What is Ghost Broking?
From January to August 2021, Action Fraud received 351 reports of ‘Ghost Broking’ in the UK – a deceptive form of insurance fraud – unlike device insurance fraud – that uses the enticing prospect of discounted motor insurance policies to lure its victims.
This fraud technique is both increasingly common as well as costly, scamming its average victim out of £2,250. To overcome such a tricky scam requires insurers to formulate equally cunning responses – responses that are well supported by mobile network operator data.
But first, businesses and potential victims alike should be aware of how they operate.
Creating the Bait
The aspiring ghost broker will operate from a convincing-looking website and profiles on social media or forums, posing as an insurance aggregator site, or as an employee of a reputable motor insurer.
To lure in prospective ‘customers’, ghost brokers advertise dramatically discounted insurance policies and reach out to potential victims offering prices that are too good to be true.
So, who are the victims?
Unlike many forms of fraud, the target is young people, especially students. More than a third of ghost broking reports come from 17-29-year-olds, making this the most impacted age group.
Focussing on this demographic is beneficial to the fraudster for a number of reasons:
>> Young people are more likely to face steeper insurance prices.
>> Compared to older age groups, they have less money to spend on average.
>> They may be less familiar with how insurance typically operates.
These factors make the promised savings especially tempting for the victim, to the extent that they are willing to overlook any potential red flags. This makes them particularly susceptible to fraud.
When a victim uses the scam site or is persuaded to take a policy by the fraudster on social media, they will not be the one handling the policy, the fraudster will take their details, and return the paperwork. The victim will have paid for what appears to be a genuine insurance policy, but not all is as it seems. Should they get into an accident or need to access their insurance information for any other reason, they will find that the policy is not in their name, or even worse, doesn’t exist at all.
For the victim, this can mean more than just having to pay for new insurance, they will face a fixed penalty of £300 and six penalty points for driving without insurance, and they may find their vehicle seized until they get insured.
Behind the Scenes
The technicalities of the policy which the fraudster provides vary, as there are a handful of techniques that have been observed.
One such approach is through forgery:
The fraudster will buy a legitimate insurance policy using the genuine information of another individual. Since this is not the information of the victim, the fraudster can purchase it at a cheaper price. For example, if the victim is a new, teenage driver in a busy city, providing these details with a genuine insurer will result in an expensive policy. So, to bypass this high price, the fraudster will harvest legitimate information of a real individual from a demographic which will receive a cheaper premium, such as a middle-aged person from the countryside.
The policy will be taken out in the name of the second individual but sold to the first. This may appear legitimate to the victim, however, if an accident happens, then the victim will find that there is no insurance in their name.
Falsification is a similar method, where, instead of providing real information about another driver, the fraudster will alter the victim’s information, such as the age, to produce a cheaper policy. This may appear genuine since it has the victim’s name on it, but since the information is not a match, the policy is fraudulent and would be voided or cancelled.
In these examples, the fraudster makes money from their advertised price being a great deal for young drivers, but not as cheap as it would be for the more experienced drivers, allowing them to profit from the price difference.
Alternatively, a fraudster may buy a legitimate policy, but cancel once the victim has received all the paperwork, allowing them to make money from the refund.
So, with such levels of deception, how can insurers tell the real from fake?
The Power of Mobile Data
Within the mobile data provided by mobile network operators, certain information about the user of a phone can be stored, such as name, address, date of birth, as well as signs of fraud such as SIM or device change.
This information can be used to detect if the person purchasing insurance is who they claim to be – if the data doesn’t match, you may have a case of ghost broking on your hands.
This doesn’t require burdening the user with additional proof to provide during sign up. Using an easily integrated API such as the one provided by Phronesis, insurers can screen for ghost broking in the background – letting genuine customers pass uninterrupted, but closing the door to fraudsters.
Mobile data is especially powerful in combatting ghost broking, as the primary age group targeted by this fraud have a mobile phone ownership of 98% – meaning this data can be used for a vast majority of cases.
Get in touch today to speak about how we can help your business to defend from and shut-out ghost broking.