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13 Apr 2018

BY James Chapple

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Government finally closes sickness claims loophole

A legal loophole which has given rise to spurious false sickness claims, costing the travel industry millions of pounds, has finally been closed.

Sick man
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Government finally closes false sickness claims loophole

The government on Friday (April 13) announced it would fix the level of legal costs that can be claimed from package holiday sickness scams.

 

In doing so, it shuts a loophole the industry has long said has fuelled a rise in bogus claims and risked pushing holiday prices up.

 

The Ministry of Justice (MoJ) said the new rules would be enforced in the coming weeks - in time for the summer holiday season.

 

“Claiming compensation for being sick on holiday, when you haven’t been, is fraud,” said justice minister Rory Stewart. “This damages the travel industry and risks driving up costs for holidaymakers [and] 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.”

 

Abta, which launched the Stop Sickness Scams campaign in response to the issue, says there has been a 500% increase in false claims from around 5,000 in 2013 to 25,000 in 2016, despite data to suggest illness in resorts has decreased in recent years.

 

The MoJ said since October last year, there have been at least four private prosecutions brought against fraudsters in the UK making false claims by the likes of Thomas Cook, Tui and Red Sea Holidays - including three in March alone.

 

Derby pair Leon Roberts and partner Jade Muzoka, who said they fell ill with food poisoning while staying at a spa resort in Turkey only to plaster jolly pictures of their trip all over Facebook, were each sentenced to 26 weeks in jail, suspended for 12 months, after bringing a claim against Tui.

 

Tui was forced to defend another claim, this time by Liverpool couple Chelsea Devine and Jamie Melling who said they fell ill on the fourth day of their 10-day all-inclusive holidays to Levante.

 

Devine and Melling did not report their illness while they were away or upon their return and like Roberts and Muzoka, posted cheery snaps on social media.

 

Nearly a year later, they made identical claims for around £2,500, which were swiftly dismissed. The pair were ordered to pay Tui £15,000.

 

Finally, Jessica Hegner and Karl Hancock from Crawley demanded £4,000 compensation from Red Sea Holidays after claiming they fell ill while holidaying in Sharm el Sheikh, but the judge found their actions “fundamentally dishonest” and ordered they pay more than £12,000 in costs - again, after the couple documented their trip on social media.

 

Following the ruling, Red Sea executive director Peter Kearns said it had been “open season on tour operators for too long”.

 

Also welcoming the ruling, Andrew Flintham, managing director Tui UK and Ireland, said: "We’ve seen a dramatic rise in fraudulent and exaggerated claims over the past few years which without continued intervention represents a real threat to the travel industry and honest holidaymakers.

 

"This is a great step in the right direction, however, it’s definitely not the end of the story and there’s still more work to be done with help from government and partners across the travel industry.”

 

Abta: 'Scams have cost industry millions'

Abta: 'Scams have cost industry millions'

Until now, legal costs associated with overseas package travel sickness claims have not been controlled, with many operators opting to settle out of court rather than challenge them.

 

The MoJ said this had not only forced tour operators to retreat, it had emboldened claims management companies to target tourists and urge them to pursue claims.

 

Last year, it asked the Civil Procedure Rule Committee, the body responsible for setting rules on legal costs, to bring package holiday claims within a fixed costs regime.

 

This, in effect, would mean tour operators pay prescribed costs based on the value of the claim and the length of the proceedings, making defence costs more predictable and putting power back in the hands of tour operators to challenge claims. The committee has agreed changes with the rules to be updated on Monday (April 16) before being enforced shortly after.

 

Abta has welcomed the announcement after launching its own Stop Sickness Scams campaign last year.

 

Mark Tanzer, Abta chief executive, said: “False sickness scams have been costing the travel industry tens of millions of pounds and damaging British tourists’ reputation abroad.

 

“Since 2013, legal fees for personal injury claims which occurred in the UK have been capped, which is why in partnership with claims management companies, firms of solicitors have been targeting customers who have taken an overseas all-inclusive package holiday.

 

“This has contributed to a 500% increase in sickness claims at a time when actual incidents reported by customers in resort have either remained stable or declined.

 

“We are pleased the Ministry of Justice has responded to the concerns and evidence raised by Abta and our members by taking firm action on this issue. Closing the legal loophole before the summer should lead to a reduction in the number of false claims.

 

“We encourage the government to keep this matter under review and continue to pursue a ban on cold calling by claims management companies in relation to sickness claims.”

 

Steve Heapy, chief executive of Jet2holidays and Jet2.com - which have also campaigned on the issue - added: "In some quarters Britain has been referred to as the ‘fake sick man of Europe’, and a cure for this sickness has now been found.

"We urge the government to follow up this welcome news by banning the practice of cold calling in relation to sickness claims, as we know that some unscrupulous claims management companies are attempting to mislead customers through this dishonest activity.

"We have fought hard to ensure that European resorts continue to offer the best value all-inclusive packages for British travellers, and we are delighted to hear that the government is on the side of holidaymakers too."

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