Having experienced this first hand I can assure you it happens. And it is not always based on what someone else experienced (see the first sentence).Having lived in North Wales for many years I can assure you that this story is an urban myth! I have heard the story repeated time and time again but it is always based on what someone else experienced. You know the line - "I know a man who told me that his mother in law once went into a shop in North Wales where everyone was talking to each other in English but when she asked if she could buy a packet of crisps in an English accent everyone else in the shop started talking in Welsh".
Maybe it is not that common, but don't come on and tell someone they did not experience what they did.
Oh - and was it in North Wales? You tell me - is Llandudno in North Wales? ( I think it is, but maybe I was wrong about that as well?)