Ghost brokers have been a thorn in the side of business owners and individuals for a number of years now and frustratingly, aren’t showing many signs of slowing down. Motorists are at particular risk but these cagey conmen are rife across many other industries too. The biggest problem is that many of us don’t know how to spot a ghost broker but it’s time you mastered the art of identification before you become a victim of illegitimate services.

What is a ghost broker?

In a nutshell, ghost brokers are essentially conmen who hide behind seemingly kosher websites and adverts to offer and promote uber cheap services or policies that attract vulnerable customers. They sell low-cost but entirely invalid services to unsuspecting business owners and individuals that are tempted by a chance to save some money, which can spell serious trouble further down the line.

Ghost brokers are particularly threatening to small businesses, start-ups and self-employed professionals and unfortunately, it is these vulnerable candidates that they tend to target most thoroughly. Conmen capitalise on the potential naivety of budget-conscious business owners who are desperately trying to make a profit or even reach break-even point and are completely unabashed at the potential consequences.

How to spot those pesky ghost brokers:

The best way to dodge the often crushing consequences of dealing with a fraudulent ghost broker is to avoid them in the first place. However, the nature of the beast means that they can be extremely convincing and difficult to detect, particularly if you’re a start-up entrepreneur looking for ways to save money. The following warnings are a sure sign that you’ve got a trickster on your hands so should you experience any of them, know that it’s definitely your queue to sprint in the opposite direction.

• The first red alert should sound when the deal that they are promoting seems far too good to be true. It’s an unfortunate fact of life that if something appears to be exceptionally attractive then there is probably a catch in the small print. Look at Prince Charming, for example – he may seem like a dream come true but the reality is he’s still living at home with his parents and gets around on a horse. No Ferrari here, buddy. But seriously, if you’re tempted by a 75% discount offer, think thrice about it.

• If you do choose to ignore this first red flag and get as far as enquiring about a bogus policy, trust your suspicions when the broker only leaves you with a first name, mobile number and vague location. Keep in mind that no legitimate company would do this. You would be given transparent access to full names, office numbers, websites and a specific, registered business address.

• Social media promotion (such as Facebook advertisements) and Gumtree listings are also something that you should be particularly wary of. According to new research carried out by The Association of British Insurers (ABI), unauthorised advisers have even been known to tout for business in pubs, clubs and newsagent noticeboards.

Although most brokers will probably have an active online presence where they communicate with customers and market legitimate services, social media hard sell sparks concern. Similarly, if a broker communicates or delivers quotes via text message, then let this level of unprofessionalism be enough to put you off.

• If a broker offers you an instant, no-questions-asked, one-size-fits-all type of quote then the alarm bells should really start ringing. Some firms, across all sectors, will offer an instant quote service that means you can get the ball rolling quickly and efficiently, which is great. However, this process will still usually involve inputting specific details about your business in order to tailor the response to you. If the broker isn’t interested in any of this information then you’ve almost certainly got a ghoul on your hands.

• Okay so maybe you’re a particularly trusting and optimistic person who likes to give everybody the benefit of the doubt. This is a pleasant quality to have but if you aren’t careful, can land you in some sticky situations. It pays to be on-guard, especially when it comes to protecting your business so check out The Financial Services Register to establish the authenticity of the broker you’re dealing with.

This is a public record of every firm and individual in the financial services industry and is regulated by the Financial Conduct Authority. If they aren’t listed by the FCA then you definitely need to move on. The FCA also offers a helpline service for businesses and individuals that have fallen victim to the detrimental effects of ghost brokers and also provides access to a searchable list of scammers that you can make use of.

It’s crucial to act fast if you suspect any fraudulent activity, not only to save your business but also to avoid any unnecessary accusations from the authorities. If you fail to report the activity then you could be leading them to believe that you are working in collaboration with these bogus brokers so stay alert to protect your vulnerable business.