact the Insurance Fraud Bureau via their Cheatline[7].
We can't help you get your money back, but we look into every report we receive and it could help protect others.
