Two Brits were arrested on the Spanish island of Majorca after allegedly encouraging tourists to make fake holiday illness claims.
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Spanish police said one person was arrested on suspicion of fraud and another was questioned, the Daily Mirror reports.
British holidaymakers at hotels in Alcudia were believed to be targeted and officers are trying to establish whether the suspects were working alone or whether they belong to a claims firm involved in the scam.
According to the Daily Mail, a spokesman said: "The two Britons were capturing clients so they could allegedly make false claims in their names from the hotels they were staying in.
"They were doing this in the street and the doors of hotels.
"The operation remains open and further arrests have not been ruled out."
It comes after a British couple from County Durham were being sued by a five-star hotel in Crete for allegedly making a fake claim against the resort saying its food and drink made them ill.
Sean and Caroline Bondarenko allegedly fabricated a £10,000 compensation claim against the Caldera Palace Hotel on the Greek island of Crete.