Rules to crackdown on holiday sickness fraudsters will be introduced before the summer holidays, ministers have revealed.
Legal fees for package holiday illness cases are to be capped to deter bogus claims.
This change closes a loophole that has fuelled what the travel industry are calling a 'claims epidemic'.
The Association of British Travel Agents (ABTA) said that claims have risen by 500% in recent years, despite travel industry data suggesting a decline in reports of illness at holiday resorts.
Should the increase in claims continue to climb, travel experts believe that British tourists could face increases in holiday prices.
Many travel companies settle sickness claims out of court rather than challenge them in an attempt to limit these costs.
The changes will be put in motion over the coming weeks in advance of the summer holiday season.
Justice Minister Rory Stewart said: "Claiming compensation for being sick on holiday, when you haven't been, is fraud.
"This behaviour 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."
In an ITV investigation, it was found that some claims management companies send touts to resorts and encourage tourists to pursue holiday sickness compensation.
The Civil Procedure Rule Committee, who are responsible for regulating these legal fees, have agreed to fixed recoverable costs schemes on package holidays.
Tour operators will pay limited costs depending on the value of the claim and length of proceedings, making predicting defence costs and challenging fraudulent claims easier.
The changes, which will protect both holidaymakers and travel companies, will be updated on April 16.
Since October 2017, four couples were sentenced or ordered to pay legal costs after making bogus package holiday illness claims.
These dealings were a result of private prosecutions brought by Thomas Cook, TUI and Red Sea Holidays.
ABTA advice on what to do if you genuinely fall ill whilst on holiday as of July 2017:
- Inform your resort rep, hotel owner or tour operator
- Visit the doctor and speak to your resort rep, hotel owner or tour operator about it
- If you are not satisfied with the outcome of either of the above you can pursue the issue through a small claims court or through ABTA's arbitration scheme
- You do not need to use claim management companies to make a claim, and if you do use them, they will typically take a large cut of whatever you are offered