An epidemic of false food-poisoning claims that has cost hoteliers hundreds of millions of pounds and threatened an end to the all-inclusive package holiday has triggered a ferocious legal fightback from the travel industry.

Between 2013 and 2016, a 500% increase in gastric sickness claims by British holidaymakers prompted some hoteliers to warn they would withdraw the holiday deals from the UK market. The vast majority of the claims were brought by claims-management companies who tout for business in holiday hotspots and cold call tourists once home.

“Fake claims have been costly to the travel industries in the UK and popular overseas destinations and damaged the reputation of British holidaymakers abroad,” said Mark Tanzer, chief executive of Abta, the industry’s trade association. “Some hotels in Spain and Turkey were even considering closing their doors to British tourists.”

Claims firms switched to pursuing compensation for holiday sickness after the government clamped down on the costs they could charge for making whiplash claims, which had hitherto been their staple business.

Some claims firms were suggesting a photo of a receipt for Imodium, the diarrhoea treatment, was enough to launch a claim. The unscrupulous firms would deluge hoteliers with applications for documents that threatened to embroil them in bureaucracy. Many preferred to settle to avoid hassle. The government estimates the hospitality industry has paid out at least £240m. In 2016, Mallorcan hotels alone paid out £42m.

Now, however, a concerted legal fightback by the travel industry ahead of this summer’s holiday season appears to have staunched the flow of false claims, potentially saving the all-inclusive package holiday from extinction in parts of Europe. “We’ve been knocking these back by the bucketful for months and months,” said Mark Hudson, head of counterfraud at Horwich Farrelly which helps a number of travel companies contest claims. “What we are seeing is that the vast majority of these claims are just nonsense.” Hudson estimates that of the 2,500 claims handled by his firm, his travel company clients have paid out on only 60 occasions.

“Most of these people were not ill in any way,” he said. “Many really didn’t even know the claims were being brought on their behalf.” The situation became so dire that last year the Solicitors Regulation Authority issued a warning notice to lawyers working with the claims companies.

Hoteliers for one reason or another are not going to face remotely the same number of claims in the future Mark Hudson, counterfraud expert

More than a dozen law firms are being investigated in connection with holiday claims, including several deemed to have potentially improper links with claims management companies, paying them to refer clients. “We are also seeing firms pursuing claims without the proper instructions of claimants,” the SRA said. Several police forces are pursuing people suspected of making fraudulent claims. Last year a couple from Merseyside were jailed for making fraudulent sickness claims relating to holidays in Mallorca in 2015 and 2016, following a private prosecution by Thomas Cook. “Making a false claim for being ill while on holiday is an act of fraud and the courts have taken a very strong stance on this matter – ordering people to pay thousands of pounds in costs and some people have even been handed prison sentences,” Tanzer said.

After intense lobbying from the travel industry, the government has now introduced a law limiting the costs firms can command for making holiday sickness claims, something experts suggest will further significantly cut the number of claims from their peak two years ago. “Summer 2016 was ridiculous in terms of claims,” Hudson said. “We won’t see that spike again. It’s to be hoped that the number of claims going forward will be very tolerable levels as they were 10 years ago. It could have had a huge impact on the hoteliers but for one reason or another they are not going to face remotely the same number of claims in the future.”