Consumers shopping for cheap car insurance in Ontario could get caught in a scam. (iStock)

Police in Ontario are warning of a scam to sell fake auto insurance to drivers that will leave them out-of-pocket but without any coverage.

Ads offering cheap vehicle insurance have been appearing in free newspaper classifieds in Toronto and Ottawa and web-based classifieds such as Craigslist.

"Basically, it's a phone number, and it has some type of quote where it says, 'Everybody's accepted. Low insurance rates. Give us a call'," Ontario Provincial Police Const. John Schultz told CBC News. "It's very short, brief ads."

The scammers use prepaid cellphones to avoid detection and have their victims wire money through Western Union or Moneygram.

They've used names such as Arthur and Son, Smith and Sons, Addison and Sons as well as the name of a legitimate insurance agency. They've given out bogus business addresses in Ottawa, Toronto, Timmins, Ont., and Sudbury, Ont.

"They'd talk to them for a few minutes, take down the tombstone information [and say] 'Yeah, we're going to insure you; it's going to cost you this much money'," said Schultz.

So far, police know of 12 people who have been taken in by the fraud, but they are still investigating other reports of people succumbing to the scam.

Police say the scam has been operating since February and is centred in Ontario.

Victims of the fraud are sent realistic looking insurance cards in the mail, but Schultz says they are worthless and won't enable the cardholder to get coverage.

"The headaches you're going to have if you don't have insurance when you get involved in an accident is just going to be tremendous," he said.

The Canadian Anti-Fraud Centre advises consumers to verify that an insurance broker is legitimate before buying a policy. Insurance brokers in Ontario have to be licensed and that can be checked by calling 1-800-265-3097.

Anyone suspecting they've been a victim of the fraud can also contact the Canadian Anti-Fraud Centre at 1-888-495-8501.