A travel management company (TMC) has fallen victim to a fraud in which customers lost their luxury villa bookings worth up to £12,000.

Parador Travel Management booked a villa in St Tropez worth £11,700 in March 2008 and was forced to reimburse the customer when it emerged that the villa had never existed. The City of London Police have arrested a man in connection with this and other villa frauds.

The TMC, which has since been bought by The Co-operative Travel Group, is still hoping the money will be recovered by the courts. Head of The Co-operative Travel Management Anthony Rissbrook said the villa seemed legitimate because it was on a reputable website.

He said: “We had conversations with the person who was supposedly going to arrange the holiday. In late June 2008, having paid all the money, he disappeared. Websites need to ensure that they vet the content on their sites.”

The same fraudster placed an advert in March 2009 on another villa letting website offering luxurious villas for up to £5,000 a week.

The ‘owner’ would take deposits and the final payment before phoning customers near the time of travel to say there was a problem with the property, such as broken air conditioning. He would promise them a refund that never arrived and then stop answering their calls.

Most victims had their holidays cancelled in advance, apart from one who travelled to Cannes to find the address of the villa did not exist.

Police are warning agents not to be “complacent” when booking villa holidays. Head of operations for the economic crime directorate detective chief inspector Dave Clark said: “Always conduct your own checks when booking a villa and try to get recommendations from previous customers.”

Clark said the villa market was a prime target for scammers at the moment, after TheSunday Times revealed a £1 million scam by morairaway.com that left hundreds of families without their Spanish villa holiday last year.