Tourists at an outdoors bar in the historic centre of Malaga
Credit: Luis Dafos/Getty Images

The British government is closing a loophole that allowed tourists to scam Spanish hotels and tour operators out of more than $74 million in one year by claiming they had contracted food poisoning while on vacation.

The loophole allowed claims management firms to request unlimited compensation for incidents that took place overseas. Some firms allegedly used this loophole to basically extort money from hotels and tour operators. Rather than enter lengthy and expensive legal battles, most businesses would settle out of court.

Over the past few years, these types of claims have increased by 500 percent. In 2013, only 5,000 of these claims were reported. By 2016, that number was 35,000, according to the Association of British Travel Agents.

“Claim farmers” reportedly approached British tourists looking for a vacation to Spain and promised more than $3,090 (€2,500) for their help. An estimated 9.5 million Brits were contacted by the scammers.

“Claiming compensation for being sick on holiday, when you haven’t been, is fraud,” U.K. Justice Minister Rory Stewart said in a statement. “This damages the travel industry and risks driving up costs for holidaymakers. This behavior also tarnishes the reputation of British people abroad. That is why we are introducing measures to crack down on those who engage in this dishonest practice.”

Tourists participating in the scam would file a complaint once they were back in the U.K., after it was too late to be inspected by a Spanish doctor. All they needed to do was provide a receipt, proving that they had purchased anti-diarrhea medicine. The firm representing the scammers would then file cases in small claims court or complain directly to their tour operator.

The British Civil Procedure Rule Committee will enstate rules on legal costs. The predictable costs will make it easier for hotels and tour operators to fight bogus claims in court.