Sheffield-based telecoms firm Plusnet has apologised after being fined £880,000 for continuing to bill more than 1,000 ex-customers.
An investigation by industry watchdog Ofcom found the BT-owned company broke a 'fundamental' billing rule by charging people for phone or broadband after they had cancelled their service.
In total, 1,025 customers were collectively overcharged by more than £500,000 over a period of four years.
Ofcom's consumer group director Lindsey Fussell 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.”
Telecoms providers must recognise that a line is 'ceased' once a customer cancels their home phone or broadband service.
But an error in Plusnet's system meant cancelled lines were still classed as 'live', so customers were still charged.
Ofcom said Plusnet had made 'repeated' attempts to refund all affected ex-customers by letter and by phone, and has so far refunded 356 customers a total of £212,140, which included interest at a rate of four per cent for each customer.
The firm has donated the remaining funds to a dozen charities, in lieu of payments owed to customers whom it could not contact.
Plusnet has also made clear to Ofcom the steps it has taken to prevent any future billing errors of this kind.
The £880,000 penalty, which must be paid to Ofcom within 20 working days, was reduced by 20 per cent to reflect Plusnet's willingness to enter into a formal settlement.
A spokesman for the firm said: “We are very sorry and would like to apologise to the 1,025 customers affected.
"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.”
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