What is a Ghost Broker?
A ghost broker is someone who pretends to be a legitimate insurance broker or agent but is in actuality selling fake insurance policies.
What Does a Ghost Broker Do?
Ghost brokers create fake insurance documents that appear like legitimate insurance policies, and sell them to unsuspecting customers.
Who Do They Target?
Ghost brokers will usually target younger drivers as they are less familiar with the insurance industry and entice them with inexpensive car insurance deals. Often victims are drawn in through advertisements on various social media platforms.
Ghost brokers will also target newcomers to Canada who are less familiar with the insurance system.
How Does This Scam Work?
A ghost broking scam will generally work in one of two ways:
- Fake policies or pink slips are fraudulently created to look identical to legitimate documents and then sold to unsuspecting victims. The ghost broker keeps all of the proceeds and the policies provide no coverage for the individual and their vehicle.
- Genuine insurance policies are purchased by the ghost broker, using false information (e.g. driving record, age of driver) to get a significant discount and sold to the customer for a profit. These policies contain material misrepresentations, which has the potential to lead to a policy void/claim denial when the victim goes to make a claim
How to Recognize a Ghost Broker Scam
- The price is generally much lower than you will find anywhere else.
- They might ask for a large amount of cash as a deposit, without giving a receipt
- The seller only wants to communicate through social media or a messaging app. The seller does not offer up a cell phone number, landline or a legitimate address.
- The seller does not have an office so they will generally ask to meet in a public place.
- Typically the seller does not have a website.
- The seller does not have a business email, only their personal email (e.g. Gmail, or Hotmail, etc.).
Take the Necessary Precautions
- Do you own research online. Look for customer reviews on a particular broker.
- Purchase your insurance from a legitimate and reputable insurance company directly or through a licensed broker, either online or over the phone. A legitimate broker will be licensed and registered with their provincial licensing body. In Ontario, you can check the Registered Insurance Brokers of Ontario (RIBO) website to check if your insurance broker is licensed.
- Ask the broker for their license number and confirm authenticity on the licensing body website (there will be a “search” function to confirm a broker’s status).
- Do not purchase a policy through social media channels or “money saving” forums.
- Call the brokerage directly to confirm that the broker is indeed employed there.
- If the price is impossibly low, take that as a warning sign.
- Report the ghost broker to the police and contact our partners at Crime Stoppers Canada (available 24/7): 1-877-422-TIPS.