Consumers have been told to be on their guard when booking holiday villas after a bogus website left hundreds of customers with thousands of pounds of losses.

The website Morairaway.com took bookings worth an estimated £1 million this summer before being exposed as a sham. Many found out they had been defrauded when they turned up in Spain to find the villas did not exist.

One of the victims, Parminder Chana, lost £3,350 on a five-bedroom villa he had booked to celebrate his wedding anniversary. “I started to think something had gone seriously wrong when I did not receive a confirmation for the money I had wired to Spain in early June,” he says.

When he could not reach anyone by phone and the website disappeared, he decided to go to Spain to investigate for himself.

Mr Chana, 46, left his home in Essex and set out to find the villa. He found the road, but his villa, No 7, did not exist. He drove to Javea, the supposed location of Morairaway’s office in the northern Costa Blanca, but he found nothing but an office with post boxes, next to a newsagent.

“The newsagent asked me if I was looking for Morairaway and said that he’d had half a dozen people asking that week, and two dozen the previous week,” Mr Chana adds.

So far, at least 130 Britons are known to have lost their holidays, but the number affected could be much higher.

Morairaway.com, and its two sister websites — ipuertobanus.com and denia-rentals.com — advertised through holiday-rentals.co.uk and holidaylettings.co.uk, two of the largest businesses offering villas across the world. Both companies have said that they have exhaustive processes to detect bogus advertisements, and yet Morairaway.com still managed to post 46 fake villas on holiday-rentals.co.uk.

These websites pass on inquiries, rather than take bookings. Advertisers pay a fee to be featured for an agreed period — Holidaylettings received £1,675 for the Morairaway posting.

It is not the first time that the companies have been duped: last summer a fraudster in Majorca managed to con at least one British couple out of a £700 deposit for a villa featured on holiday-rentals.co.uk.

This week it was revealed that holidaylettings.co.uk was duped by a fraudster in Cyprus, who posted three fake villas on its website, taking payments of up to £1,500 from 72 Britons.

Holiday-rentals.co.uk will fully refund customers of the Morairaway scam, but only those who registered for its free rental guarantee scheme, and then only up to £3,300. Others will receive a part-refund. Flights and car hire are not covered. Holidaylettings.co.uk has no guarantee scheme.

Kate Stinchcombe, a spokeswoman for Holidaylettings, says: “We are really shocked that this has happened. But nothing was flagged up. We did as many checks as we can. We have a number of ways of identifying suspicious behaviour, such as firms using multiple IP [internet protocol] addresses or the payment process not correlating with addresses supplied.

“We use software and in-house systems, while [members of] our customer services team creating the adverts also saw nothing. M[orairaway] did everything right and behaved like an average advertiser.”

The fake website advertised for three months from March, prompting several hundred inquiries. It is estimated that 130 customers from both websites went on to book villas. An unwitting Parisian travel agent acting as agent for Morairaway took a further 75 bookings. It is not known yet how many people in the UK and Europe booked direct.

The Spanish Civil Guard has launched a fraud investigation. In the UK, the matter is being investigated by Thames Valley Police’s economic crime unit.

Investigations by Times Money have revealed that the Morairaway.com domain name was registered for 12 months on September 11 last year with Domains by Proxy, based in Arizona in the United States.

There the trail runs cold. As with offshore banking, Domains by Proxy sets up accounts on behalf of clients, who therefore cannot be traced. The company’s slogan is: “Your identity is nobody’s business but ours.”

So far it is not known if the Spanish police have requested information from Domains by Proxy.

However, other scraps of information have begun to emerge, which increasingly point to the webmasters being based in India. On the internet, Sachin Kalambe describes himself as working on search engine optimisation at Morairaway.com. His name also popped up at omwebsolution.com — a web design and development company in India — which says that it built the Denia-rentals.com site. The omwebsolution site shut down on June 24 and is now “under construction”. This year a company called softdeals.net also claimed to have designed and developed Morairaway.com, plus ipuertobanus.com. The Softdeals site is also “under construction”.

One of the victims of the scam, Eric Rzepka, in Paris, is among many consumers who have been doing their own investigative work. Mr Rzepka has provided Times Money with addresses related to companies in Manchester, Spain and India. Times Money has made these addresses available to the police.

An independent blog giving advice on villa rental, www.holiday-home-rental.co.uk, is now calling for an industry-wide approach to customer protection.

Rob Barham, who writes the blog, says: “There is scope for consumer protection to be introduced in some way. The holiday rental directories need to come together to create one recognised scheme/badge [and work] together to ensure scammers are blocked from using all sites.”

In the meantime, travel experts advise holidaymakers to show caution when booking villas, particularly with so many people using the internet to find bargains or last-minute deals.

Barry Gooch, chairman of Prevention of Fraud in Travel — a coalition of travel industry partners and police — says that fraud cases have risen this year. “I don’t want to give the impression that the industry is careless,” he says. “But the problem is that because it has been very tough on the industry this year, people are less guarded.”

Holidaymakers who pay by credit card are protected from fraud on bookings costing more than £100. Morairaway.com, however, told customers that its card facilities were broken and asked for cash transfers or a bank draft. If you are asked to do the same, say that you will pay the balance when the credit card facilities are repaired. If they refuse, consider making alternative arrangements. Booking villas recommended by friends and family is another way to ensure that you pay for a legitimate property.

Travel insurance does not normally cover fraud, but those who pay via PayPal are covered for 45 days after payment. If you book through an Abta or Atol-bonded travel company, your money is guaranteed.

Anyone contacting Thames Valley Police economic crime unit should ring 0845 8505505 and quote “1158 — 30/6/09”, the reference number assigned to the Morairaway case.

Additional reporting by Graham Keeley in Barcelona

Follow the latest developments at timesonline.co.uk/travelnews

Case study:

Amy Richardson, Alexandra Bolton and Jenny Spencer, pictured left to right, were all victims of the Morairaway scam. The three friends were part of a group of seven who booked a week in a villa in Alicante for a university reunion in August.

With Morairaway.com demanding full payment 60 days before departure, the group paid £1,300 by bank transfer on June 1. “There was no other payment option,” Amy recalls.

A contract and receipt arrived two weeks later. “We thought nothing of it — it looked completely legitimate,” the 25-year-old adds. A few days later holidaylettings.co.uk sent an e-mail warning about the scam.

It was too late to stop the payment and there is no chance of a refund from holidaylettings.co.uk, travel insurance or a credit card provider. All Amy and her friends can hope for now is that the Spanish banks moved in time to freeze the deposits.

Amy, of Balham, South London, says: “I had booked a villa with Holidaylettings five years ago and all was fine. Now I would not book with anyone who isn’t covered.”

Don’t get ripped off

Travel insurance does not usually cover fraud, but holidaymakers who pay by credit card are protected if the purchase is more than £100 and less than £30,000.

Be suspicious if your holiday company requests a cash transfer or banker’s draft.

If you use holiday-rentals.co.uk to search for a villa, ensure that you register for its free rental guarantee scheme.

If you book through an Abta or Atol-bonded company, all your money is guaranteed. If you pay via PayPal, you are covered for 45 days after payment.