Your Guide to Avoiding Motor Trade ‘Ghost Brokers’

19 May, 2024

A ghost broker operating illegally.

Motor traders dealing with the buying, selling, servicing and transporting of vehicles need to be aware of a worrying trend seen across the motor trade – ghost brokers.

Whilst the majority of brokers in the trade are reputable, like any industry, there are rogue agents operating. Ghost broking has increased by 65% over the past five years, showing that these rogue agents are out there and ready to strike.

This blog gives you the insights you need to recognise the signs and ensure your business is protected from their fraudulent activities.

We look at the definition of ghost broking, its common signs, the consequences for businesses, how to report ghost brokers and how to ensure your motor trade insurance partner, like Tradesure Insurance, is legit.


What is a Ghost Broker?

Ghost brokers are fraudsters who sell fake or invalid motor trade insurance policies to unsuspecting customers. They operate outside the law and they aren’t recognised by the Financial Conduct Authority (FCA) or the Financial Ombudsman.

They provide scam policies to businesses and individuals who fail to undertake their due diligence when signing up. As you would expect, they tend to target naïve, vulnerable or inexperienced traders, appearing for all intents and purposes as a legitimate business selling legitimate policies, at a price much lower than the typical rate.

The insurer will throw out any claim, meaning you won’t be covered and are liable for any losses in full. Vehicles won’t appear on the Motor Insurance Database (MID), so police are able to confiscate and destroy your vehicle.

As with many scams the basic rule applies – if it looks too good to be true, it probably is. The low premiums are the tell-tale sign, reinforced by an insistence on ‘prompt payment in cash’ and a lack of policy documentation .

Even if you do receive some documentation, the likelihood is that it will be fake. In most cases the culprits use false information to obtain genuine policies from unsuspecting parties , or doctor genuine existing policies for unauthorised resale. You should look out for any signs of photoshop use, incorrect details and generally poor quality details on the documents you receive.


How Ghost Brokers Operate

  • Advertising low prices: Ghost brokers often advertise their services through social media, online marketplaces, community boards, or simply by making a phone call. They attract customers by offering significantly cheaper insurance premiums than those available through legitimate channels.
  • Forging documents: These fraudsters may create entirely fake insurance documents or manipulate genuine ones. They often use stolen or false details to create the illusion of a valid policy.
  • Third party sales: Sometimes, ghost brokers purchase legitimate policies from insurers using false information and then resell them to customers. This can lead to the policies being invalidated if the insurer detects the fraudulent information.
  • Payment and contact: Victims are typically instructed to pay via bank transfer or cash, making it difficult to trace and reclaim money. Once the payment is made, the ghost broker often disappears, leaving the victim without valid insurance.


The Documents You Should Receive From A Legitimate Provider

  1. Insurance Certificate: a document that proves they have insurance from a particular insurer. This is the document that is most likely to be fake.
  2. Policy Schedule: giving confirmation of cover and an overview of the policy.
  3. Statement of Fact: provides all their details and levels of cover.
  4. Insurer Policy Book: this can be printed, but is most likely a large pdf which can be 60 pages long.

If you don’t receive all of these documents, alarms bells should start ringing and you should seek professional advice.


A Motor Trader panicked with his fake insurance documents.

What are the Consequences?

The impact of falling victim to ghost brokers can be severe for motor traders. Understanding these consequences can help you appreciate the importance of vigilance and thoroughness in your dealings with your insurance.

When you purchase a policy from a ghost broker, the ramifications are the same as if you had no insurance policy at all – because in the eyes of the law, you don’t.

The consequences for not having a valid policy can include:

  • Fines: Significant financial penalties for driving without valid insurance.
  • Points on License: Accumulation of penalty points, leading to potential disqualification from driving.
  • Seizure of Company Vehicles: Police can impound and even destroy vehicles with invalid insurance, causing immediate loss of assets.
  • Full Liability for Accidents: Your business will bear the full cost of any claims, including repair costs, legal fees, and third-party compensation.
  • Business Disruption: Loss of vehicles can halt operations, leading to missed deadlines and unfulfilled contracts.
  • Increased Future Insurance Costs: There may be difficulty in obtaining legitimate insurance afterwards, often at higher premiums.
  • Stress and Anxiety: Emotional toll from dealing with legal issues, financial loss, and business disruption.


What to Do If You’ve Been Ghost Brokered

If you suspect that you have fallen victim to a ghost broker, take the following steps immediately:

  1. Cease Vehicle Use: Stop using any vehicles covered by the suspected fake policy to avoid legal penalties.
  2. Confirm with Insurer: Contact the supposed insurance company to verify the policy’s validity.
  3. Report to Authorities: Inform the Financial Conduct Authority (FCA) and the Insurance Fraud Bureau (IFB), and file a report with the police. We give more information on this in the next section.
  4. Secure New Insurance: Obtain legitimate motor trade insurance and verify all documentation.
  5. Seek Legal and Professional Advice: Consult with a solicitor for legal guidance and review your processes to prevent future fraud.


Reporting a Ghost Broker

Intelligence from the motoring community is the one sure-fire way to bring down ghost brokers. Reporting any instances, whether you have hard evidence or just general suspicions, is key to helping the authorities clamp down on these scam artists.

If you feel you may have encountered a ghost broker, either as an individual or through your business, you are encouraged to contact law enforcement agencies. The easiest way to do this is online via Action Fraud in the UK. The advice is to act sooner rather than later if you suspect fraud has taken place as these rogue agents move fast.


Finding Reputable Motor Trade Insurance Providers

Choosing a reputable, legitimate and experienced broker will ensure your policy is real, valid and offers you the protection you need for yourself and your business.

Do your background research. Find the company’s website, search for them on Google and take a look at their social media channels. If you are still not convinced you should also be able to look up the broker via the Financial Conduct Authority.

Other platforms such as Feefo can help you understand whether the business is legitimate and can provide you with feedback from genuine previous customers.

Remember, do your research and if a deal seems too good to be true – it probably is. If the broker has no website, no social media presence and no reviews, and you can’t find them on the Financial Conduct Authority register, it’s likely that they are operating fraudulently.

At Tradesure Insurance , you’ll find us in all of these places. We’re proud to be a reputable firm offering brilliant customer service, competitive products and, most importantly, valid policies. We’re here to answer all of you questions and provide competitive quotes for your business whenever you need us. Contact us today for more information.


You’re in safe, experienced hands with Tradesure Insurance

Whilst we’re keen to educate our readers about the dangers of ghost brokers, it’s also important to emphasise that the majority of agents do operate legitimately. Fill in your details below for an insurance quote for your motor trade vehicles.