Plusnet, the cut price broadband firm owned by BT, was today slapped with a £880,000 fine by regulators after overcharging customers £500 each.
An investigation by telecoms watchdog Ofcom found Plusnet had billed more than 1,000 customers in excess of £500,000 in total.
Plusnet continued to charge customers after they cancelled their contracts.
The Sheffield-based firm made the discovery in September 2015 and reported itself to Ofcom. Regulators opened an investigation in May 2016 into "technical" failings that occurred between 2011 and 2015.
Ofcom said the speed of response by Plusnet, the fact it reported itself and that it was a technical rather than deliberate error influenced the level of the penalty, which also included a 20 per cent discount to "reflect Plusnet’s willingness to enter into a formal settlement".
The BT subsidiary refunded 356 of the 1,025 customers affected a total of £212,140, payments that included four per cent interest on refunds.
Plusnet has donated the remaining funds to a dozen local charities, in lieu of money owed to customers it could not contact.
Nevertheless, any customers that have not been contacted and believe they have been overcharged are still able to apply for a refund from the broadband firm.
“We are very sorry and would like to apologise," said a spokesperson for Plusnet.
We reported this ourselves to Ofcom, and made every effort to contact these customers to arrange a full refund before the investigation started.
"We would also like to reassure all customers this was an isolated historic issue and we have implemented a number of new robust measures to make sure this doesn’t happen again.”
Lindsey Fussell, Ofcom’s consumer group director, said: “There can be no margin for error, and no excuses, when it comes to billing customers correctly.”
“This fine should serve as a reminder to telecoms companies that they must adhere to Ofcom’s billing rules at all times, or face the consequences.”