The complete guide: Holiday Rip-offs

Those two weeks in the sun we look forward to all year can turn out to be a minefield. Stuck in a hotel next to a building site, hassled by timeshare touts, fleeced by taxi drivers and preyed on by local crooks. Here's how to avoid needing another holiday to recover

Get one thing straight from the outset: holidays are in almost every respect A Good Thing. After all, most of us slave away at our workstations for 48 weeks out of 52 just to go on one. A holiday is a precious break, so setting off convinced that you're about to be fleeced by unscrupulous tour operators, vagabonds and cartographically challenged taxi drivers will take the fun out of the whole thing.

Get one thing straight from the outset: holidays are in almost every respect A Good Thing. After all, most of us slave away at our workstations for 48 weeks out of 52 just to go on one. A holiday is a precious break, so setting off convinced that you're about to be fleeced by unscrupulous tour operators, vagabonds and cartographically challenged taxi drivers will take the fun out of the whole thing. And rip-offs are often a question of perspective: the £2 can of Pepsi you purchased after your climb up to Montmartre's Sacré-Coeur may seem on the costly side of extravagant, but didn't it do your parched throat good? Having said that, it pays to be careful – and to know your rights. Hence this handy guide to avoiding shark-infested holiday waters.

When do rip-offs start?

Your rip-off alert should sound its first strident klaxon when you book your trip, unless it has an Atol number attached – the Air Travel Organiser's Licence is a guarantee that you will get your holiday, or your cash back if the company goes bust. Should you not be flying anywhere, booking through an Abta travel agent can bestow a degree of protection. The Association of British Travel Agents has a scheme for rail, self-drive or coach holidays, and guarantees your money back if you buy through an Abta member. Finally, the Association of Independent Tour Operators has its own bonding scheme.

But I'm an independent traveller!

If you are booking all the elements of your travel separately, try to pay with a credit card – the Consumer Credit Act protects you for most transactions worth £100 or more where the merchant (eg airline, hotel, car rental company) fails to deliver. But bear in mind that if one component of the trip goes awry – if, for example, you are delayed getting to your destination – you are still liable for accommodation costs, etc. In contrast, the smug folk who booked a package will be happy to recite the many benefits of the Package Travel, Package Holidays and Package Tours Regulations 1992.

which are?

These rules mean that if you buy a package the holiday company can't mess you around – or at least, if things go horribly wrong, you'll get some or all of your cash back. For a start, the tour operator can't tell fibs about the holiday. And if, after booking the trip, you decide not to go, you can transfer the holiday to someone else for a nominal fee.

If the tour operator changes significant aspects of the trip, it has to give you the chance to cancel and get a full refund.

Assuming the holiday goes ahead as planned, the operator is responsible for every aspect – and that includes companies working on its behalf, from airlines to hotels. The tour operator must ensure that the holiday you get is the one it promises – and if that doesn't happen, you can demand that things are put right, and seek compensation if things go wrong.

The Package Travel Regulations even go so far as to oblige the holiday company to provide legal aid if you have a claim against a third party: trip over a dangerous paving stone on a street in Spain, and you can enlist the holiday company's support in making a claim against a local authority.

So what's a package?

A broad definition is applied: any holiday that includes transport and a second component – usually accommodation, but car rental or tickets for a football match also qualify.

What's not a package?

Anything where you arrange the component parts yourself. This includes some cases where you think you have booked a package but it turns out you haven't. One example is easyJet and easyRentacar: if you book a no-frills flight to Barcelona, and a hire car for when you get there, you might assume that you have bought a fly-drive package; after all, both companies are owned by the same individual. In fact, this is a "dual contract", where the components are regarded as separate, and you have no rights under the Package Travel Regulations. Indeed, there is even a clause in the easyRentacar terms that warns if your easyJet flight is late and you miss picking up the car, you have no comeback.

Hurray! I've just been told I've won a free holiday!

"The commonest scam," according to Sean Tipton of Abta, "is on the lines of 'Congratulations you have won a free holiday. To register for your holiday please forward us some money.' Attempts to book this holiday are usually fielded by a premium-rate answerphone. A few months later the company folds. Also, timeshare – which has largely cleaned up its act – has been replaced by Holiday Clubs where you pay thousands of pounds for 'free' holidays for the rest of your life. These holidays once again prove very difficult to book or, if offered, are at totally inappropriate times of the year and so unusable. The best advice is: do look a gift horse in the mouth. Unless the offer is made by a bonded company, it probably is too good to be true."So, caveat emptor...

Assuming I've avoided all the pitfalls and managed to leave the country, what might happen to me while I'm away

The main hazard is your own greed. Many people who are ripped off on holiday are willing participants – almost always because the villain appeals to our natural lust for cash. Convince yourself that you really have won a free holiday in a free draw that is "nothing to do with timeshare", or that the "spot the lady" game being conducted in the Ramblas of Barcelona is fairly run, or that the gems you are being asked to buy in Sri Lanka really are going to sell for four times the price when you get home, and you will be happy to hand over your cash to the rogues. Just don't ever expect to see it again.

If I can suppress my greed, what are the other worries?

First, not knowing what a policeman looks like. Tourists tend to be law-abiding and compliant towards police officers. So plenty of crooks have devised scams where they pretend to be law enforcement officers, demand to see your passport and cash – often on the imaginary pretext of an alleged crime – and then relieve you of it. Just don't make the mistake the Independent's travel editor made when accosted by three disreputable types in a backstreet of Havana. He refused to accept their assertion that they were police until they escorted him, at gunpoint, to the local nick for some heavy-duty questioning.

Second, not knowing what a bureau de change looks like can cost you dear. A common rip-off in countries with less reliable currencies than our own involves plausible-looking gentlemen offering fantastic rates of exchange at local travel hubs. A chunky roll of banknotes, with a perfectly legitimate high-denomination bill on the outside, will exchange hands. You can use this note to buy yourself a consolation beer when you discover that the bills inside the roll – although they look similar to the bona fide one – ceased to be legal tender in that part of the world two years ago. The "folded note" con – when currency is counted twice as the wad is handed over – is another favourite. Do try to work out how the local cash works before you hand over all your funds, and never change money anywhere you can't return to and make a fuss.

And while we're on the subject of currency confusions, an honourable mention must go to the US dollar. To the untrained eye, a $100 bill looks awfully like its lower denomination cousins. Especially when you're slightly the worse for wear and paying a "friendly" Yellow Cab driver. So be careful of your Benjamin Franklins. George Washington can be frittered at will.

What seems to be the problem, officer?

"Tail-light, comrade. And you were doing 50kph in a 30kph zone. And, ooh, your international driver's licence hasn't been signed in triplicate. Looks like you'll have to follow me down to the station."

Moscow's traffic police take a particular delight in flagging down local traffic at night in sub-zero temperatures. In these conditions no one wants to go down to the station, especially when they know their tail-light is working fine. Everyone wonders whether there might be a way they could, you know, cut through the red tape a bit quicker. Of course, the traffic cop says he doesn't know what you mean, but US$50 might see you safely through this little misunderstanding. Given that this conversation will be carried out in Russian, some of the subtleties will probably be lost on you, but money is a universal language, as is the delicate ballet of the shakedown.

In many parts of the globe, wheel-oiling and palm-greasing are a fact of life. Tourists often escape the worst of it as officials will be under instructions not to mess with the lucrative travel trade. But often the taxi driver with a Westerner in the back, or the moped operator you're clinging to, will be the one facing the "fine", and you will be obliged to cough up. Patience is the key. Your tormentor will have already sized up what he thinks you can afford, and agreeing a common price will be made lots easier if you smile a lot and offer round any cigarettes you happen to be carrying.

What eles should I guard against

If you're travelling independently, the first few days in any country are bound to involve some acclimatisation. If bargaining is part of the culture of your destination, you'd do well to get a feel for prices and customs before you launch yourself into the maelstrom. A fair price will almost always mean more than the locals pay (to the extent that officially sanctioned two-tier systems operate in countries such as Vietnam), but in developing countries that seems only fair. Haggling in markets is part of the joys of travel, a chance to be ripped off and enjoy it.

On a more serious note, backpackers should always be wary of accepting drinks from strangers, however friendly they may seem. Being drugged into a stupor in order to be relieved of your cash is one of the nastiest holiday rip-offs and is a particular risk for lone travellers. Pickpockets and petty criminals are common to every country, but tend to operate in crowded urban areas, particularly where travellers with bags are likely to converge. A suddenly light back-pack means that it's been slashed and your valuables stolen, all while you were – by definition – looking the other way. Money-belts and photocopied travel documents will help to lessen the pain if this happens to you.

One rip-off that prays on travellers' senses of guilt and isolation is the "commission merchant", who will offer to take you to see local points of interest for a price. (This scam happens regularly in tourist towns in India such as Agra and Jaipur.) Whether or not you eventually see the sights, on the way you will be introduced by your guide to various vendors anxious to sell you their wares at inflated prices. Your friendly guide is, of course, receiving a commission from these attentive brothers-in-law and cousins, and you will be insulting him and them should you refuse. In the end, it may be worth buying something, then cutting your losses and making your own way round the town.

And then there's "legitimate" rip-offs in hotels: making phone-calls from your room, and mini-bars. Think before you drink; reflect before you connect. Otherwise you will join the many thousands each year who find themselves arguing the toss with an unsympathetic hotel concierge at check-out time.

How bad can rip-offs get?

One of the nastiest scams doing the rounds in Mexico is perpetrated by individuals pretending to be market researchers for guidebook publishers. They ask your name, then a series of innocuous questions, then say they would like a contact number at home in case they need to get in touch with you for more information. You wander off to the bus station for the trip to Guatemala, pleased to have helped and thinking no more about it. Meanwhile, the interviewers call your nearest and dearest on the number that you willingly supplied, and explain that you are in hospital, or in trouble with the law. Your relations or friends must send cash instantly to help rescue you. Of course, they comply, but you only find out what has been going on when you log in at the internet café in Panajachel.

When is a rip-off not a rip-off

A couple of years ago I found myself in the Turkish seaside resort of Kusadasi. Attracted by the boat-trips on offer I soon negotiated a fair price, and the next day my chosen craft and I slipped away together into the azure mystery of the Aegean Sea. Sadly, things did not go quite to plan.

I was soon participating in the most miserable cruise of my life: a day of grey, diesel-scented tedium, with only a soggy lunch on a waterlogged spit of sand to break the monotony. The boat was dirty, the captain rude, the weather inclement, and the promised itinerary of hot springs and Roman remains did not materialise. I felt cheated, thoroughly ripped off, until I glanced at the card I'd been given when I booked my excursion. "Kusadasi Paradise Trip," it read. "Where sun, sand and excitement is the exception!" I couldn't say I hadn't been warned.

Beware of the internet

In 1999, British Airways spent more cash on getting tickets into the hands of passengers than it did on putting fuel into its planes. In comparison, the no-frills airlines spend almost nothing on getting bums on seats – mostly by using the internet. But the rules of engagement are the same: rip-offs only attack when your guard is down. One holidaymaker told of her attempts to book a £100 return flight to Dublin over the Net. Having completed her online booking form, she submitted her credit card details, only to realise immediately that she'd input the wrong dates of travel.

A frantic call to the airline in question met with the disappointing news that her booking could not now be modified, despite the fact that a mere two minutes had elapsed between the booking confirmation and her call. The moral of which is that there are far better ways of blowing £100 than hitting the "submit form" button prematurely.

A broader problem is that, on the internet, you are not always entirely sure with whom you are booking. If you are not convinced that a particular enterprise is reputable, check before you click.

Simon Calder: The perfect scam

This one works beautifully because (a) most people feel well-disposed towards helping other travellers; (b) there is an element of self-interest; (c) you are told explicitly, upfront that the traveller does not want your cash; and (d) the amount you stand to lose is relatively low – you are more likely to go along with it, and less likely to go to the police to complain about being fleeced.

You're walking through Mexico City chatting to a fellow traveller. An American voice calls out, "Gee, I haven't heard English spoken for a while." You get talking, and it turns out that the guy's from Nevada and about to fly home.

Trouble is, he has not quite got the $15 he needs for departure tax – nor the $5 for the cab to the airport. Not that he's asking for cash. He's got two Mexican phone cards that cost $20 but he hasn't yet used. Maybe you'd like to take them? You'll be able to phone your mum to wish her Happy Easter.

Except when the deal is done, and you find a payphone, you discover the cards' credit has been used up. You look down and notice that there are expired phone cards everywhere, just waiting to be sold by people with plausible stories.

What are the most common rip-offs?

The old ones are the best. Surprise, confusion and the innocent good nature of the traveller are what the world's bad guys use to separate you from your valuables.

1. The mustard trick. The villain applies a dollop of mustard, or similar gunk, to your clothing, then offers to help you clean up. In the ensuing kerfuffle, your pocket will be picked, or your bag or camera removed.

Defensive manoeuvre: as soon as anything unexpected happens, assume that someone is out to rob you. Try to create some space between you and other people. Retreat into a café or hotel to clean up, but never let a stranger "help".

2. Read this. A group of children encircle you, one of them holding a piece of paper or card that you are supposed to read. While you try to figure out what is going on, a dozen small hands are at work on your possessions. In the Cuban variation, the paper/card is dispensed with.

Defensive manoeuvre: if you feel yourself being surrounded, start running (they will get out of your way) and yelling.

3. Trouble afoot (mainly aimed at men). A stranger falls into step beside you and points down at your shoe. Sometimes he may even reach down and grab it. The plan is that you will reach down, too, exposing the wallet that you have in your trouser pocket for easy picking.

Defensive manoeuvre: keep walking. Examining tourists' footwear is not a tradition in any country that I know of, so don't worry about offending cultural sensitivities.

4. The cashpoint catch. The easiest way to get foreign currency is to use a cash machine outside a bank. By doing so, you are announcing to the community that you have just become relatively rich. Don't be amazed when you turn a corner and find a couple of robbers, who know (they've watched you) exactly where you have stashed your cash.

Defensive manoeuvre: get your currency in advance, or at the airport upon arrival.

5. The squeeze. A nasty one, this: as you board a bus or train, you suddenly find your way blocked by one or two men, with an accomplice following behind. In the few seconds before you realise what's going on, they have searched every pocket (and money belt) and removed all your valuables.

Defensive manoeuvre: even if you miss the bus or train, wait until the entrance is clear.

6. Taxi? In many countries, the line between official cars for hire and private vehicles is blurred. In a non-licensed taxi, you may find that the driver takes you to an isolated area and refuses to go any further until you have paid twice or three times the agreed fare. Or, he may simply rob you and leave you by the roadside, hopefully still alive.

Defensive manoeuvre: especially when you arrive in a strange country, enlist a police officer (ideally a genuine one) to help you sort out your onward transport. Or take the public bus, on which most people will be law-abiding folk with your best interests at heart.