Ofcom has handed telecoms company TalkTalk a £3 million fine for billing customers for services they never received.
The communications watchdog says it issued the heavy penalty to "reflect the seriousness of their breach of the rules and to act as a deterrent".
In a series of blunders, even once TalkTalk was warned to fix its systems, many customers were still wrongly billed.
- TalkTalk fined £3million by Ofcom
- It wrongly issued over 62,000 bills
- Every customer impacted has been reimbursed
An investigation by Ofcom into TalkTalk and Tiscali UK in July 2010 found both companies wrongly issued landline and broadband bills, particularly to those who had closed their accounts.
It found the firms wrongly issued bills in just over 62,000 cases between 1 January and November 2010.
Tiscali was bought by TalkTalk in July 2009, and has since been rebranded TalkTalk.
Ofcom received more than 1,000 complaints from customers, which prompted the probe.
Ofcom issued a legally-binding notification in November, warning steps had to be taken to sort out the billing problems by 2 December 2010.
But the watchdog says despite taking some important steps to comply with the rules, almost 3,000 consumers were still incorrectly billed between that point and 4 March this year.
Diane Gaston, from lobby group Consumer Focus, says: "It is totally unacceptable for any company to bill customers for services they haven't used.
"This fine is a welcome move by the regulator. It is important to send a clear message to the industry on how essential it is that firms play fair by their customers."
TalkTalk had to refund customers by 2 December 2010, and Ofcom says more than £2.5 million was paid in refunds and goodwill payments to more than 65,000 affected consumers.
Dido Harding, TalkTalk Group chief, says: "The billing migration was completed last year and in the last three months Ofcom has received only 12 complaints on the issue.
"In addition, as announced in February, every customer impacted has been reimbursed and compensated with payments totalling over £2.5 million.
"Last year I recognised that we needed to invest in our systems, processes and customer services, and we are making significant progress.
"We are of course disappointed at the scale of the fine and feel it is a disproportionate penalty, however we are striving to continually improve and invest in customer experience and are pleased at the clear progress we are starting to make."