2020-10-19

Compensation scams – watch out…

This blog post was co-authored by Caroline Caine, Investigations Analyst, Manchester office.

“I’m calling because I am aware that you have been involved in an accident and you may be entitled to compensation.”

We are all familiar with a call or text message like this but have you ever stopped to consider that this may not just be a way for a claim management company to generate leads for claims? In fact, this is just one of the ways a compensation scam can start.

Cold calling is a tactic that is not only used by claims farmers to persuade you to commence a claim. It is also used by scammers to gain personal information about you which they can sell on, use to commit identity fraud, or even pursue a claim in your name, without your knowledge, and pocket the compensation.

Those looking to pursue compensation scams have a variety of ways to entice their target market:

  • Nuisance calls – these are the epitome of compensation scams despite being banned in September 2019. Being told, that you may be entitled to a claim for compensation if you just provide the caller with some further information. Callers are trained in how to coax people into making a claim, even going so far as to convince you that you’ve had an accident.
  • Pop-ups on social media - according to recent statistics taken from YouGov, 1 in 3 18 -24 year olds have seen a suspicious insurance advert on social media.
  • Scam emails - asking you to click on a link and provide key personal details.

The expected rise in compensation scams

Cold calling has increased. Accident management companies need to generate leads where they can and we are now at a time where people are financially disadvantaged; be it through furlough, unemployment or due to being unable to complete their work due to social distancing measures, which can make it more tempting to any individual to pursue a claim for even the smallest amount of ‘quick cash’. We have already seen this from the 2008 recession where fraudulent insurance claims increased by 17%. This recession looks to be far bigger than the 2008 recession and so we expect to see a more significant increase in fraudulent behaviour.

In the coming months, we are likely to see an increase in the scale of fraud, taking numerous forms such as ghost broking, ‘crash for cash’ scams and COVID-19 claims. These topics will be covered in more detail in subsequent Fundamentally Honest blogs.

Scamming you

An increase in claims farming was expected. With fewer cars on the road and people in work, not as many claims are being brought. The claims farmers and scammers need to generate leads in order to make money and they know that some people may be more inclined (due to their financial positon) to bring a claim when they wouldn’t normally have considered it.

It is important to point out that cold calling activities are within the law, so long as the data used to contact you was obtained legally and you have consented to your data being used for this purpose. However when is cold calling actually a compensation scam?

The signs of a scam

  • They don’t know any details about the accident you were involved in.
  • They get your name wrong.
  • They pressure you to sign up there and then.
  • They insist on knowing your date of birth and National Insurance number. This is not needed in order to pass to a firm of solicitors but is needed if they want to steal your identity or claim on your behalf.
  • If you admit to being involved in an accident but tell them you did not suffer an injury. We know from experience that they will say that that’s not a problem. Here they are encouraging you to pursue a fraudulent claim. They will say it’s “no win, no fee” but that’s not strictly true as if your claim is found to be fraudulent you could end up paying the costs of the other side.

Stop the scams

Recently, the Insurance Fraud Bureau (IFB) along with the Associations of British insurers (ABI) and The City of London Police Insurance Fraud Enforcement department (IFED), launched a campaign ‘Stop the Scams’. The aim of the campaign is to stop fraudsters in their tracks and assist the public with the reporting of these claims in order to prevent the expected rise of insurance scams.

Cheatline was created by the IFB to allow confidential and anonymous reporting of compensation scams. This crucial tool is in place to work alongside the police, insurers and industry watchdogs in order to prevent fraud and to reduce the resulting cost to the industry. Cheatline, powered by Crimestoppers is a free phone number, 0800 422 0421, is used to report insurance fraud in minutes. Individuals are significantly encouraged to report scam callers, data theft, claims fraud and application fraud. This not only assists in bringing scammers to justice and preventing fraud, but also provides the IFB with substantial insights into the world of organised insurance fraud.

The government’s advice to ‘stay safe and stay alert’ is fitting when it comes to being on our guard against compensation scams.

Related content: Fundamentally honest blog - Stop the scams