UK holidaymakers who make bogus food poisoning claims could go to prison, warns travel trade organisation Abta.
A huge rise in false claims has left travel bosses "embarrassed" by a trend which they say is a "British problem".
Abta chief executive Mark Tanzer said the fraud is "one of the biggest issues that has hit the travel industry for many years".
He added that tourists chasing false or exaggerated claims "risk ending up in jail either in the UK or abroad".
Tens of thousands of UK tourists have put in for compensation in the past year, even though sickness levels in resorts have remained stable.
Abta says the cases usually involve holidaymakers who have been abroad on all-inclusive deals, who argue that because they only ate in their hotel, that must have been the source of their alleged food poisoning.
It has launched a campaign called Stop Sickness Scams, asking the government to clamp down on the issue.
It says laws designed to stop fraudulent claims for whiplash have instead pushed the problem of false insurance submissions on to overseas holidays instead.
This is because of a cap on the legal fees that can be charged by law firms pursuing personal injury cases at home.
Mr Tanzer added: "The government must urgently address this issue. The legal loophole that is allowing firms to unduly profit from these claims must be closed.
"This would allow people with genuine claims access to justice but make this area less attractive to claims firms."Image copyright Getty Images
Travel firm Tui said it had experienced a 15-fold rise in holiday sickness claims in the past year, costing between £3,000 and £5,000 a time, which was often more than the value of the holiday itself.
Tui's UK managing director Nick Longman and Thomas Cook UK's managing director Chris Mottershead both warned that if the problem continued, it could spend the end of the all-inclusive holiday for UK travellers.
Mr Mottershead said: "It has the potential of putting hoteliers out of business. They will stop British customers coming into their hotels."
Joel Brandon-Bravo, managing director of Travelzoo UK, told Eyes On Events Radio 5 live's Wake Up To Money that the upward trend was being driven by claims management companies.
"People are being called when they get back from holiday and encouraged to make claims and we've also seen evidence of them employing touts outside resorts encouraging people to make a claim and walking them through the process to make it easy for them," he said.
Mr Brandon-Bravo added that he felt people who were trying to cheat the system were not aware of the consequences if they were caught.
"Generally it is not made clear that if a claim is found to be fraudulent the individual could have a criminal record.
"In fact, there is one case going through right now with a Greek hotel, who is counter-suing a couple who made a claim for sickness three years ago for £10,000 and the hotel is counter-suing them for £170,000.
"They tried to withdraw their claim but they are seriously worried they could lose their house."
The Foreign Office has also advised tourists against making any fraudulent claims.
"If you make a false or fraudulent claim, you may face legal proceedings in the UK or Spain," the FCO warns.
"There have been reports of an increase in holidaymakers being encouraged to submit a claim for personal injury if they have experienced gastric illness during their stay," says the FCO website.
"You should only consider pursuing a complaint or claim if you have genuinely suffered from injury or illness."