Fake car insurance policies have cost motorists and organisations more than £630,000 over a three-year period, according to the national fraud and cyber reporting centre.

Between November 2014 and October 2017, Action Fraud, which is hosted by City of London police, received more than 850 reports linked to the practice of ‘ghost broking’, where scammers sell false or non-existent insurance policies to motorists.

City of London police says the practice could be leaving thousands of unsuspecting motorists without valid cover. However, although they are referred to as ‘victims’, each of these motorists could be subject to prosecution if they are found to be driving without valid insurance.

Action Fraud says each individual victim of ghost-broking loses an average of £769, although companies affected by the uninsured drivers can also lose substantial amounts of money.

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According to the City of London police's insurance fraud unit (IFED), most victims of ghost broking are sold their fraudulent policies through social media such as Facebook and Instagram, with young men aged between 20 and 29 being the most likely targets.

Detective chief inspector Andy Fyfe, head of the IFED, said: ‘Ghost brokers trick unsuspecting victims with offers of heavily discounted car insurance, leaving them with a policy that isn’t worth the paper it’s written on and open to the severe harm that comes with driving without valid insurance. Being able to drive is vital for a lot people, whether it be to get to work or pick up their children from school or nursery, so if they fall victim to a ghost broker it could not only impact on them financially but also seriously affect their day to day life and make things very difficult.’

Mark Godfrey, managing director of RAC Insurance said ghost broking was a ‘disturbing’ crime and encouraged drivers to be suspicious of insurers apparently getting in touch via social media.

‘This crime takes advantage of young male drivers who are naturally keen to take out cheaper car insurance as they are paying the highest premiums in the market due to the higher risk,’ he said. ‘We urge every young driver to be extremely wary of approaches from so-called insurers via social media. Whenever considering insurance cover drivers are best advised to choose a reputable motor insurer and to ensure they check all of their paperwork. If a deal sounds too good to be true then it probably is.’