Ofcom has issued Plusnet with a £880,000 fine after it was found to have continued to charge customers after they had cancelled their contracts.
In excess of 1,000 ex-customers were billed by the ISP for landline or broadband services after they had cancelled, resulting in overcharging of more than £500,000.
The issue arose due to an error in Plusnet's billing system, which was still recognising cancelled accounts as active and charging customers accordingly.
Since the issue emerged Plusnet has been working to reimburse the former customers who were incorrectly charged. To date, it has refunded a total of £212,140 to 356 account holders, including an interest rate of four per cent for each customer.
The remaining money - owed to customers that Plusnet was unable to contact - has been donated to local charities.
Consumer Group Director at Ofcom Lindsey Fussell said the fine should "serve as a reminder" that companies must abide by Ofcom's billing rules.
"There can be no margin for error, and no excuses, when it comes to billing customers correctly," she remarked.